Are you all set to exchange your solemn wedding vows with the person you love the most? Congratulations! But, if you’re still unsure as to how you’ll manage the expenses for the big day, let’s assure you by saying that a wedding loan can easily solve your problem. A wedding loan is nothing but an unsecured personal loan that you use specifically to bankroll your wedding. In Singapore, you can use different types of personal loans or approach any one of the many reliable lenders for extra cash.
A thorough research and some basic considerations can help you narrow down your options and choose the most suitable loan for your wedding.
Things to Consider Before You Get Started With Your Wedding Planning
- Budget: A wedding in Singapore can cost anywhere between S$35,000 and S$50,000. Start planning for one considering S$45,000 as the median. Know the most important expenses that you would like to get covered with a loan. Your wedding banquet, catering, bridal package and the engagement ring are the expenses that are usually considered to be non-negotiable. You can then start focusing on the other arrangements like flowers, decorations, and entertainment and see if you could reduce the expenses related to them, you could ask your friends to help with the arrangements rather than hiring professionals, or shop around to get the best deals. Once you know your budget, you’ll know how much you need to borrow.
- Your annual income: Most lenders set a minimum annual income criteria of S$30,000 ( some set it at S$20,000). You can’t apply for a loan if you don’t meet this requirement. Depending on your annual income, you may be lent up to 4-8 times your monthly income. DBS offers a loan up to 10 times your monthly income if you earn S$120,000 or above per year.
- Credit score: Securing a loan for your wedding won’t be easy if you don’t have a good credit score. Before you apply for a loan, get your latest credit report from one of the CBS offices for a fee of S$6.42. This will help you understand what your current credit profiling and risk rating is. If your spouse has a better credit score and satisfies the TDSR requirement comfortably, you might encourage them to apply for the loan.
- TDSR: The government of Singapore has created a framework under which a borrower can’t borrow any amount exceeding 60% of their gross monthly income. If you want to move in with your spouse in your own flat or condominium after marriage, and want to apply for a home loan, you’ll have to ensure that your wedding loan doesn’t disqualify you on the grounds of the TDSR requirement.
- Co-signer: If you don’t have a good credit score or if you need to borrow more than your lender is willing to lend, you may start looking for a co-signer or guarantor for your loan. However, you need to be extremely careful because if you default, the co-signer of your loan application may get into trouble. Ideally, your co-signer should have a good credit score. To ensure that everyone involved is on board, discuss the right repayment plan and tenure with your fiance and the co-signer before locking it.
- Type of loan: Instead of applying for a loan, you could also use a purchase payment plan arrangement available on most credit cards in Singapore or opt for in-store credit facilities, especially for expensive items like your engagement ring or bridal attire. Some of these credit facilities come with special features like interest-free periods, low interest during a promotional period, and flexible instalment payments. However, you should be careful with 0% interest loans. If you fail to repay the dues within time, not only will you see a sudden drop in your credit score but also a much higher debt burden because higher interest rates and penalty charges will be levied. Talk to all the stakeholders carefully before deciding whether you should apply for an all-purpose wedding loan or in-store credit facility.
- The best deals: While looking for a low advertised rate of interest is important, it is not the only parameter that you should base your decision upon. In fact, the effective interest rate (EIR) gives you a better idea of the cost of borrowing since it not only takes the compounding effect of the loan into consideration but also the various administrative fees such as processing fees, annual fees, fee for change of loan tenure, and early repayment that add to the overall cost of borrowing. Do your research thoroughly and shop around to look for promotional offers and flexible terms. Make sure that you have carefully analysed all the clauses related to a special offer before you apply. Check our website for the best promotional deals and loan products available in the market.
- Loan amount: Before you apply for a personal loan to fund your wedding, you need to decide the amount you want to borrow. As discussed before, lenders in Singapore usually allow you to borrow up to 4-8 times your monthly income. However, you’ll have to do a detailed financial budgeting before you decide on the amount you can afford to borrow. Check your monthly cash flow – inflows and expenses. Remember, that after you move in with your spouse, if you haven’t already, there could be a change in your monthly cash flow. Don’t forget to account for that change when you apply for a loan.
- Minimum borrowing amount: Most traditional lenders have a minimum loan amount for their products. This can vary from S$500 to S$1,000, generally. You can’t borrow lower than this amount. If you need to borrow less than this, turn to your family or friends for help. You might also approach a registered money lender although your cost of interest could be higher. However, it shouldn’t be a major concern if you aren’t borrowing a big amount.
How Marriage Preparation Programmes Can Help?
The Ministry of Social and Family Development (MSF) organises and arranges marriage preparation programmes, through its network of registered partners, for newly-weds and soon-to-weds. These programmes not only teach couples how to communicate more effectively but also to improve the other aspects of one’s conjugal life.Important money matters are also discussed in details. Joining such a programme could help you and your spouse understand how to save more money, how to choose the right debt instruments and investment products, and how to make a marriage work. Check the official MSF website for more information.
How to Reduce Costs for Your Wedding
Here are some of the easiest ways to downsize costs for your wedding:
- Don’t hire a professional photographer. Ask your friends instead.
- Don’t have a full bar.
- Serve hors de oeuvre and a light meal instead of a gala dinner party.
- Do your own wedding decoration and planning instead of hiring an event management company.
- For entertainment, ask your friends and family to prepare programmes based on their talents and preferences instead of hiring a wedding band.
A loan alone won’t be enough to take care of your wedding costs if you don’t plan well in advance. Don’t hesitate to ask your friends and family members for money-saving suggestions or for help. When you do take a loan, plan not only for the wedding expenses that you can cover with it but also how you plan to repay it within the shortest possible time and with minimal inconvenience.