 "How Gen Zs, millennials are funding dream weddings for social media 'likes'")
The wedding industry in India is evolving, with more millennials opting to finance their weddings to avoid placing a financial burden on their families. Though thoughtful, this choice is most practical when couples have saved in advance; otherwise, they may need to consider taking out loans.
To meet the rising costs of weddings, many couples are opting for personal loans specifically designed for wedding expenses. The trend towards wedding loans is fuelled by a desire for ‘personalised experiences, unique settings, and destination or themed weddings’, often driven by social media influence and the pursuit of ‘likes’ on social media.
Data from the IndiaLends Wedding Spends Report 2.0 shows that about 26 per cent of self-funding brides and grooms consider taking out personal loans, with 68 per cent of those planning to borrow between Rs 1 lakh and Rs 5 lakh. The survey, conducted in October–November 2023, involved 1,200 millennial participants.
Factors driving wedding loan demand
The ‘Destination I Do’ survey by Skyscanner highlights the growing popularity of destination weddings in India, especially among Gen Z and millennials. According to this July 2024 survey of 2,000 Indian respondents, 85 per cent were either planning or had experienced a destination wedding.
A report by Moneycontrol quoted Krishan Mishra, CEO of FPSB India, as saying that destination weddings come with added costs, such as transporting guests, hiring planners, and arranging luxury accommodations, which often make wedding loans necessary.
Gaurav Chopra, founder and CEO of IndiaLends, said that flexible loan options and quick approvals make wedding loans appealing for financially independent couples.
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Eligibility criteria
Banks, non-bank financial companies, and fintechs treat wedding loans as personal loans with similar eligibility standards.
The Moneycontrol report quoted Chopra saying that to qualify, borrowers need a solid credit score, ideally above 730, to show responsible credit management. Proof of steady income and a clean repayment history over the past 1 to 3 years is also essential.
Important loan terms
Before committing, borrowers should understand the interest rates, processing fees, prepayment terms, and any additional charges associated with the loan.
Wedding loan interest rates generally range from 9.99 to 24 per cent per year, depending on the borrower’s creditworthiness, loan amount, and tenure, with processing fees around 1 to 4 per cent of the loan. Repayment terms typically range from 12 to 84 months, varying by bank.
For example, the State Bank of India charges a 3 per cent prepayment fee on the outstanding amount, while Tata Capital imposes a 4.5 per cent fee on early loan closure.
Potential pitfalls
The primary downside of wedding loans is the high interest rate, akin to other personal loans. Late payments or defaults may reduce credit scores, complicating future borrowing or resulting in higher interest rates. Additionally, early loan closure may incur substantial fees.