There have been various such instances where people going to take the vow, finance their wedding. If the reports are to be believed then a marriage can even cost as high as $27,800. So, it is obvious that the two families may have to obtain a wedding loan. If you haven’t ever heard about wedding loans before this, you must be wondering as to what are wedding loans and if these at all exist. A wedding loan is nothing but a personal loan.
ABCs of wedding bad credit loans
In some cases, couples use credit cards for managing the cost of the wedding. However, debts incurred through credit cards can be hard to pay off. In general, the interest rates on credit cards are high and therefore, it becomes hard to become debt free soon. It is therefore, better to obtain bad credit loans which would help you two to manage the cost of the wedding. In order to obtain a wedding loan which is no different than a personal loan, you will be required to:
- Determine the cost of your wedding – In order to obtain a loan for your wedding, you will first be required to determine the total cost of your wedding, along with the cost of honeymoon. Based on the cost, you will have to apply for the wedding loan.
- Determine the level of your affordability – You need to determine the level of your affordability. This is extremely important because, if you are already planning to make use of the money from savings, you would not like to borrow any extra money which would be hard to pay back. Therefore, it would be important for you to find out your affordability and apply for a wedding loan likewise.
- Shop for the loans available – You will have to start shopping for the available loans. The process is same as that of other loans. If you shop, you will be able to find better offers through comparison. So, you will not only be required to shop online and offline, but you will also be required to look for a comparison tool or a loan calculator. Most of the loan calculators are available for free and it becomes easier for you to compare different offers.
- Check with your credit score and reports – You need to check as to the situation that your credit score is in and your credit reports. Credit reports contain all of the financial details starting from your address, number of debts, credit cards, the debt amounts, the payments made and more. So, if you check the credit report, you may be able to do away with any wrong listings and may be know how to improve the credit score. It is extremely important for you to have a good credit score, in order to obtain a really affordable offers, with regards to the wedding loans.
The above factors are very important for you to consider before you can go on to obtain a loan for your wedding.
Even a single misstep can result in bad credit. Credit is such a fragile thing, that you need to take utmost care to preserve or maintain it. If you incur too many debts and if you miss payments, it is going to have a negative effect on your credit history. These debts are going to show up on your credit reports. Similarly, the missed payments too are going to show up on your credit reports. However, the question remains as to why is it risky to have a bad credit history?
Bad credit history and its effect
In order to understand the risks associated with bad credit history, you will have to make sure that you are aware of what a bad credit history is. A bad credit history is when there are too many unpaid debts listed on your credit report. Furthermore, if you have too many negative listings like that of missed payments, lawsuits, liens against your name, it is considered bad for your credit. If you had filed bankruptcy, that too is considered bad for your credit.
Effect on bad credit history on your finances and the risks involved:
- When you have bad credit history, it results in lowered credit score. Lowered credit score is not at all good for your credit and thus you finances too. It is extremely important to keep your finances in shape, so that you can go on to buy a home as per your needs and affordability, so that you can obtain a new job and more.
- The main risk involved with bad credit is that it becomes hard for you to obtain new credit. May it be a car loan, or a personal loan, may it be a new credit card or a home loan, it becomes almost impossible to obtain the same. When you apply for new credit, lenders and creditors check your credit history. If you have bad credit history, they can reject your credit application. Although, there is the option to obtain installment loans for bad credit, it is highly risky. This is because, if you have bad credit the lender is going to charge a high rate of interest.
Why is high interest rate risky?
High interest rate credit cards and loans are risky because, it becomes hard for you to maintain payments on the same. When you make the payments, it gets divided between payment towards the principal amount borrowed and the payment towards the interest. So, if the interest rate is too high, you will be required to make more and larger payments. Otherwise, it is going to take long time before you can actually pay it off.
You may also start missing payments on your credit cards or installment loans for bad credit, which have high interest rates. As a result, your debt level spirals out of control. You end up defaulting on more number of debts. This again has a double negative effect on your already bad credit. and it takes time and patience o get your credit back on track.