Marriage, a significant life event, is one of the most important days in a person’s life and usually no stone is left unturned to make the day perfect in every way. Marriage expenses vary according to the personal tastes and needs of the couple. While some want the event to be a grand extravaganza, others would like to keep it simple and spend only on essentials. It is quite tricky to budget for a wedding as budgets are known to overshoot. This is where a marriage loan can come in quite handy.
Today’s millennial borrowers need a range of choices even when it comes to a marriage loan. Unlike a personal loan that could be used for any purpose, these days, loans are being customised and tailored to meet specific needs. The wedding loan is one such loan that has been designed to meet the specific needs of couples to meet their wedding expenses.
The big fat Indian wedding that has formed the storyline for many movies is now being replicated in real life by those who can afford it. Others customise it to fit their own budget but you cannot take away the fanfare completely. Looking at the demand from millennials, most banks, NBFCs and fintech lenders have started offering tailored wedding loans.
No collateral required
Wedding loans are unsecured loans which means no assets need to be pledged while taking the loan. This makes it more popular among the younger generation. The loan amount depends on the salary and employment status of the borrower.
You can take separate wedding loans
One method to maximize the loan amount could be to borrow separately and double the amount of loan that can be availed. LoanTap offers loans from Rs 50,000 to Rs 10,00,000 for tenures ranging from six months to sixty months. Annual Interest rates start at 18%.
Plan your wedding budget correctly
It is important to plan the wedding down to the last detail and calculate the budget accurately. This will help you to apply for the right amount of loan. Make sure you do not borrow in excess of your needs just because funds are easily available. It is best to work out the estimated loan amount and the tenure to arrive at the EMI that would fit into your monthly budget and can be paid off comfortably.
Manage the Debt To Income Ratio
Lenders consider the borrower’s net monthly income while working out the loan eligibility of borrowers. The EMI on all debts taken together should not exceed 35-40% of the net monthly income to maintain a healthy debt to income ratio. This is important to ensure that the monthly budget is managed well and the borrower does not fall into a vicious debt cycle.
Take stock of existing assets and liabilities
Before entering into a wedding loan, you should take stock of the savings and investments that you have and the existing monthly income. This would be needed to calculate the amount of EMI that you are comfortable paying off. Under no circumstances should you allow the total EMI on all debts put together to exceed 40% of the take-home income.
Pay off existing debts before going for a wedding loan
It would be prudent to pay off existing debts so that you can maximize the wedding loan. The total EMIs on all debts should not exceed 40% of the net monthly income. So, before applying for the wedding loan, make sure you pay off the other debts so that you can maximise the marriage loan available.
Do not apply to multiple lenders
Do not apply to multiple lenders for the same loan. You will seem too desperate as a borrower and this may go against you when the lender assesses your application.
Do not take any other debt six months before a wedding loan
If you are planning to take a marriage loan, you are better off not applying for any other personal loan in the previous six months. If you are servicing a loan that is less than 6 months old, the lender may decide not to approve the marriage loan to avoid further debt burden.
Have a steady job
Make sure you have been at the same job for at least six months before applying for a marriage loan. That will establish your employment and credit history and the lender will have faith in your ability to repay the loan. Frequently changing jobs is not considered an ideal quality of a good borrower and lenders are likely to treat this with scepticism.
Maintain a high CIBIL score
Lenders work out the interest on the loan based on multiple factors like the borrower’s net monthly income after adjusting monthly expenses, the credit history of the borrower and the credit score calculated by CIBIL. The CIBIL credit score is a numerical summary of the credit history of the borrower. It is a number in the range of 300-900 where 300 is the minimum and 900 is the highest possible, A credit score above 750 is considered excellent and usually indicates a very high likelihood of the loan being approved. Maintaining a good credit score is the best way to maximize your chances of getting a wedding loan.
Check your credit report to make sure it is accurate
A high credit score will help you to get the marriage loan you need. Make sure that you check the credit report and ensure that the information is correct. You don’t want incorrect data to affect your credit score and your loan taking ability. It is best to check all the details before you apply for the loan.
A good job at a reputed organization improves your chances
Having a good job in a reputed organization may improve the chances of the borrower to get a wedding loan at a competitive rate since the lender will value his repayment capacity favourably.
Always compare options
Never go for the first loan offer you get. You may be better off checking out all the banks, NBFCs and loan aggregator sites to find the best offer. Some lenders may come out with promotional offers as well. It is best to check out all the possibilities before narrowing down on the best scheme available.
Watch out for the fine print
Look out for all the hidden costs and charges and read the fine print carefully. If you read the documents carefully you may actually end up saving a lot of money on interest as well as processing fees and other charges.
Who is eligible for a wedding loan?
- Any individual who is an Indian citizen or resident
- The borrower should be over the age of 21 years
- The borrower must be having a net monthly income of over Rs 30,000.
What is the process to be followed for availing of a wedding loan?
You will need to visit the LoanTap website and fill in an online application form. The following documents will need to be uploaded –
- PAN Card
- Aadhaar Card/Driving Licence/Passport as proof of address
- Salary slips for the last three months
- Bank Statement of the Salary account for the last six months
The team at LoanTap will evaluate the application form and assess if the documents are in order. If everything is perfect, the loan application will be approved. The loan amount will be disbursed to the mandated account within 24-36 hours of the application.
What are the features of LoanTap Wedding Loan?
LoanTap understands the stress of conducting an important event like a wedding. That is why it gives borrowers the flexibility to pay interest only EMIs for the first three months after which you can revert to the normal EMI.
Can a wedding loan be prepaid?
Yes. The wedding loan can be prepaid by paying minimal charges. After servicing the loan for 6 months, you can prepay the loan without any prepayment penalty.
What are the advantages of a wedding loan over credit card payments?
Paying your expenses using a credit card is convenient only if you pay off the amount in full by the due date. If you are planning to treat the credit card outstanding as a debt that can be paid off as and when you please, it will accumulate interest at 24-36% annually. So a loan of Rs 10,00,000 will end up at 1240000- 1360000 at the end of the year if you do not make any payments. Kicking the can down the road may end up being a very expensive proposition if you delay your credit card payments. On the other hand, a wedding loan is a defined debt where the amount, interest rate and tenure is predefined. You can pay the EMI on a monthly basis and close the account after six months without any prepayment penalty. This gives you the flexibility to manage your monthly budget well.
LoanTap understands the needs of new couples and the expenses associated with an Indian wedding. They help couples realise their dreams whether it is a destination wedding or an expensive honeymoon. Wedding loans from LoanTap make these dreams a reality. Funds can always be paid back in convenient instalments without too much of a burden. Living your dream when it comes to the most significant event of your life is the most important thing and LoanTap ensures that they are with you every step of the way.So make your wedding plans in advance and apply for wedding loan. This will ensure that you have the best day of your life and you can pay off your loan over the agreed tenure of the loan.