A wedding is a big event and requires a significant amount of funds to tackle these expenses. This undertaking could be challenging. Many consider a wedding loan a method of handling these expenses, such as booking the venue, catering, and other costs. A wedding loan is a type of personal loan that most banks and non-banking financial companies (NBFCs) offer. It does not require you to pledge collateral and can be used for any wedding-related expenses that you may have.
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Monday 31March 2025
Before applying, it is important that you compare loan options. The two major sources for a wedding loan are banks and NBFCs. These lenders have different lending terms. Compare key factors such as eligibility criteria, interest rates, and other loan features. Understanding these differences may help you make a more informed decision.
Features of a Wedding Loan
A wedding loan is a type of personal loan that is meant to cover any wedding-related expenses that you may have. Here are some of its key features:
No Collateral Required
Wedding loans are unsecured loans, which means that you are not required to pledge any asset as collateral.
High-value Loan Amount
Get access to high-value loan amounts based on your monthly income and credit profile.
Flexible Repayment Tenure
Choose a flexible tenure to repay your loan at a comfortable pace.
Interest Rates
Compare interest rates across different banks and NBFCs to find one that suits your budget.
Quick Disbursal
Once your loan application is approved, you can expect the loan amount to be disbursed within 72 hours.
Minimal Documentation
Lenders usually ask for minimal documentation, such as income, identification, and address proof, making the process smooth and convenient.
Prepayment and Foreclosure
Choose to either prepay or foreclose your loan before the completion of your tenure; however, this may attract a prepayment fee.
Things to Consider Before Applying for a Wedding Loan
A wedding loan can be a huge financial undertaking, hence it is important to consider the following factors before applying:
Check Your Credit Score
A good credit score can help improve your eligibility for a wedding loan and even help secure a lower interest rate. Lenders usually look for a borrower with a CIBIL score of 700 or higher.
Compare Interest Rates
Personal loan interest rates vary from one lender to another. It is important to compare the interest rates being offered before finalising a loan.
Assess Your Repayment Capacity
Borrow an amount that you are comfortable repaying. Choose a tenure that makes your monthly instalments manageable.
Review Processing Fees and Charges
Other than the interest rate, consider the applicable fees and charges, such as processing fees, late payment charges, and prepayment charges. Knowing these costs and any hidden fees is necessary as they can increase the overall cost of borrowing.
Read Loan Terms Carefully
Before signing your loan agreement, it is important that you read the terms and conditions carefully. Understand the details of your loan, such as repayment structure, applicable penalties, interest rates charged, and other relevant details.
Advantages of Choosing a Bank for a Wedding Loan
Here are some of the key advantages of choosing a bank for a wedding loan:
Lower Interest Rates
Banks generally offer lower personal loan interest rates compared to NBFCs. This makes personal loans from a bank a cost-effective choice.
Wider Range of Services
Along with a personal loan, banks generally offer a wider range of financial services and products. This includes insurance, savings accounts, and other investment options.
Regulated
Banks are strictly regulated by the Reserve Bank of India (RBI). This ensures trust and a high level of security for your financial transactions.
Advantages of Choosing an NBFC for a Wedding Loan
If you were to choose an NBFC for a wedding loan, then here are the key advantages that you can expect:
Quicker Processing
NBFCs are known for their quick approval and loan disbursal. This is ideal for those who are in need of funds urgently.
Flexible Lending Terms
NBFCs are generally not as strict as banks when it comes to their lending terms. Flexible lending terms allow them to cater to a broader range of customers, including those with a moderate or low credit score.
Wide Range of Products
Even in the case of NBFCs, you can expect a wide range of products and services. This includes small business loans, education loans, travel loans, pocket insurance, and more.
Key Differences Between Wedding Loans from Banks and NBFCs
Choosing between a bank or an NBFC for a wedding loan depends on multiple factors. Here are the key differences that you must consider:
| Features | Banks | NBFCs |
| Interest Rates | Banks generally offer a lower interest rate | NBFCs generally offer loans at a higher interest rate |
| Loan Amount | Higher loan amounts depending on income and creditworthiness | Flexible loan amounts |
| Eligibility Criteria | Strict eligibility criteria | More relaxed and flexible eligibility criteria |
| Approval Time | Longer time to approve due to strict eligibility criteria | Quicker approvals due to flexible eligibility criteria |
| Disbursal Time | May take a few days from the time of approval | Often within 24–48 hours of getting approved |
How to Choose Between a Bank or NBFC
If you are stuck between choosing either a bank or an NBFC for a wedding loan, then here are some factors that you should take into consideration:
- If a lower personal loan interest rate is important to you, then a loan from a bank may be a more suitable option
- In case you need urgent financial assistance, then an NBFC can offer you funds quickly
- If you have a lower credit score, then apply for a wedding loan with an NBFC because they have a more relaxed eligibility criterion
- If you need a large loan amount and a longer tenure, then a bank may be a more suitable option since banks offer favourable lending terms
