How to use a personal loan for wedding & vacation expenses
How to use a personal loan to fund a dream vacation or wedding
Almost everyone spends time thinking about the adventures they’ll take travelling the world and the major moments in their life. And what most everyone realizes is that these dreams cost money in the real world.
Just because your travel goals or your wedding (or your child’s) may seem out of reach, but it doesn’t have to be. With some smart financial moves and thoughtful planning, you can find the finances you’ll need for wedding and vacation expenses.
There are a few options for financing a major life event like a wedding, honeymoon, or vacation. We’ll cover a few options here, including a personal loan from Rate. The good news is, if you want to apply for a personal loan to cover your wedding or vacation expense, you can start right away.
Why not just use a credit card?
Taking on a credit card debt for your wedding expenses gives you a resource that you can use to pay for all the purchases and service agreements you’ll enter. Many credit cards offer rewards programs that can give you points or cash back. You could use these benefits to support your honeymoon, or to furnish your first home together.
The same is true for vacation and honeymoon expenses. Several newlyweds opt to pay for travel on a credit card, as many companies offer travel-specific rewards programs with their cards.
The downside with credit cards is that they often carry a higher interest rate than a personal loan. If you aren’t planning to pay off your credit card bill right away, you could end up paying a lot in interest.
Carrying a credit card balance can seem like an easy short-term solution when you lack cash, but getting out of debt for many can become overwhelming long term problem.
For example, making minimum payments on a $10,000 balance can end up taking several years to pay off. With compounding interest, your $10,000 balance can add over $14,000 in interest expenses.*
How about other types of loans?
While it’s possible to use the funds from a home equity line of credit (HELOC) or a home equity loan for a wedding, vacation, or anything else, it’s not recommended. These funds come from the equity you’ve built in your home, a major investment, and financial advisors often recommend to use these funds on something that will provide a similar return on investment, like a home renovation or to buy an investment property.
Is a personal loan a better option?
Taking out a personal loan is an easy way to finance your wedding expenses. A personal loan is a fixed rate installment loan. This means that you will know exactly how long it takes to pay off and can manage your budget with the same monthly payment for the life of your loan. Choosing a personal loan enables you to exercise intelligent management of your finances to help you meet your goals.
For many lenders, including Rate, you can apply online in minutes and if you’re approved, will have your funds in hand quickly—sometimes in as little as a day.
Should I take out a personal loan for my wedding?
Just because you can take out a personal loan to cover your wedding expenses, the real question is if you should.
It is easy to get carried away planning a wedding. Regardless of how you plan to pay the total cost, it is advisable work out your budget as a couple and stick to it to start your marriage on the right foot.
The main benefit of taking out a personal loan for wedding expenses is that they generally will offer a lower interest rate than you could find with a credit card. A personal loan can help you finance major expense responsibly when you do not have enough cash on hand.
If you’re able to qualify for the loan, their convenience is a big point in their favor. When you need to start making payments to the venue and vendors, often months before the actual wedding, a personal loan will allow you to get the funds to them in a few days. Then you’ll also have a lump sum to draw from as you get closer and closer to the big day.
One other benefit of using a personal loan for your wedding expenses is that you and your partner can start building credit as a couple by making all your scheduled payments on time.
The most important thing you’ll need to be able to answer this is to have a plan in place to repay your debt. Financial worries can put a serious strain on a new marriage so you and your partner should be on the same page with how to pay for the wedding. You’ll have to live with the consequences together.
Can I go on my dream honeymoon with a personal loan?
Many prospective brides and grooms may include the costs of their honeymoon in their wedding budget. Using a personal loan for the honeymoon as part of the wedding expenses is totally up to you, but a reasonable use of the money.
The other question would be could you get a personal loan just for the honeymoon. That’s no different than using a personal loan for a vacation, so let’s look at that next.
Should I take out a personal loan for a vacation?
The reasons for taking a personal loan for a trip or honeymoon are the same as the ones for a wedding: mainly convenience and lower rates compared to credit cards. They also allow you to be able to responsibly fund a big expense when you do not have cash on hand.
Because a wedding is such a personally momentous occasion, many people find that the interest expense that comes with a personal loan is worth it to make the wedding day an experience you’ll remember for the rest of your life. That logic can also be applied to a vacation if the same can be said for the trip you’re planning.
Where can I find a personal loan option to help me afford a large expense?
Do you have a wedding or big vacation coming up? Find out if a personal loan would help you cover these expenses. It’s easy. You can apply in as few as 10 minutes and, if approved, have your funds in as few as 1-to-2 business days. Rate has many personal loan options, so find one that can help you have an unforgettable vacation or the wedding of your dreams.
Do you still have questions about personal loans? We also have a dedicated personal loans resource to help you find additional answers.
* Source bankrate.com : A credit card balance of $20,000 with an 18% APR paying the minimum due will result in $14,423.16 and the balance being paid off in 28.5 years.