A wedding is one of the most significant and most emotional events in a person’s life. From grand decorations to catering and gifts, everything costs money. In today’s world, weddings are traditional functions and status symbols. Due to this, many families spend beyond their limits. When savings are low and expenses keep rising, many people consider taking a personal loan for wedding expenses.
Yes, personal loans offer instant financial help. But before you take that step, it’s important to understand all the essential aspects. A wrong financial decision during this happy time can create a long-term money burden. So, before signing any loan agreement, let’s explore the key things you should always check before taking a personal loan for marriage.
Understand Your Wedding Budget First
Before taking a loan, sit down with your family and create a full wedding budget. Be transparent about the total expenses and how much you can manage from savings. Ask yourself a few critical questions:
- Do we need everything on the list?
- Can we reduce or avoid some expenses?
- Can we do something more straightforwardly without affecting the joy?
For example, instead of hiring a high-end wedding planner, you can take help from friends and relatives. For catering or decoration, get multiple quotes and choose budget-friendly options.
After checking all this, decide how much extra money is needed. Only that amount should be borrowed, not more. Remember, borrowing is easy, but repaying is not.
Choose the Right Bank or NBFC After a Full Comparison
Not all lenders are the same. Every bank and NBFC has different rules, interest rates, and hidden charges. Don’t choose a loan offer just because EMI looks small. Always compare these key factors:
- Interest Rate: Check if it is fixed or floating. The fixed-rate remains the same throughout the loan tenure, while the floating rate can change with time.
- Processing Fee: Most lenders charge 1% to 3% of the loan amount.
- Prepayment Charges: If you want to close the loan early, you may need to pay an extra fee.
- Late Payment Penalty: Always know how much the fine will be charged if EMI is delayed.
Use online platforms like Paisabazaar, BankBazaar or Bajaj Finserv loan calculator to compare lenders. Select the one with the lowest total cost, not just the lowest EMI.
Always Check the Total Loan Cost, Not Just EMI
EMI is just one part of the loan story. Many people make the mistake of choosing a long loan tenure to reduce EMI, but this increases the total interest paid. For example, a Rs. 5 lakh loan at 14% interest for 5 years may give you an EMI of Rs. 11,600, but you will end up paying around Rs. 2.96 lakh as interest.
Now, imagine if you extend it to 7 years — EMI reduces to Rs. 9,400, but total interest becomes Rs. 3.89 lakh. That’s Rs. 93,000 more to reduce monthly EMI.
So, calculate the complete loan cost, including the following:
- Interest paid during the entire tenure
- Processing charges
- Foreclosure charges (if any)
- Other hidden fees
The shorter the loan tenure, the less interest you will pay. So, choose a loan duration that balances your EMI and overall interest.
EMI Should Never Cross 30–40% of Your Income
One simple rule in personal finance is that the loan EMI should not be more than 30–40% of your monthly income. For example, if you earn Rs. 50,000 per month, your total EMI from all loans (including home, car, and marriage) should not exceed Rs. 20,000.
After marriage, many new responsibilities come. You may want to move into a new house, buy new furniture, plan a honeymoon, or face medical emergencies. If your EMI is too high, you may not have enough cash left to handle these things or even save for the future.
So, before finalising the loan amount, correctly calculate and ensure you don’t spoil your monthly budget.
Your Credit Score Plays a Big Role in Interest Rate
If you have never checked your credit score, now is the time. A credit score is a 3-digit number (out of 900) that shows your creditworthiness. Most lenders prefer a score of 700 or above to offer loans at a reasonable interest rate.
Here’s how your score can affect your loan:
- Above 750: You can easily get a personal loan at a low interest (10%–13%)
- Between 650–750: You may still get a loan, but interest could be higher (14%–18%)
- Below 650: Loan approval becomes difficult, or interest can go above 20%
If your score is low, delay and improve the loan plan first. Here’s how you can do that:
- Pay all credit card bills and EMIs on time
- Keep credit utilisation below 30% of the limit
- Do not apply for multiple loans or cards at the same time
- Avoid cheque bounce or loan default
Once your credit score improves, you can reapply and get better loan offers.
Beware of ‘Instant Loan’ and ‘No Document Loan’ Traps
You might see ads like “Get an instant loan in 10 minutes” or “No documents needed for a marriage loan”. These offers sound very attractive when you are in a hurry. But be careful — such loans often have high interest rates (24%–36%) and many hidden charges.
These offers may also come from apps or unknown lenders, which the RBI does not regulate. Taking a loan from such sources can lead to harassment, data misuse, and fraud. So, always borrow from RBI-registered banks and NBFCs.
If possible, try alternatives like:
- Asking close family or friends for a short-term, interest-free loan
- Liquidating part of fixed deposits or mutual fund savings
- Using gold loans (which come at a lower interest of 8%–12%)
- Use your employer’s advance if your company has that option
These can reduce your loan burden and protect your credit score.
Marriage Is a Celebration, Not a Financial Burden
Marriage is indeed a once-in-a-lifetime celebration for many. But it should not leave you in long-term debt. You must avoid the pressure to show off or spend to match others. Your financial health after marriage is more important than one day of glamour.
Keep your wedding plan simple, elegant, and within budget. Take the help of innovative financial planning tools and loan calculators. Take a personal loan only when required, and only after understanding every term and condition in detail.
Make this new beginning of life debt-free and peaceful.
Sources: Moneycontrol, Live Hindustan, Economic Times, India Today, UPSTOX
