Basics of Marriage Loans in India for Big Fat Shaadi

Wedding is most profound event in everyone’s life. Very rarely do people have enough money to make their dream wedding come true! It’s after all a ‘dream’ wedding! In India, traditionally people used to depend on trusted money lenders to have extra money to make the grand marriage a reality. With families going nuclear and dearth of trusted money lenders, people are now turning to banks for wedding loans to put together a wedding of their choice. In many circumstances it’s the annoying demands of the relatives or ‘elders’ to have some rituals or give away gifts or certain nature which you just can’t say ‘Now’ to, adding to your already heavy shaadi bill.

If you don’t want to pressurize your parents for mounting wedding expense without stressing your ownself, wedding loan is a good way out. We have listed down some basics of marriage loans in India.

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Things to consider before getting a Shaadi loan:

Know your expected expenses before you decide to take a loan. Using the following list draw up a lumsum amount that your wedding will cost. Once you draw that up, carefully calculate how much can you really afford in your existing finances. The balanced amount can be re-evaluated if you really wish to spend that extra money or can you cut corners somewhere? If you can’t then this is probably your marriage loan amount.

  • Blue print of your wedding- how many guests, how many ceremonies, how many dresses, dream venue, food and beverages, return gifts, jewellery, bridal wear, etc. Visualise your wedding.
  • Make a list-One should also jot down personal expenses such as invitations, jewellery and clothing. A short visit to a wedding planner will give you a brief idea about spending.
  • A local wedding at nearest city, food and beverages along with décor, venue rental are going to be major part of the budget. Most conservative estimates brings this down to Rs.5 -25 lakhs.
  • If it is going to be a destination wedding then travel, surface transportation, entertainment and gifting is going to be huge part of the spending along with usual accommodation and food costs.
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Two types of wedding loans in India:

Wedding loans are available for the children of the applicant as well as the applicant himself or herself. The age of the bride and groom must be 18 and 21 respectively.

  • The first type, an unsecured wedding loan is simply a personal loan. The interest rates on this borrowing differs from bank to bank but will be in the range of 13-22% per year in India. The amount of loan also depends upon the repayment capacity, income, assets and eligibility of the borrower. Normally banks allow five year period to repay the amount between Rs.50, 000-15 lakh.
  • Another type, secured loan is granted against the security or immovable property. Each bank has its own scheme or loan program for such wedding loan. Assets like a Life Insurance Corporation of India policy, term deposits and National Savings Certificate can act as mortgage in this process. Value of the collateral decides the amount of loan here. Typically, minimum loan amount is Rs.1 lakh. Maximum loan amount depends on your location.
  • Another lesser known option is financing through credit card’s EMI (equated monthly installments) option. The bank divides bigger expenses into smaller EMIs and one can pay it as per own convenience. But be aware that interest rates are very high in credit card loans.

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 Documents required:

For salaried applicants, you have to submit proof of identity, address proof along with bank statements of last six months. The latest form 16 (income tax returns) along with latest salary slip has to be submitted too along with two passport sized photographs. Identity proof can be anything from passport, driving license or voters’ ID card. A copy of electricity bill, ration card and passport will work as an address proof.

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Self-employed applicants will also have to submit balance sheet, income tax returns with computation of income and P&L account certified by CA. Other documents like copy of partnership deed, proprietorship agreement may require too. Bank charges standard processing fees for each application, which is mostly up to 3% of the loan amount.

Wedding Finances

In India, we never really are taught about managing your wedding finances. The expenses just go on adding! While you are considering to have a wedding loan, you must also educate yourself about wedding insurance in India. With weather becoming unpredictable and unforeseen reasons causing delays in the marriage, having an insurance is a good idea.

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