Are you considering taking out a loan for a wedding? The average cost of a wedding ceremony and reception adds up to around $30,000 — substantially more than most Americans have in their savings account. On top of the cost, many vendors require an up-front deposit. If your dream wedding is just out of reach, you may want to consider how loans will affect your credit report and consider taking out a loan to cover your wedding costs.

Unsurprisingly, lots of cash-strapped couples tend to put their wedding expenses on credit cards, knowing that they may not be able to pay off the balance. As you probably already know, credit cards charge extremely high interest rates. In the long term, taking out a personal loan is a much more financially savvy move. (Note: From the lender’s perspective, a wedding loan is a personal loan.) But wedding loans are increasingly popular: According to The Washington Post, wedding loans skyrocketed in popularity in 2019. On average, couples borrow $16,000 for their wedding loan.

Financial advisors will probably tell you to either take time to save up for your wedding or to downsize your celebration. But if those aren’t options you’re willing to consider, it’s better to take out a personal loan than to rack up charges on a credit card. Financial institutions can almost always offer better interest rates — especially some of the newer, online-only lenders.

Even if you know you want a wedding loan, there are pros and cons that every couple should consider.

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Why a Wedding Loan? The Pros and Cons

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(+) Wedding Loan Pros

1. You might be able to get a boost to your credit score with a wedding loan, provided you can make the monthly payments on time and in full. If you have a good credit score, paying a few thousand dollars in interest over the next few years might be a doable financial burden.
2. Depending on your credit score, occupation, and income, a personal loan from a bank could offer a substantial up-front loan with favorable terms.
3. Getting pre-qualified for a wedding loan is free. “Pre-qualified” simply means providing basic information about your finances to the lender so they can tell you how much money you can expect to borrow. Most lenders only need a “soft pull” of your credit. (A soft pull doesn’t affect your credit score)

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(-) Wedding Loan Cons

1. Starting your lives together have a lot of unforeseen costs, and your wedding registry probably won’t cover anything. If you plan to start a family or move into a bigger house any time soon, you should consider how a wedding loan will affect your credit report. Taking out a personal loan can affect your ability to borrow money for a house or a car. (Worth noting: Approximately 36% of couples cite financial problems as the reason for their divorce)
2. In addition to interest, loans can come with strings attached, including prepayment penalties and origin fees. Some loans do not allow you to pay them off early — they want to make sure they get all the interest. Before you agree to a loan, go over all the fine print and ask questions about penalties and fees during the application process.

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How Much Money Can I Get with a Wedding Loan?

How much you get depends on a few factors, including your credit score and your income. Technically, you could borrow enough to cover the cost of your entire wedding — personal loans typically tap out at $25,000 to $50,000, depending on the institution.

A better question to ask is: How much money can I pay back over the next few years?

That depends on a couple of factors.

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Can I get a good rate?

To get an idea of what type of loan you can secure, check your credit score — also referred to as your “FICO score.” Many credit card companies offer this bit of information for free. If your credit score is over 700, you may be able to secure a loan at a favorable rate. Less than 700? Consider taking more time to build up your credit before you apply for a wedding loan.

Let’s do the math

• If you have an excellent credit score, you might be able to secure a $15,000 wedding loan with an APR of around 12% with a 4-year term. That means you’re paying nearly $4,000 in interest.
• With a credit score of less than 700, that same loan — $15,000 over 4 years — would have an APR of closer to 23%, meaning you would end up paying $8,000 in total interest.
• Borrowers with credit score in the 400s to 300s will have a much harder time securing a loan at a reasonable rate. There are lenders that specialize in lending to borrowers with poor credit ratings, but these are less likely to offer good rates. If you’re already in debt and paying off hefty student loans, consider if adding another few hundred dollars of monthly payments is worth the cost of an Instagrammable venue or a show-stopping dress. (Also, please don’t do anything because of Instagram. Ever)

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What Are Other Ways to Cover Wedding Costs?

Long engagements aren’t a bad thing. Consider setting aside money in a high-yield savings account. These types of accounts often come with the option to organize your savings into “buckets,” allowing you to ear-mark your savings for wedding wish-list items like wedding dress, caterer, and venue.

With micro and backyard weddings on the rise, no one will be surprised if you don’t invite every single member of your extended family. Cutting down on the number of invites is one of the easiest ways to save on major expenses like venue size, catering, and the bar.

And while you save, you can follow a few basic tips to improve your credit. Pay your student loans on time and build your credit history by paying off your credit card balance in full every month.

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Am I Making the Right Choice?

Finances are extremely personal. While most financial advisors would agree that it’s better to wait and save for the wedding they want, couples don’t always have a lot of time to plan. Only you know how much your wedding is worth to you. Long-term thinking is essential when you make the decision. In ten years, will you care if there was an open bar or a live band?

If paying interest on a loan feels better than compromising on your wedding celebration, then use the financial tools available to make a plan that works for you.