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As we entered Amy Billimoria’s House of Design in Juhu, Mumbai, we knew we were not in Kansas anymore. The store exudes a happy feeling. From the décor of the store to the clothes housed within it, we could tell that this was going to be a departure from a traditional bridal makeover.

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We met at a common friend’s wedding in Lonavla, after which we started meeting almost twice a week with friends. We got along like a house on fire; it felt so comfortable talking to each other, it was like we were long lost friends. The initial courtship felt more like a game of hide and seek. We didn’t want to tell people yet as we were still getting to know each other.

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28 Jun

What to keep in mind before availing a wedding loan

While shouldering wedding expenses may drive you to take a loan, here are some vital aspects to consider before you decide to borrow 

In the loan run 

Indian weddings can be an extravagant affair. While a number of parents offer to fund their children’s wedding expenses, millennial couples are bucking this trend by choosing to pay for their own wedding. Prashant Bhosale, CEO, Incred, informs, “Indian millennials, who constitute the majority of the population, drive the credit demand by a huge margin, especially when it comes to paying for their weddings. This has also been facilitated by the rise in the number of Non-Banking Financial Companies (NBFCs) offering personal loans for weddings, making it easier for millennials.” Bhosale supports this observation with the following facts, “Between 2019 and 2020, a large number of Indian millennials availed personal loans for their weddings; 42 per cent of these borrowers comprised women while 58 per cent were men. In 2019, there was a 46 per cent increase in personal loans for weddings in metro cities and an 18 per cent rise in smaller towns as compared to 2018.” What’s more, Bhosale is sure that this number is only set to rise in the future.  

Should you take the loan-some road? 

Whether or not one should avail a loan is subjective and depends on the borrower’s financial wherewithal. Bhosale says, “One must be calculative while availing a loan and consider various factors that will impact their financial health. If they are financially stable and have a steady income, one can always take a loan, provided the EMIs are within their repaying capacity.” Breaking it down in simple terms, financial planner Charul Shah explains, “A loan implies that you don’t have the necessary money to cover your wedding expenses. Above all, you need to communicate with your partner your decision to take a loan, and assess how it will affect your financial well-being. It’s important to understand if both of you are ready to deal with the financial burden.”  

Factor this 

It’s imperative to bear in mind a few things before you consider availing a personal loan for your wedding. Bhosale says, “Consider your income, job security, interest rates, fees, tenure of the loan and pre-payment penalties while availing a loan. Additionally, being aware of all the terms and conditions will help you better evaluate your overall expenditure.” The most important factor is the ability to repay your loan. Shah adds, “You need to create a budget and stick to it. The loan has to be of a short tenure (two to three years), especially if you want to fulfil other goals like buying a home, starting a family, financing their education, etc. If planned in advance, you can compare different market lenders for the lowest interest rate and flexible payment terms.” 

How much is too much   

To determine the loan amount, it’s vital to plan beforehand to evaluate various factors. Bhosale explains, “Map out the wedding, the number of days involved, and track expenses for items like venue, clothes, gifts and jewellery. Match the EMIs with your monthly income, and then consider the loan options available as per your credit score. In case you are planning to move from your current workplace, you must consider this while trying to determine the amount.” 

Go your loan way 

Bhosale says, “Generally, for wedding loans, the monthly income criterion is Rs 15,000, although some banks and NBFCs require a minimum income of Rs 25,000. Both salaried employees and self-employed professionals are eligible to avail a wedding loan. However, salaried employees are required to have two years’ work experience, whereas self-employed professionals must have one year work experience. One of the most important aspects is your credit score. A majority of lenders require the credit score to be in the range of 700-900. Maintaining a good credit score will make it much easier to avail a loan.” 

Tips to maintain a healthy credit score: 

  • Pay your credit card bills and EMIs (home loans, car loans, other loans) on time. Prioritising is key.  
  • Set up auto payments.  
  • Avoid using your credit cards for emergencies—this is a perfect debt trap. Plan your investments to set up a contingency fund during emergencies. 
  • Check your credit score annually, to avoid any unpleasant surprises. Even a nominal pending amount will reflect as a default, thus affecting your overall credit score. 

–Inputs from certified financial planner Charul Shah

Photos Courtesy: iStock

Irene Fernandes / [email protected]
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