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Weddings in India have transformed into extravagant celebrations, often leading couples to seek significant funding. Wedding season is about to start, and this is the time when people start applying for wedding loans. This requires a well-thought-out decision to recognise and avoid predatory lending. Post-wedding debt can feel daunting, but with a solid strategy, it becomes more manageable.
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Tips for managing wedding debt
Create a debt repayment plan: Outline a clear plan to stay organized and focused for repaying your debts.
Avoid new debt: Hold off on taking new loans or unnecessary expenses until your current debts are managed.
“Create a clear debt repayment plan and avoid taking on new loans until your current debts are managed. For multiple loans, consider the debt snowball method—paying off the smallest debts first for quick wins—or the debt avalanche method, which focuses on high-interest debts to save money over time. Choose the method that best motivates you, whether through small victories or minimizing interest payments,” advises Anand Agrawal, Co-Founder & CPTO of Credgenics.
Choose a repayment method
Consolidate high-interest loans: Consider consolidating your loans to lower monthly payments.
Refinance debts: Look into refinancing to combine debts into a single loan with a lower interest rate for easier management.
“Consolidating high-interest loans can lower your monthly payments. Consider balance transfer credit cards for reduced rates and refinancing your debts into a single loan with a lower interest rate to simplify your finances,” advises Anand Agrawal.
Also Read | Why do people take out a personal loan? 9 key reasons
Set up automatic payments
“Setting up automatic payments can help you avoid missed payments, late fees, and damage to your credit score. This proactive approach keeps you organized and lets you focus on your new life together,” he added.
“Personal loans for weddings are increasingly common in India, where the wedding industry is valued at around $130 billion, making it the second-largest in the world. Many are turning to personal loans to cover costs without depleting savings, a trend particularly popular among millennials who prefer this route over-relying on parental support,” said an expert from CredNow.
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Why one should not take personal loans to fund their marriage
However, personal loans have drawbacks. Many lenders impose high fees, and the monthly payments can be significant, prompting many personal finance experts to advise against them. Personal loans typically have higher interest rates than secured loans, which increases the overall borrowing cost.
While taking a personal loan for a wedding in India may be tempting, it can be a hasty choice. With average costs ranging from ₹20 lakhs to ₹5 crores, many couples may find themselves overwhelmed by debt, especially early in their marriage. Personal loans come with high interest rates (10.5% to 24% per annum) and short repayment terms (1 to 5 years), leading to significant monthly payments that can strain finances. advises Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited.
A Confederation of All India Traders (CAIT) report estimates that India will host 3.5 million weddings between November and mid-December. According to Prabhudas Lilladher’s report, “Band, Baaja, Baarat and Markets,” the industry is projected to generate ₹4.25 lakh crore in spending during this time. This represents a significant increase from last year’s 3.2 million weddings.
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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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