A Comprehensive Guide to Avail of a Marriage Loan in India

December 9, 2021 Mutual Fund

Marriage is the beginning of a new family. It is a bond and commitment between two souls, as well their families. Since marriage is a once in a lifetime event, many couples and their families try to make it a grand and memorable experience. It involves expensive affairs, customs and rituals. In fact, Indians love to go big when it comes to celebrations, especially marriage, which often cost big money. However, the cost of the venue, caterers, camera man & videographer, clothing, makeup artist, choreographers, jewellery, reception, decoration etc. probably becomes too high and expensive when you actually start planning for the wedding. So, to host the dream event you require sufficient funds to organise everything smoothly.

An average Indian wedding can cost anywhere between Rs 8 Lakhs to Rs 50 Lakhs. But, if you wish to throw a lavish wedding party, oh-so-gorgeous ring, mouth-watering cuisines, and wear an Armani suit or a Sabyasachi Lehenga, then the wedding expenses can pinch a big hole in your pocket. It might become difficult for you to arrange for the funds if you do not have sufficient savings specifically done for the big day. In such a case, a Marriage Loan can help you cover all the expenses of your dream wedding and can resolve all your wedding related financial woes.

Before you apply for a Marriage Loan, it is advisable to know all the important aspects related to such loans.

What is a Marriage Loan?

A Marriage Loan or a Wedding Loan is nothing but a personal loan that can be availed to cover the cost of a wedding expense, honeymoon, as well as the expenses to start a new family, such as furniture, home appliances, etc. In the last few years, many banks and Non-Banking Financial Companies (NBFCs) have introduced special loans called ‘Marriage Loans’, which can cover all the expenses associated with the wedding. It is an unsecured loan offered by almost every bank in the country, which helps the applicant in managing the wedding expenses, whether it is his own or someone in the family.

Here are some of the features and benefits of taking a Marriage Loan:

• A marriage loan is a type of unsecured loan. So, the biggest advantage here is, you do not have to pledge any asset to avail of a marriage loan as you would otherwise do for any other loan.

• Since it is an unsecured loan, the rate of interest is comparatively higher than other secured loans, such as home loans, car loans, etc. The rate of interest ranges from 10% p.a. to 25% p.a., depending on the lender.

• You can get up to Rs 25 Lakhs of marriage loan based on your credit history and credit score.

• The loan tenure for marriage loans is usually between three to five years. However, some banks and NBFCs can extend it up to seven years.

• You can negotiate for a better rate of interest if your credit history is sound and your credit score is high.

• The processing fee for a marriage loan ranges from 1% to 3% of the loan amount. However, if you are a long-time customer of the bank/NBFC and have a good credit history with them, then you can negotiate on the processing fee.

• If you are expecting any funds in the near future and planning to repay the loan earlier, you should consider the foreclosure and prepayment charges of the lender. The foreclosure charges for marriage loans are usually between 2% to 5%, which can make a big difference when the dues are high.

• You can apply for a marriage loan online, from the comfort of your home and avail the loan amount quickly.

What is the eligibility criteria for a Marriage Loan?

Since a marriage loan is an unsecured loan, lenders do not ask for many documents. The eligibility criteria for a Marriage Loan may vary from lender to lender. However, the general requirements are as given below:

• You should be an Indian resident.

• Your age should be in between 21 to 60 years.

• You should have a steady income.

The lender usually asks for the following documents to avail the Marriage Loan:

• Identity proof – PAN Card, AADHAR Card, Passport, etc.

• Address Proof – AADHAR Card, Voter ID, Passport, Driving License, Electricity Bill, etc.

• Income Proof

  – For Salaried Applicants:

  ✓ Last 3 to 6 months salary slips

  – For Self-employed Applicants:

  ✓ Latest Income Tax Returns (ITR) along with Computation of Income

  ✓ Last two years Balance Sheet and Profit and Loss Statement certified by a Charted Accountant

How to ensure that your Marriage Loan is quickly approved?

Although availing of a marriage loan seems easy, there could be many eligibility requirements, terms and conditions that the lenders do not disclose upfront. This can result in loan application rejection or delay in loan processing. By following these tips you can cut out all the possible delays and get your Marriage Loan application approved quickly:

• Opting for a loan through online mode is the fastest yet secured way to avail of a Marriage Loan. Once you apply by providing all the required information and uploading the required documents, you will get a confirmation message from the lender. After verification of your profile and documents, the lender will approve or reject the loan application. A significant advantage is that you can get all the loan application updates through emails and/or through messages. The loan approval process typically takes one week time after you have submitted all the required documents. Once the loan gets approved, the disbursement can take another 1-2 days.

• Since a marriage loan has similar features to a personal loan, it is advisable to check with your existing bank for personal loan offers before searching anywhere else. Many banks nowadays offer pre-approved and pre-qualified personal loans based on your credit history and banking relationship. If you apply using such online pre-approved offers, you may get the personal loan amount disbursed in your account within a few minutes!

• A credit score represents your creditworthiness. Generally, a credit score above 700 is considered good, but having a credit score above 750 can be an added advantage in faster approval of an unsecured loan. Hence, to get your marriage loan approved, you must have a good credit score.

• It is advised that you check your credit score before applying for a marriage loan. There can be a possibility that you missed out on a couple of credit card payments or EMIs on due dates and paid it a day or two later. Although such delays in payments are unintentional, they can affect your credit score. Moreover, a credit score can have errors or mistakes which can lead to a loan rejection. Having a credit score beforehand can help you fix the score before applying for a marriage loan.

• While checking your repayment capacity, lenders check if you are maintaining a good Average Monthly Balance. Banks calculate your Average Monthly Balance by adding the daily closing balance of all days in a month and dividing it by the number of days in a month. Therefore, if you maintain an overall good balance, banks/NBFCs consider lending you because it shows you have a good repayment capacity.

• Many people usually apply for loans with multiple banks and NBFCs in order to increase their chances of getting a loan as soon as possible. However, the lenders can notice that you have applied with numerous lenders, which might give them an idea that you are in a financial crunch and hence, you are in a desperate position to avail of a loan. In such a scenario, it is possible that the lenders may avoid providing you with a credit facility. Moreover, multiple applications of loans may result in multiple rejections, which may have an adverse impact on your credit score.

• Different lenders have different eligibility criteria. Although they all offer the same product, the features, benefits, rate of interest and other charges, can have a substantial difference. Therefore, before directly applying for a marriage loan with any lender, you should do proper research and compare the features and benefits offered by different lenders.

• Providing accurate personal and income details will not only increase the chances of loan approval but will also make the entire process smooth and hassle-free.

• Applying for a higher credit limit than what you can repay leads to a loan application rejection. As you do not have to provide any security while availing a marriage loan, you should only consider your income sources and apply only for an easily manageable amount that you will be able to repay. While assessing your credit repayment capacity, you should consider all the fixed and variable expenses, the possibility of any increased expenses, and your current dues.

• Make sure you have all the required documents ready, before applying for a marriage loan. Since it is an unsecured loan, lenders do not ask for many documents. However, you should check the lender's official website or ask the bank/NBFC representative to provide you with the list of required documents. Keeping all the documents handy will save your loan processing time. 

Should you consider taking a Marriage Loan?

You should consider taking a Marriage Loan if you are planning for your wedding and are currently short of funds. However, make sure you opt for the amount that you can easily repay in the near future, as opting for a higher amount and not being able to timely repay it can create financial stress and might damage your credit score. Furthermore, before availing of a marriage loan, you should do proper research and compare different lenders and their loan features to get the best deal for you. If the rate of interest offered on a marriage loan is too high, then you can check for other types of loans, such as a personal loan or even a secured loan like Loan Against Property, which can be used to meet the wedding expenses. Opting for a loan that has a lower rate of interest can save a substantial interest outgo.

This article first appeared on PersonalFN here