Though marriage expenses vary from people to people, most weddings overshoot the planned budget. These loans are designed to finance marriage expenses.
With an increase in choices for almost everything, now you also get to choose what type of loan you want and what suits you the best. Unlike earlier times when only one type of loan – ie., personal loan – was available for consumers to cater to their needs, now for everything a different type of loan is available. One such loan is the wedding or marriage loan. Marriages here in India are celebrated like nowhere else in the world. Though marriage expenses vary from people to people, most weddings overshoot the planned budget. These loans are designed to finance marriage expenses.
Most banks and various P2P lenders have started offering wedding loans which can be utilized to meet one’s wedding expenses. For instance, SBI Saral Personal Loan, Axis Bank Wedding Loan, ICICI Bank Personal Loan for Weddings, HDFC Personal Lifestyle Loan, Tata Capital Wedding Loan, and PNB Personal Loan. These unsecured loans also come with the option of flexible EMI and generally no prepayment charges are applied. Loans of up to Rs 20 lakh is offered for both salaried and self-employed customers. The interest rate of these loans generally range from 10.75 to 19 per cent and come with a tenure of 1 to 5 years.
5 key factors to keep in mind while opting for a wedding loan:
One should plan one’s wedding budget meticulously and estimate one’s loan requirement before opting for a loan. A borrower should also stick to his budget and should borrow only what is required. Compare your estimated loan requirement with the loan EMIs you can pay off comfortably and accordingly adjust the loan amount.
Banks consider the borrower’s monthly income while calculating their loan eligibility along with the rate of interest and loan tenure. Excluding all other EMIs, normally the EMI on an unsecured personal loan is limited to 35 – 40 per cent of one’s take-home salary. Experts say if you are paying other EMIs, you should get rid of that before applying for another loan.
One should take stock of their existing savings and monthly income to estimate the amount of EMIs that one can comfortably pay off. One should not go overboard with one’s EMIs. Industry experts suggest an individual’s total EMI on all loans should not exceed 40 per cent of their net income.
The bank calculates the rate of interest depending on factors such as the borrower’s monthly income after deducting their fixed obligations and other EMIs, their credit history and credit score. Banks normally look for a credit score of 750 and above for approving a personal loan. Hence, experts suggest one should maintain a good credit score before applying for a loan. The profession of the borrower also plays a role as loans for salaried customers comes at a lower rate than that of self-employed professionals.
Before zeroing down on a loan, always compare offers from multiple banks to get the best offer. Some banks that do not offer separate wedding loan schemes, depending on the consumer they also extend personal loans at attractive rates for a wedding. You can save a lot on the interest paid, along with processing fees and other charges by carefully comparing and choosing the loan scheme.