By Prithvi Chandrasekhar, President – Risk & Analytics, InCred
Would you like to have a professional photographer at your wedding? Would you like a designer to create a unique invitation for your big day? Would you like to get a really good karaoke machine for the sangeet? Thank your guests for coming with thoughtful, personalised gifts? Wind down after the event with a honeymoon in Switzerland?
Might be nice. For a once in a lifetime experience. Weddings should be memorable.
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Wedding is expensive
But making a wedding memorable can turn out to be expensive, especially in these inflationary times. Managing wedding expenses can put a lot of needless pressure on the happy couple’s parents. So, what is becoming increasingly common is that well-employed youngsters are taking out personal loans to finance their own weddings and honeymoons.
This is a new social norm. I didn’t pay for my own wedding. My wife and I didn’t really plan the guest experience. Our parents took care of the expenses. We still have very little idea of what the event cost, or how it was financed. So, the idea of taking a loan to pay for a wedding can feel alien to my generation. But the world has changed for the better.
Twenty years ago, none of our friends or peers in their twenties had jobs that paid well enough to even consider funding their own weddings. With young professionals now earning good money in their twenties, taking a loan against that income to pay for a wedding is no different from buying gifts on a credit card, buying a first car on hire purchase, or taking out a mortgage on a first home. Internationally, it is very much the norm for people in their twenties and thirties to build up debt, which they retire through their forties and fifties.
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Managing wedding loan
Managing a wedding loan responsibly is about good credit habits that are common to all sorts of debt. Plan your expenses, make sure you can afford the loan EMIs, read the terms and conditions to make sure you understand the fees and charges that come with the loan, retire debt early. And don’t miss payments. A few accidental missed payments can result in negative reports being sent to credit bureaus, and a negative spiral of a declining credit score and higher interest rates. The easiest way to avoid missing payments is to automate repayments; this is easily done nowadays with instruments like an e-NACH and the recently introduced UPI Autopay.
Finally, and most importantly, enjoy the event. Don’t get so caught up in shopping for loans, or for other wedding stuff, that you miss the moment. Your wedding memories are priceless. For everything else, a personal loan is a lot cheaper than spending on your MasterCard.