Can a marriage loan help save your wedding?
Add to it costs that pile up after the wedding, like honeymoon , home renovation, buying consumer good articles, etc.
Most people want a dream wedding. However, care has to be taken to ensure that this dream does not turn into a financial nightmare.
With the advent of wedding planners, theme marriages and rituals panning weeks, it is easy to overspend. Availability of lending options also cloud judgments in favour of that big fat Indian wedding.
Suresh Sadagopan, Founder, Ladder7, a Financial Advisor firm, says, "Marriage expenses must be kept at a pragmatic level."
His caution is not without precedence as Tata Capital, in a research, pointed out spending on one's wedding more often than not exceeds the initial budget by at least 30%.
According to a DNA report, that quoted SKV Srinivasan, executive director, retail, IDBI Bank, saying that the wedding loan market in Mumbai alone is estimated to be around Rs 500 crore to Rs 700 crore.
Add to it costs that pile up after the wedding, like honeymoon, home renovation, buying consumer good articles, etc.
Sadagopan says, "A loan amount that can be comfortably repaid in 3-5 years (preferably less) is the rule of thumb I would advocate".
Till now, people opted for personal loans, which generally come at a high-interest rate, to meet wedding expenses. However, market is now flush with financial products like wedding loans.
Financial companies and banks like Tata Capital, Axis Bank, ICICI Bank, IDBI Bank also now provide wedding loans.
Wedding loans are more or less similar to Personal loans. They are generally available at an interest rate 13-18% depending on one's eligibility. "Some banks do have wedding loans. Many banks just have personal loans only which one can take for a wedding. The eligibility criteria are like income level, other loans being serviced, where one is working, credit score etc. is the same for personal loan/ marriage loan. Based on their assessment they will sanction a loan typically upto Rs 25 lakhs, " Sadogopan said.
As per a report by The Hans India, the State Bank of India (SBI) sanctions about Rs 2000 crore per year towards personal loan, a majority portion of which goes towards marriages.
Sadagopan said that ideally, you should start putting away money as soon as one gets a job. "Then, one gets a headstart of a few years to save for one's wedding. Keeping the wedding simple is the only way to not run into huge debt and spending a lifetime paying it back".