Indian weddings are often known to be extravagant affairs with celebrations continuing for days. Apart from traditional rituals and customs, singing, dancing, decoration, and lavish parties are norms to make the event a memorable affair.
However, as exciting and interesting as it sounds, organizing a wedding comes at a hefty cost and in most cases, can overshoot the pre-decided budget, which one may not have budgeted for. This is where a marriage loan can help you.
What is a Marriage Loan?
A marriage loan or a wedding loan is a type of personal loan that can be availed of to meet the expenses related to wedding arrangements - whether it is for self or for one’s children. There is no end-usage restriction on the loan amount, meaning the loan amount can be used for any purpose, whether it is buying jewelry, planning the honeymoon, funding wedding arrangements, or purchasing home appliances for the newly wedded couple.
However, before applying for a wedding loan, you need to keep the following five things in mind:
- Do not Borrow More than what is Required
Although you can avail of the maximum limit offered in a personal loan for a marriage loan, it is not advisable. You should go through the wedding budget meticulously to understand your expenses and find out your actual loan requirement.
Never borrow more than what is required as it may hurt your finances and get trapped in a long EMI payment cycle.
Use the personal loan eligibility calculator to determine your loan eligibility and the maximum amount you can borrow. This will help you to plan your loan better. If you need a higher amount, try paying off existing debts, or add a close family member with a good credit score and stable income as a co-applicant.
- Plan your EMIs to Improve your Loan Eligibility Chances
While considering a personal loan application, lenders ensure the total EMI payments (including all loans) of the borrower don’t cross 60%-70% of the monthly income. If it exceeds, the lender is most likely to reject the marriage loan application.
Use the personal loan EMI calculator to plan your EMIs. Ensure your existing debts are less than 30% of your monthly income before applying for a wedding loan, to get the loan at the best terms.
- Check out your Credit Score before Applying
Lenders usually look for a good credit score of 750 and above for approving a personal loan. If you have a high credit score and a low debt-to-income ratio, you can get the best deal and good terms & conditions on your marriage loan.
However, if you have a low credit score, you should take steps to improve your credit score first before applying for a marriage loan. Applying for a personal loan and not being approved by the lender will do more damage to your credit score and thereby, your ability to borrow.
- Check out the Foreclosure charges
Before applying for a marriage loan, you should be aware of all types of charges and penalties that may arise. For example, the processing fees, penalty on late payment/default, prepayment penalty, etc.
Also, check whether your lender allows prepayment of the loan. Most lenders, including SMFG India Credit, do not allow part prepayments on personal loans.
- Do your Research
Do your research thoroughly before applying. Choose a lender that is reputed, verified, and whose eligibility criteria match your profile. Before signing the loan agreement, ensure that you understand the terms and conditions of the loan such as the tenure, the annual interest rate, the repayment schedule, and so on.
Documents Required for Availing Marriage Loan
To avail of a marriage loan, you can refer to the lender’s documents required for a personal loan. The following are the primary documents required to avail of a marriage loan
- PAN & ID proof
- Proof-of-Residence reflecting your current address (Aadhaar, Driving license, passport, Utility bills)
- Income Proof (Form 16, last three months' salary slip)
- Last 6 months' bank statement
- Proof of employment & employment address
Self-employed professionals need to furnish relevant financial documents related to their business.
Marriage is a very special event in one’s life as it marks the new beginning of relationships and companionship. You should always try to strike a fine balance between finances and celebrations so that you don’t feel financially unstable at any moment after the marriage.
You should keep a strict watch on expenses at all times and don’t overspend on any event. And, ensure you repay the loan within the loan tenure. Always pay your EMIs on time and in full, to avoid debt traps, penalty charges, and reduction of credit score.