Common wisdom when it comes to wedding planning is that you should create a party that's within your budget. But sometimes the needs of the many (guests) outweigh the needs of the checkbook-opening few.
In other words, you and your partner may find yourself making some last-minute changes. And in the world of weddings, changes almost always cost extra.
"You've got the wedding funded, but you really want to dial up the quality by x-amount," says Tom McDermott, general manager of U.S. business for Borro, one loan provider that's dealt with wedding loans. "Whether it's the band, or switching to filet mignon, you know how that can be."
Not that anyone should borrow lightly, but if you proceed with caution you can end up with a ceremony that you'll never forget, and a budget that isn't wrecked by those additional settings and fuller flowers.
Loans for the Wedding
If you end up wanting or needing to go over and above the amount of cash you have on hand for your ceremony, credit cards could be an option, but what if you're worried about maxing them out before the honeymoon? And how about high balances and the impact they'll have on your credit score?
A helpful strategy is to seek out a loan that hits on both of the concepts below:
Borrow against assets.
Also known as a secured collateral loan, under the terms of borrowing against assets you may be able to skip the credit-check process entirely. Lenders of this type attach the loan to things such as jewelry, fine art, a car, or even valuable furniture. This means your credit score is protected from the effects of new inquiries to your credit report, just the thing that typically causes those numbers to dip.
Qualify by collateral.
A loan that the lender qualifies against an asset rather than the person borrowing is also a loan that often won't result in the lender reporting to credit bureaus if, for any reason, the borrower is ever late or behind on payments. Not that you should ever pay late, but protecting your score is always a consideration.
Sometimes a loan can help you in ways that credit can't. If you're careful, you can maximize a wedding event while minimizing long-term effects on your credit history.
Another loan option that could be the answer to your wedding-funding woes is a sale-advance loan. Under this model, you put something up for sale via the lender and then you receive a percentage of the item's value in advance.
Monthly interest rates on the amount you're advanced tend to be relatively low — for example, Borro offers a simple monthly rate at 1% — and when the merchandise sells you get back what is typically the difference between the initial loan and the sale price (note: the proceeds are usually less interest and a sales fee).
As always, one wants to approach new loans in life with caution. Be certain to verify the organization you're considering with your state's attorney general, and with the Better Business Bureau.
If the lender comes back with a clean bill of health, and you know you can pay the loan plus interest — asset-based loans can come in at higher annual rates than credit cards — then you can proceed in a way that keeps your scores high and your wedding reception on track.