Payday loans are also called cash advance loans, deferred deposit loans, post-dated check loans, or check advance loans. They are short-term, high-interest loans. People who use these loans tend not to have access to other types of lending, and this is a last resort to get them through to the next paycheck.
Many states consider these loans predatory because of their high interest rates and financing fees. Some states place caps on the fees and interest rates or ban this type of lending completely.
Read on to find out what a payday loan is, how they work, and other options for those who need a short-term loan or cash advance.
Key Points
• Payday loans are short-term, high-interest loans typically for $500 or less.
• Borrowers must be 18 years old, have a checking account, and provide proof of income.
• Loans are repaid on the next payday, usually through direct debit or a post-dated check.
• High interest rates and fees can trap borrowers in a cycle of debt.
• Alternatives to payday loans include credit cards, cash advance loans, TSP loans, and personal loans.
What Is a Payday Loan?
Payday loans, also known as cash advances, are high-interest, short-term loans, typically for $500 or less. They are notorious for having very high interest rates and fees. There are few payday loan requirements, but borrowers typically need to be over 18, have a checking account in good standing, and show that they earn a secure income.
Consumers can find these types of loans through online lenders, apps, and local brick-and-mortar merchants. The loan amount is typically paid back by direct debit once the borrower receives their next paycheck. Alternatively, loans may be secured with a post-dated check.
How Does a Payday Loan Work?
Consumers fill out an application with a lender and show proof of identity, a recent pay stub, and a bank account number if required.
Borrowers have to secure the loan with a post-dated check or agree to have the funds debited from their account when they are paid, usually in two weeks. Loans are usually between $50 and $1,000, and funds are deposited within a day or two. Borrowers can also receive cash.
People with bad credit and access to better financing tend to use these loans to help them get by temporarily. However, payday loan problems are well-known: High interest rates and exorbitant fees can trap someone in spiraling debt if they cannot repay the loan on time.
The Consumer Financial Protection Bureau states, “More than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter.” Borrowers then face even higher financing fees and interest rates compounding their debt load.
Many states place caps on the interest rates and fees charged for payday loans; some states, such as New York, have outlawed them completely.
What Are the Requirements for a Payday Loan?
Most working adults qualify for a payday loan. Here are the most common standards.
Age
Borrowers must be at least 18 years of age.
Proof of Income
Applicants have to show proof of income, such as a pay stub.
Citizenship
Consumers may have to show proof of U.S. citizenship.
Bank Account
Borrowers need to have a bank account that is in good standing.
Payday Loan Interest Rates
Depending on the state, interest rates for payday loans can carry a 400% annual percentage rate (APR) or more.
In states that cap interest rates on payday loans, lenders may instead charge a fee that is a percentage of the amount loaned. Finance charges can be between $15 and $30 for each $100 borrowed.
Payday Loan Amounts
Payday loan amounts are usually $100 to $1,000. In some states, a borrower is allowed only one payday loan at a time. Other states, like Texas and Nevada, offer unlimited payday loans for customers.
Alternatives to a Payday Loan
Rather than take out a high-interest payday loan, there are better options for people in a precarious financial situation.
Credit Cards
If the borrower has a credit score, using a credit card is a safer bet than a payday loan. The average credit card interest rate is around 21%, while payday loan interest can be over 400%. However, if the borrower needs the cash to pay bills such as rent or utilities, that is often not possible with a credit card.
Cash Advance Loans
A cash advance loan puts cash immediately into your bank account. These loans are offered by online lenders, such as Earnin. These companies don’t charge loan financing fees but ask for “tips.” So, a borrower might tip between 5 and 15% of the advance. These apps are often marketed as payroll benefits, and they charge membership and service fees.
TSP Loans
A TSP account is a tax-deferred retirement savings and investment plan that offers Federal employees the same tax advantages as a 401(k) retirement plan. If you have a TSP retirement account, you can take out a loan from that plan without having to pay tax or penalties. However, you must pay the amount back to the account within five years with interest (which will be much lower than the interest on a payday loan).
Personal Loans
For consumers with a good credit score, banks and online lenders offer unsecured or secured personal loans. Unsecured loans are not backed by any collateral and will have a higher interest rate than a secured loan, but not as high as a payday loan.
Unexpected expenses can be paid for with a personal loan and at a lower interest rate. Many people take out personal loans to pay off credit card debt because the interest rate on a personal loan is less than the interest rate paid on their credit card debt. Getting approved for a personal loan can be easier if you have good credit.
Loan payback terms can be between two to seven years, with loan amounts typically between $1,000 and $50,000 or higher. If you manage the payments on a personal loan responsibly, you can build up a strong credit history. That is not the case with a payday loan, which is not typically reported to credit rating bureaus.
The Takeaway
Payday loans are short-term loans that cash-strapped consumers use to get by until their next paycheck. The borrower is expected to repay the loan on their next payday, or they may submit a post-dated check. Interest rates are extremely high because of the risk to the lender that the borrower will default. Unfortunately, this is often the case, and borrowers can find themselves spiraling into debt as interest and fees accumulate. For this reason, some states have banned payday loans.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
What are the requirements to get a payday loan?
Most working adults qualify for a payday loan. A borrower needs to be 18 or over, show proof of income (a paystub) and citizenship, and have a bank account.
Is proof of income a requirement for a payday loan?
A lender requires proof of income because they want to know you have the means to pay the loan back. A recent pay stub or similar documentation is typically enough.
Is taking out a payday loan a good idea?
Basically, no. A payday loan should only be used as a last resort, and if you are sure you can pay back the loan in two weeks. Even then, the interest you will pay will be much higher than a cash advance or a short-term loan from an online lender.
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Large personal loans are typically defined as those in the range of $50,000-$100,000. Like personal loans of all denominations, the lump sum received for a personal loan can be used however you like: to pay off medical debt, say, or finance a major home renovation. They typically do so at a lower interest rate than would be charged if you used a credit card.
To understand whether this kind of loan is right for you, whether you would qualify for one, and how to apply, read on.
Key Points
• Large personal loans typically range from $50,000 to $100,000 and are used for medical debt, home renovations, and consolidating debts.
• A strong credit score, typically 750 or higher, can improve approval chances and secure better loan terms.
• Stable employment ensures a consistent income, increasing the likelihood of loan approval and favorable terms.
• A low debt-to-income ratio, under 36%, is preferred, reducing the risk of default and enhancing loan terms.
• Benefits of a large personal loan can include manageable monthly payments and potential positive impact on a credit score, but risks involve negative credit impact and prepayment penalties.
What Is a Large Personal Loan?
A large personal loan is exactly what it sounds like — a loan for a lot of money. There is no specific figure that makes a personal loan cross over into that “large” territory. To one person, $50,000 might be a large personal loan. To another, it might be $100,000. But typically, it’s a number that’s well into the five-figures realm. Typically, lenders don’t offer more than $100K for a personal loan.
A large personal loan is a form of credit that can be used to make large purchases or consolidate other high-interest debts. Personal loans generally have lower interest rates than credit cards and are sometimes used to consolidate high-interest debt.
To start with the basics, a personal loan is defined as a set amount of money borrowed from a lending institution. Unlike a mortgage loan or auto loan, which is used for a specific purpose, funds from a personal loan can be used to pay for a variety of expenses such as medical bills, K-12 private education costs, or to consolidate multiple debts. Typically, however, you can’t use a personal loan for business expenses, and using personal loans for higher education tuition is usually prohibited.
How Do Large Personal Loans Differ From Other Personal Loans?
Personal loans function in the same way, no matter their size because they are borrowed sums of money that are paid back with interest. This is true regardless of the amount of money borrowed.
However, there are some differences between larger personal loans and their smaller counterparts depending on the lender you choose.
Small Personal Loans
Large Personal Loans
Loan amounts approximately $1,000 to $5,000
Loan amounts approximately $50,000 to $100,000
Including fees, may not be cost effective compared to larger loans
With good to excellent credit scores, applicants may qualify for low interest rates
Typically have shorter repayment terms
Repayment terms are typically longer
Interest Rate Considerations
You’ll likely want to compare personal loan interest rates. Different lenders may specialize in different sizes of loans, and their rates may vary depending on what they consider their “sweet spot,” so it can pay to shop around.
One key point: Don’t just look at the interest rate on a loan. The APY, or annual percentage yield, will give you a truer sense of what you will pay over the life of the loan. The APY includes fees (such as origination fees) and other factors, rolled in with the interest rate.
Term Length Options
The length of the loan term will impact your payments in a couple of ways. First, a longer loan period typically means you will have a lower monthly payment, which can be helpful in terms of your budget and cash flow.
However, a longer loan term also usually means you are paying more in interest over the life of the loan. Consider your options carefully to make sure you are getting the right deal for your situation.
How long do you usually have to pay off a personal loan? Two to seven years is common for personal loans in general, and, for larger loans, you may find terms of 10 or even 12 years.
When Is a Large Personal Loan a Bad Idea?
A large personal loan may be a bad idea if you already struggle with your current debts or monthly expenses.
When considering financing, it’s important to know both the pros and cons of a personal loan. Whether a loan is a right choice for you depends on your unique financial situation. Here are some of the risks to consider:
• If you fall behind on payments, your credit score could be negatively affected.
• If you miss enough loan payments, your large personal loan may go to a collections agency. Some lenders will charge off a debt, meaning they gave up on being repaid, but you’re still legally responsible for the debt.
In the right situation, however, a large personal loan can be helpful. If you’re approved for the loan, you’ll have the funds to make a big purchase and can repay it over time. Those smaller, monthly installments mean that the burden is more manageable.
Top Uses for Large Personal Loans
One of the best features of personal loans is that they can be used for almost any purpose. Among the common uses of personal loans that are considered large are:
What Are Common $100,000 Loan Qualification Requirements?
Typically, lenders have stricter requirements to qualify for a larger loan than one with a smaller limit.
Credit Score
Generally, you need a minimum credit score of 670-720 to qualify for a $50,000-$100,000 loan. However, it may be ideal to have a score of 750 or above in order to get approved. Depending on your score, your lender may offer you varying loan terms.
Checking your credit report before applying for any loan is a good idea. You will be able to find any errors or discrepancies and have an opportunity to correct them before you begin applying for a loan.
Checking your credit score counts as a soft inquiry and doesn’t negatively impact your credit score. The Fair Credit Reporting Act guarantees you access to one free credit report from each of the three major credit bureaus, and these are currently available weekly. You can find yours at AnnualCreditReport.com.
One of the factors your lender will consider is your employment status. They want to see how much income you earn and if you have the resources to repay the loan. In addition, the lender wants to be assured of your job stability. It may be a good idea to avoid making any sudden career changes while you’re applying for a loan.
Debt-to-Income Ratio
Your debt-to-income ratio (DTI) is a number that compares the total amount of debt you owe per month to your monthly earnings. You can find yours by taking your total recurring monthly debt and dividing it by your gross monthly income. Your recurring debt includes your mortgage, student loans, and other loans, and your gross income is everything you earn before taxes or other withholding.
Lenders use this number to help them predict a borrower’s ability to repay current and future debt. In general, lenders look for a DTI under 36%, but borrowers with a higher DTI may be approved if they are well qualified in other areas.
Assets and Collateral
As your application is reviewed, you may need to show assets in addition to a strong income and credit history. Assets include such things as real estate, cash in the bank, investments, vehicles, and art, antiques, and jewelry.
If you are getting a secured loan, meaning it involves collateral which can be claimed by the lender if you default, then these assets could help qualify you for that type of financial product.
What Is the Application Process for a Large Personal Loan?
Applying for a personal loan is a multi-step process. Different lenders may have different processes, but typical steps are as follows.
Compare Rates
Some lenders may offer loan prequalification. This allows you to see, based on a soft credit check, potential average personal loan interest rates and terms you might qualify for. It can be a good way to compare your lending options and find the best offer.
Gather Documents
As you move ahead with your personal loan application, collect all the paperwork you need.
Approaching this step proactively will help you streamline your application process, saving you time. It will also make it easier for your lender to review your eligibility and creditworthiness.
Personal loans usually require similar documents, no matter the lender, though. A few you should include are:
• Proof of identity such as a driver’s license or passport.
• Proof of current address such as a current lease agreement, utility bill, or proof of insurance.
• Verification of stable income and employment such as W-2s, bank statements, paystubs, or tax returns.
Waiting for Approval
Once you submit all the necessary paperwork, the last thing to do is wait. Approval times vary between lenders and may be quick or lengthy depending on how complicated the application is. Some approvals happen within a day, while others may take up to 10 days.
After your lender approves your large personal loan, you’ll receive it in the form of a lump sum. Lenders may deduct any fees, such as origination fees, before disbursing the loan proceeds. A personal loan calculator can help you estimate your loan payments.
💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.
What Can You Expect When Repaying Your Loan?
Regular installment payments begin once your large personal loan is approved and you receive the funds. The loan agreement will state the loan terms, interest rate, and what each payment will be, in addition to other details about the loan.
Monthly Payment Examples
Here are a few numbers to note that help you see how your loan payment might vary:
• For a $50K loan at 7% APY and a 5-year term, your monthly payment would be $990.06
• For a $50K loan at 9% APY and a 5-year term, your monthly payment would be $1,037.92
• For a $50K loan at 9% APY and a 7-year term, your monthly payment would be $804.45
• For a $100K loan at 7% APY and a 5-year term, your monthly payment would be $1,980.12
• For a $100K loan at 9% APY and a 5-year term, your monthly payment would be $2,075.84
• For a $100K loan at 9% APY and a 7-year term, your monthly payment would be $1,608.91
Early Repayment Options
Paying off a large personal loan early can help you save a bundle on interest. You might do this with a lump sum payment (say, you have a windfall such as an inheritance) or you could adopt a biweekly payment schedule to speed up your paying off the debt.
While uncommon, some large personal loans may have prepayment penalties. Check the fine print or contact your lender to learn more.
Can You Borrow $100,000 if You Have Bad Credit?
While it might not be impossible, borrowing a large loan with bad credit won’t be easy. Lenders tend to favor low-risk borrowers who are more likely to repay their loans on time and in full. A strong credit history provides some assurance that a borrower will do that. But poor credit or no credit at all may look to lenders like a likelihood to default.
Lenders willing to loan to borrowers with bad credit typically require different data to evaluate their application, however. For example, they might ask the borrower to show a history of utility payments or information from their bank account. Lenders may also limit borrowing amounts and charge higher interest rates to applicants with bad credit.
Additionally, borrowers with poor credit can improve their chances by opting for a secured personal loan, one for which they pledge collateral to guarantee the loan, as noted above. This may work well for someone who struggles with credit but has assets and sufficient income to make loan payments. If the borrower defaults on the loan, the lender has the right to seize the asset pledged as collateral.
Are There Alternatives to Large Personal Loans?
After some research, you might decide a personal loan isn’t right for you. Or, you may struggle to get the level of financing you want. In that case, there are alternatives to a personal loan. For example, you could consider these choices if you have equity in your home or other real estate:
• Cash-out refinancing: A cash-out refinance allows you to replace your existing mortgage with a new, larger loan. After the original mortgage is paid off, you can use the difference as you like. This option works best if you have a significant amount of equity built up in your home and have a high credit score.
• Home equity loan: Like a cash-out refinance, a home equity loan depends on your built-up home equity. However, it is a second, additional, mortgage, rather than one new mortgage. By borrowing against your equity, the loan has collateral behind it, making it a secured loan.
• Home equity line of credit (HELOC): Like a home equity loan, you use your home equity to access a HELOC. It acts as a line of credit you can tap into when you need it, and you only pay interest when you borrow. This works best for a homeowner who needs smaller amounts of money over a longer-term, rather than just one lump sum.
• 401(k) loans: If you have a 401(k) plan, you may be able to borrow money from your retirement account. Depending on your plan’s specifics, you might be able to borrow up to 50% of your account’s vested balance or $50,000, whichever is less. If your balance is less than $10,000, you may borrow up to the full amount. Then, you pay the funds back with interest within a period (usually five years).
• Securities-based loans: Another option could be a securities-based loan, often called a securities-based line of credit, or SBLOC. In this case, a lender allows you to borrow up to a certain percentage (say, 70% to 90%) of the value of stocks, bonds, or other non-retirement assets. The assets pledged as collateral are held in a separate account, and you are charged interest as you use your line of credit. Fees are typically quite low.
The Takeaway
A large personal loan is one that is typically in the range of $50,000-$100,000. It can allow you to pay off debts or make significant purchases. However, it may require a high credit score, a solid employment history, and other factors to qualify, and it can bring its own set of pros and cons as well.
Finding the right large personal loan for your financial needs and situation may take some time, but comparing lenders is a good way to get started.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
What’s the highest personal loan amount I can get?
Typically, the highest personal loan amount is $50,000-$100,000, though some lenders may offer up to $200,000 for some borrowers.
How long does it take to get approved for a large personal loan?
The time it takes to get approved for a large personal loan can vary. In some cases, it could happen within a day; in others, it might take a couple of weeks.
Do all lenders offer $100,000 personal loans?
Not all lenders offer $100,000 personal loans. Some do; others offer large loans up to $20,000-$50,000; and still others only offer loans up to, say, $5,000 or less.
What happens if I default on a large personal loan?
If you default on a large personal loan, your debt can be turned over to collection and your credit score can be negatively affected.
Can I get a large personal loan with a co-signer?
Yes, you can get a large personal loan with a co-signer from some lenders. In some cases, a co-signer with a strong income and/or credit history could help you qualify.
About the author
Ashley Kilroy
Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.
Photo credit: iStock/vladans
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If you are getting a secured personal loan, you’ll need to use collateral, which can typically be in the form of money in a bank account, investments, real estate, or a vehicle. By putting up this kind of asset, the lender can feel more confident about offering the loan. If the borrower were to default on the loan, the lender knows they can claim the collateral. For the more common unsecured type of personal loan, the amount doled out is only secured by a borrower’s promise to repay the funds, rather than collateral.
Learn more here about how secured personal loans work and what can be used as collateral.
Key Points
• Secured personal loans require collateral, such as real estate, vehicles, bank accounts, investments, or valuable items, providing lenders with an asset to claim if the borrower defaults.
• Potential advantages of secured loans include access to larger loan amounts, lower interest rates, and more favorable terms, especially for borrowers with lower credit scores.
• Risks of secured loans involve potential loss of assets if payments are missed, as well as a longer and more complex application process due to asset valuation requirements.
• Unsecured personal loans do not require collateral, making them less risky for borrowers’ assets but generally offering smaller loan amounts and higher interest rates due to increased risk for lenders.
• Building credit before applying for a loan can help borrowers qualify for unsecured loans, avoiding the need to put valuable assets at risk while still accessing competitive rates and terms.
Common Types of Collateral for Secured Loans
If you do opt for a secured type of borrowing, here’s what can usually be used as collateral for a personal loan:
• Real estate you own
• Vehicles (typically cars and trucks, but boats and other varieties are possible, too)
• Bank accounts and investments
• Jewelry, art, antiques, or collectibles
Secured Loans: Personal Loans With Collateral
Requiring collateral for a personal loan is uncommon, but not unheard of, depending on the type of personal loan you get. Generally, secured loans have more competitive interest rates, larger loan amounts, and more favorable terms.
But if a borrower fails to repay their secured loan, they’ll receive a notice letting them know they’re in default and giving them an opportunity to become current on payments. If the borrower doesn’t pay up, that can lead to loss of the collateral.
There’s a wide range of possibilities when it comes to types of collateral that can be used to secure a personal loan. Some common examples of loan collateral include:
• Real estate: One option for personal loan collateral is your home or other real estate you own, like an investment property. Even if you don’t fully own your home, you may be able to use the equity you do have as collateral. Just make sure you understand the risk involved — you could lose your home if you’re unable to make payments.
• Vehicle: You can use a vehicle as collateral when purchasing a car or truck, but some lenders allow you to use the equity in a vehicle to get funds. This may be a better choice than, say, a payday loan. However, you risk losing that vehicle if you can’t make the payments.
• Bank or investment accounts: You might be able to use a CD or other investment account as collateral. Just know that using these accounts as collateral might prevent you from accessing the funds in the accounts, which is a downside to consider.
Beyond these more standard items, other things that could be used as collateral for a secured personal loan include paychecks, savings accounts, paper investments, fine art, jewelry, collectibles, and more.
Potential Advantages of Secured Loans
If you need to borrow a larger sum of cash, then you might find more success if you put up collateral. A borrower whose credit score isn’t as high as might be required for a riskier unsecured personal loan may find it easier to get approved for a personal loan that’s secured.
Plus, you might receive more favorable rates and/or terms, because the lender has the security of knowing they can possess the collateral if the loan is not paid back. As a personal loan calculator can demonstrate, a lower interest rate can add up to savings quickly.
Downsides of Secured Personal Loans
Perhaps the biggest downside of secured personal loans is that if you fail to make your payments, you could lose the asset that’s securing the loan. Given that houses, investment accounts, and vehicles are common examples of personal loan collateral, that could be a big blow.
Another downside of secured vs. unsecured personal loans is that the application process is generally longer and more involved. This is because the lender needs to assess the asset being put up as loan collateral to verify its value.
Unsecured Personal Loans
As mentioned, unsecured personal loans aren’t backed by collateral. Instead, lenders just need a borrower’s signature promising they’ll pay back funds (as well as a review of their credit history and other financial fitness indicators, of course). Because of this, you may hear unsecured personal loans referred to as signature loans, good faith loans, or character loans.
Student loans are a type of unsecured loan, though they have their own unique terms and repayment options. So are most credit cards, although they tend to have higher rates than what’s typical on an unsecured personal loan.
Potential Advantages of Unsecured Loans
You can typically obtain unsecured personal loans on short notice. If the borrower has sufficient income and a good credit score and history (among other factors), rates can be competitive compared to those of secured loans.
And, of course, with an unsecured personal loan, you wouldn’t be tying up any assets or putting them at risk if you struggle with repayment.
As with secured personal loans, unsecured loans of this type can offer tremendous flexibility, such as using the funds as a vacation loan or for almost any other purpose.
Downsides of Unsecured Loans
Because unsecured loans are riskier for the lender, rates are typically higher than those of secured loans. Additionally, amounts available to borrow are usually smaller.
While it’s true that there isn’t an asset a lender can repossess for nonpayment, lenders can still take action on unpaid unsecured personal loans. Lenders can report the account as in default to the credit bureaus, send the account to collections, and take a borrower to court for nonpayment. This can significantly affect a person’s credit for years to come.
Building or Repairing Credit to Avoid Loan Collateral
If your credit score or credit history is preventing you from getting an unsecured loan, it might make sense to take time to build your credit. This won’t happen instantly, so it won’t be the magic solution if you need a loan now. But if you’d prefer not to put up an asset as collateral, it might be a worthwhile step prior to taking out a personal loan.
• Pay all existing loans on time, and make sure not to miss any payments.
• Get your monthly bills, such as your rent payments or utility bills, added to your credit report by a third-party service.
• Keep your credit utilization (meaning the total percentage of your available credit you’re using) below 30%.
• Get caught up on any outstanding balances or past-due debts.
• Limit applications for new accounts.
• Maintain older credit accounts, even if you only use them occasionally. They can help build the length of your credit history, which may help your score.
• If possible, responsibly manage a mix of credit accounts, such as both lines of credit and installment loans.
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Making a Choice: Secured or Unsecured
Whether a secured or unsecured personal loan is right for you depends on your specific need, financial situation, and credit history, among other factors, though the common uses for personal loans apply to both.
Factors to Consider When Choosing a Loan Type
If you’re looking for higher borrowing limits and potentially lower rates, or if you know you may not feel your application is particularly strong, a secured personal loan could make more sense. Just think carefully about what asset you decide to put down as collateral, as you do need collateral for a loan of this type.
But if you have strong credit and don’t need to borrow as much money, an unsecured personal loan might make sense. That way, you won’t have to worry about loan collateral. Just remember that doesn’t mean you’re off the hook if you don’t repay the loan — lenders can report the defaulted loan, put it in collections, and even take you to court.
The Takeaway
While less common than unsecured personal loans, secured personal loans can be a valuable option. They involve putting up collateral (such as bank accounts, investments, real estate, and vehicles), which can qualify you for lower interest rates and higher borrowing limits. Which kind of loan is right for you will depend on your particular needs and credit history.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
Can you get a personal loan without collateral?
Yes, you can get a personal loan without collateral. These are called unsecured personal loans, and they may have higher interest rates and lower borrowing limits than secured loans, or those with collateral, since they are somewhat riskier for the lender.
Does the loan amount impact how much collateral is needed?
Yes, the loan amount often impacts how much collateral is needed. That is because the lender needs to know that they can recoup the amount of funds loaned if the buyer were to default. So for this reason, a $50,000 secured personal loan would require more valuable collateral than a $5,000 loan.
Do secured loans have lower interest rates than unsecured loans?
Typically, secured loans will have lower interest rates than unsecured loans. The reason: The presence of collateral means the loan is less risky for the lender than an unsecured loan.
How can I qualify for an unsecured personal loan?
To qualify for an unsecured personal loan, you usually need to prove you are creditworthy to lenders. That means having a solid credit history and score. While personal loans may be available to people with credit scores of 580 and up, the most favorable rates are typically reserved for those with scores of 700 and higher.
What happens if I default on a secured loan?
If you default on a secured loan, the lender can claim the collateral and sell it to cover the debt.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
It can be challenging to qualify for a personal loan after a bankruptcy, A bankruptcy will remain on your credit reports for up to seven to 10 years, but with effort, your credit scores can be built during that time and beyond.
If you are approved for a personal loan, you likely will pay fees or a higher interest rate than you might have without having a bankruptcy on your credit report.
Read on to learn how bankruptcy works, the pros and cons of filing for Chapter 7 vs Chapter 13 bankruptcy, and how to get approved for a loan with a bankruptcy in your credit history.
Key Points
• Bankruptcy remains on your credit report for up to seven to 10 years, but you can rebuild your credit during this time to improve your chances of getting approved for a personal loan.
• While it is possible to get a loan after bankruptcy, you may face higher interest rates and less favorable terms due to the bankruptcy on your credit report.
• Chapter 7 bankruptcy involves liquidation of assets to pay off creditors, while Chapter 13 bankruptcy allows for a repayment plan over three to five years to retain assets.
• Personal loans can typically be discharged in both Chapter 7 and Chapter 13 bankruptcy, with secured loans potentially leading to the loss of collateral.
• Improving your credit score, reducing your debt-to-income ratio, and maintaining a history of on-time payments can help increase your chances of loan approval after bankruptcy.
How Does Bankruptcy Work?
When a person can’t make payments on their outstanding debts, despite trying to do so, bankruptcy may be an option to have a fresh financial start.
Bankruptcy can be either a liquidation of the debtor’s assets to satisfy creditors or the creation of a repayment schedule that will satisfy creditors and allow the debtor to keep their property instead of liquidating it.
💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.
Filing for Bankruptcy
Bankruptcy petitions are filed with the bankruptcy court in the debtor’s judicial district. The process is mostly administrative, with minimal time spent in front of a judge — often no time at all unless there is an objection by a creditor. A court-appointed trustee oversees the case.
The debtor must attend a “341 meeting” (named for section 341 of the Bankruptcy Code), at which creditors can present questions and concerns. For Chapters 7 and 13 bankruptcies, which are being discussed here, the remainder of the process differs slightly.
Common Reasons to File for Bankruptcy
Among the reasons people may file for bankruptcy are the following:
It’s not impossible to get a loan after bankruptcy, but interest rates may be high and loan terms less favorable than for someone who hasn’t been through a bankruptcy. The negative effect a bankruptcy has on a person’s credit lessens over time, but lenders may not be willing to offer their best rates to someone they perceive as not having been financially responsible in the past.
Factors That Impact Loan Approval After Bankruptcy
There are a few forces that impact getting approved for a loan after bankruptcy:
• Credit score and history. A bankruptcy can lower your credit score by 100 or 200 points, which can make it challenging to build credit to the level needed to qualify for a personal loan or a loan with a favorable rate.
• Timing. As noted, a bankruptcy can stay on your credit report for seven to 10 years. There can be a waiting period of one to two years or longer before you can qualify for a loan.
• Lender requirements. Different lenders have different guidelines. There are some who specialize in lending to those with poor credit.
• Type of bankruptcy. Some lenders may look more favorably upon those who have a Chapter 13 bankruptcy, which involves repayment of debt, vs. Chapter 7. (Learn more below.)
Two Main Types of Bankruptcy Filings
There are two main types of bankruptcy available to individuals, Chapter 7 and Chapter 13. With both, typically a bankruptcy trustee reviews the bankruptcy petition, looks for any red flags, and tries to maximize the amount of money unsecured creditors will get.
Chapter 7 is the most common type of bankruptcy for individuals, followed by Chapter 13.
Chapter 7 Bankruptcy
This is often called liquidation bankruptcy because the trustee assigned to the case sells, or liquidates, nonexempt assets in order to repay creditors.
Many petitioners, though, can keep everything they own in what is known as a “no-asset case.” Most states allow clothing, furnishings, a car, money in qualified retirement accounts, and some equity in your home if you’re a homeowner to be exempt from liquidation. (Each state has a set of exemption laws, but federal exemptions exist as well, and you might be able to choose between them, a subject a bankruptcy attorney should be able to provide insight on.)
After the bankruptcy process is complete, typically within three to six months, most unsecured debt is wiped away. The filer receives a discharge of debt that releases them from personal liability for certain dischargeable debts.
Are Personal Loans Covered Under Chapter 7?
In most cases, personal loans may be discharged in a Chapter 7 bankruptcy proceeding. A secured personal loan for which collateral has been pledged is included in discharged debts, but the asset put up as collateral will likely be sold to satisfy the debt.
A Chapter 7 bankruptcy can create a fresh start for someone struggling to repay their debts, but it’s not a magic wand. Here are some pros and cons:
Pros of Chapter 7 Bankruptcy
Cons of Chapter 7 Bankruptcy
Debtors are free of personal liability for discharged debts.
Some types of debt, such as student loan or tax debt, cannot be discharged.
Certain assets may be exempt from bankruptcy, giving the debtor some property to sustain themselves.
A trustee takes control of the debtor’s assets.
If all of a debtor’s assets are deemed exempt, the bankruptcy is termed a no-asset bankruptcy.
Creditors will not receive any funds from the bankruptcy because there won’t be any assets to liquidate.
Chapter 13 Bankruptcy
This form, aka reorganization bankruptcy or a wage earner’s plan, allows petitioners whose debt falls under certain thresholds to keep their assets if they agree to a three- to five-year repayment plan.
There are three types of claims in a Chapter 13 bankruptcy: priority, secured, and unsecured. The plan must include full repayment of priority debts. A trustee collects the money and pays the unsecured debts, with the individual debtor having no direct contact with the creditors. Secured debts can be handled directly by the debtor.
Once the terms of the plan are met, most of the remaining qualifying debt is erased.
The U.S. Bankruptcy Code specifies that if the debtor’s monthly income is less than the state median, the plan will be for three years unless the court approves a longer period. If the debtor’s monthly income is greater than the state median, the plan generally must be for five years.
Certain debts can’t be discharged through a court order, even in bankruptcy. They include most student loans, most taxes, child support, alimony, and court fines. You also can’t discharge debts that come up after the date you filed for bankruptcy.
Are Personal Loans Covered Under Chapter 13?
Personal loans can be discharged in Chapter 13 bankruptcy, but whether a creditor is likely to be repaid in full depends on if the personal loan is secured or unsecured. Priority claims are paid before any others, followed by secured, then unsecured claims.
The Pros and Cons of Chapter 13 Bankruptcy
Debtors who have assets they’d rather not have liquidated might opt for Chapter 13 bankruptcy vs. Chapter 7, which involves liquidation of most assets. But like any type of bankruptcy, there are pros and cons.
Pros of Chapter 13 Bankruptcy
Cons of Chapter 13 Bankruptcy
Debtors may be able to save their assets, such as their home, from foreclosure.
If the repayment plan is not followed, the bankruptcy could be converted to a liquidation under Chapter 7.
Debtors may opt to make payments directly to creditors instead of through the trustee.
Living on a fixed budget for the duration of the repayment plan will take some adjustment.
Debtors have more options to repay their debts than they might under Chapter 7.
Chapter 13 bankruptcy is more complex than Chapter 7, and may lead to higher legal costs.
Debtors can extend repayment of secured, non-mortgage debts over the life of the plan, likely lowering their payments.
Taking more time to repay the secured installment debt may lead to more interest before it’s paid in full.
A bankruptcy will be considered a negative entry on your credit report, but the severity depends on a person’s entire credit profile.
Someone with a high credit score before bankruptcy could expect a significant drop in their credit score, but someone with negative items already on their credit reports might see only a modest drop.
The good news is that the negative effect of the bankruptcy will lessen over time.
How Long Bankruptcy Stays on Your Credit Report
Lenders who check credit reports will learn about bankruptcy filing for years afterward. Specifically:
• For Chapter 7, up to 10 years after the filing.
• For Chapter 13, up to seven years.
Still, filing for bankruptcy doesn’t mean you can’t ever get approved for a loan. Your credit profile can be positively impacted if you stay up to date on your repayment plan or your debts are discharged — among other steps that can be taken.
You may even be able to begin building your credit during bankruptcy by making the required payments on any outstanding debts, whether or not you have a repayment plan. Of course, everyone’s circumstances and goals are different so, again, always consult a professional with questions.
Some lenders may specialize in offering loans to people who have a bankruptcy on their record (though rates and terms may be less favorable). That said, some lenders may deny credit to any applicant with a bankruptcy on a credit report.
How Long After Bankruptcy Discharge Can I Get a Loan?
As long as you can find a lender willing to approve you for a loan, there is no specific amount of time needed to wait until applying for one. Often, waiting one or two years will be enough. However, your credit report will reflect a discharge for seven to 10 years, and lenders may not offer favorable terms or interest rates.
Should I Apply for a Loan After Bankruptcy?
Making sure you are in a stable financial situation after bankruptcy is a good idea before thinking about applying for a loan at that time. Having a repayment plan that you can stick to before taking on more debt is imperative. That being said, taking out a loan and repaying it on time and in full can be a good way to help rebuild your credit.
Some pointers:
• Before applying for an unsecured personal loan, meaning a loan is not secured by collateral, it’s a good idea to get copies of your credit reports from the three major credit reporting agencies: Equifax®, Experian®, and TransUnion®. Make sure that your reports represent your current financial situation and check for any errors.
• If you filed for Chapter 7 bankruptcy and had your debts discharged, they should appear with a balance of $0. If you filed for Chapter 13, the credit report should accurately reflect payments that you’ve made as part of your repayment plan.
• Consider getting prequalified for a personal loan and comparing offers from several lenders. They will likely ask you to supply contact and personal information as well as details about your employment and income.
• If you see a loan offer that you like, you’ll complete an application and provide documentation about the information you provided. Most lenders will consider your credit history and debt-to-income ratio, among other personal financial factors.
• You may want to think carefully before considering “no credit check” loans: They typically have high fees or a high annual percentage rate (APR).
💡 Quick Tip: Fixed-interest-rate personal loans from SoFi make payments easy to track and give you a target payoff date to work toward.
If You’re Approved for a Personal Loan
Before you sign on the dotted line, it’s smart to take the following steps:
Read the Fine Print
If you’ve had a bankruptcy on your record, the terms of your offer may be less than favorable, so consider whether you feel like you’re getting a reasonable deal.
People with credit scores considered poor might see APRs on personal loans running into the triple-digits. Make sure you are clear on your interest rate and fees, and compare offers from different lenders to make the choice that works for you.
Avoid Taking Out More Than You Need
You’re paying interest on the money you borrow, so it’s generally better to only borrow funds that you actually need. Further, it’s probably wise to only take out as much as you can afford to repay on time, because paying on time is an important key to rebuilding your credit. Having a focused plan for what you’ll spend the personal loan funds on may give you some incentive to manage it responsibly.
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If You’re Not Approved for a Personal Loan
If you are denied a personal loan, don’t despair. You may have options for moving forward:
Appealing to the Lender
You can try to explain the factors that led you to file for bankruptcy and how you have turned things around, whether that’s a record of on-time payments or improved savings. The lending institution may not change its mind, but there’s always a possibility the lender can adjust its decision case by case.
You likely have the best chance at an institution that you’ve worked with for years or one that is less bound to one-size-fits-all formulas — a local credit union, community bank, online lender, or peer-to-peer lender.
Looking Into Applying With a Co-signer
A co-signer who has a strong credit and income history may be able to help you qualify for a loan. But both parties should keep in mind that the co-signer is typically responsible for paying back the loan if the primary borrower can’t do so.
Building Your Credit
You may need to take some time to try to build your credit profile before reapplying for an unsecured personal loan. You still have a chance to work toward reducing your other debt. There are many types of personal loans available, and a little waiting time to consider what’s right for you isn’t a bad thing.
There are several important habits to adopt when building your credit, but the most important one is your payment history, meaning whether you pay bills on time. This contributes 35% to your credit score, so it’s wise to be diligent about it as you move past bankruptcy. Setting up autopay can be a good move as it ensures you won’t accidentally pay a bill late or miss it.
Alternatives to Personal Loans After Bankruptcy
If you don’t qualify for a personal loan after bankruptcy or feel that’s not the best option, here are other ways to access credit and/or build your credit score:
• Secured credit cards, which involve putting down a deposit that usually serves as your credit limit.
• Secured loans, in which collateral (such as a savings account or a vehicle) is needed and can lessen the lender’s risk.
• A loan from a trusted friend or family member.
The Takeaway
Getting approved for an unsecured personal loan after bankruptcy isn’t impossible, but it may take some time to qualify and your rates and fees will likely be less favorable. It’s a good idea to compare offers from several lenders and gauge whether it’s the right time to borrow.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
Can I get a loan with a discharged bankruptcy?
Yes, it is possible to get a loan after bankruptcy, but it may take time and the rates and terms may be less than favorable.
Are personal loans covered under Chapter 7?
Yes, personal loans can be discharged under Chapter 7 bankruptcy.
Are personal loans covered under Chapter 13?
As with Chapter 7, personal loans can be discharged under Chapter 13 bankruptcy, typically after the court-approved repayment period of three to five years. Secured personal loans will take priority over unsecured personal loans, however.
How long after bankruptcy discharge can I get a loan?
There is no set time a person must wait in order to apply for a loan after bankruptcy discharge. Each lender will have its own conditions for approval. However, a typical period might involve waiting one to two years.
What are the best ways to rebuild credit after bankruptcy?
To build credit after bankruptcy, it’s wise to be especially diligent about paying bills on time, every time, since that’s the single biggest contributing factor to your score. You also want to be cautious about your credit utilization rate when you are able to access credit again, and not apply for too many forms of credit at one time.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
This article is not intended to be legal advice. Please consult an attorney for advice.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
To pull off a dream wedding on a budget can require smart budgeting and planning. You’ll want to prioritize key elements and think about what you can live without or do for a minimal price.
Here, you’ll learn more about developing and sticking to a budget, including cost-cutting tips that will make the whole process easier on your wallet and your peace of mind.
Key Points
• Prioritize wedding elements to avoid overspending and achieve a dream wedding without debt.
• Average wedding costs vary by location, with a median cost of $10,000 and a national average of $36,000.
• When creating a budget, start with major wedding expenses, like venue, catering, and music.
• Avoid common budgeting mistakes like underestimating costs and not saving enough.
• To save money, try limiting the guest list and tackling DIY projects.
Average Cost of a Wedding
The average cost of a wedding depends on several factors, including how you do the math. In 2025, the national figure was $36,000, according to wedding registry site Zola. Based on a recent SoFi survey of 1,000 people, however, the median cost of a wedding is $10,000, which may be a more accurate gauge of how much people really spend.
As you might expect, individual figures can vary greatly: If you get hitched in the grand ballroom of a hotel in Chicago with sweeping views of Lake Michigan, it’s going to be much pricier than gathering with just immediate family and your best friends to exchange vows by that same lake.
In real life, the average cost of a wedding varies widely based on location. In Indianapolis, wedding expenses total just under $25,000, according to The Knot. Over in San Francisco, the big day exceeds $50,000. Worth noting: These figures represent average wedding costs, which can be misleading. Just one lavish wedding, for example, can skew the average to be higher than what most people actually paid, which is why a median price tag can better reflect how much you’ll actually spend.
Understanding Your Financial Health
As you embark on financing a wedding, it can be wise to first look holistically at your financial wellness. You want your wedding to be the happiest day of your life, but not one that sinks you into debt that challenges your long-term financial plans.
Think carefully about how much you have saved, what family and friends might contribute, and whether options like a wedding loan would make sense for you. Also factor in your other upcoming money needs. If you are planning on buying a house, you may want to have a lower-cost celebration and instead funnel any cash gifts into a down payment fund.
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Major Costs to Include in Your Wedding Budget Breakdown
Next, consider this breakdown for a major, $30,000-plus wedding with all the bells and whistles. While the median cost of a wedding is considerably lower, this will give you an idea of how expenses may be broken down. Most couples go all-in on just one or two priorities for their big day.
Remember, these are the costs incurred by and for the bride and groom. The groomsmen and bridesmaids will incur their own costs for being in the wedding.
How to Determine What You Can Afford
No one is born knowing how to plan a wedding. To set your wedding budget, start by asking yourself a few questions:
• How much of your savings are you willing to use for your overall wedding budget?
• Are your parents or other relatives planning to contribute financially?
• Are you considering taking out a personal loan to help cover costs?
• If you are using savings, how long will it take to save the amount of money you need?
• Is a wedding really worth the amount of money you want to spend on it?
• Should a one-day event take priority over other life goals, like traveling together, starting a family, or owning a home?
Getting clarity on these answers will help you come up with a starting number.
Budget allocation involves assigning a percentage of your overall fund to each category. Use the percentages below to get a rough idea of how much you can pay for your venue, catering, etc. According to The Knot, a typical budget allocation looks like this:
Wedding Budget Allocation
Venue and rentals
27%
Catering
24%
Photographer and videographer
10%
Floral design and decor
9%
Music
8%
Couple’s attire and beauty
6%
Wedding rings
5%
Wedding planner
4%
Guest entertainment
3%
Transportation
2%
Stationery
1%
Officiant
1%
You may have to factor in alternative or multiple options for some categories, such as live music, DJ, or guest entertainment. In combination with the average wedding costs table above, you should be able to project your total budget without any major surprises.
Common Wedding Budget Mistakes to Avoid
Here are a few of the pitfalls to avoid if you are planning a dream wedding on a budget. Consider these as you work on your wedding budget breakdown.
• Not budgeting enough. Many couples underestimate the amount of money they’ll spend on a wedding. When there’s no plan, everything becomes a priority and you’ll go through money faster than you can imagine. Be sure to make both a wedding budget and a savings plan to make it happen.
• Not communicating with loved ones about the budget. If you have parents or other loved ones helping to cover expenses, be sure to have a conversation with them to avoid overestimating their contribution.
• Not saving long enough. Once you know how much you’ll need, be realistic about how long it will take you to save that money. You may want to consider pushing back your wedding date to have enough time to save for it. (Too late to save up? Learn about wedding financing options.)
• Going into debt. Many couples put wedding expenses on a credit card. If the balance isn’t paid off within the month, you’ll end up paying high interest rates on top of what you budgeted.
• Forgetting to budget for unexpected costs. Surprise bills always come up. Keep a small amount reserved for unexpected wedding expenses.
• Not keeping track of your spending. With wedding expenses, it’s easy to lose track of which bills you’ve paid. A money tracker can help you stay organized.
8 Cost-Saving Tips for a Budget-Friendly Wedding
If your list of wedding expenses far exceeds your budget, don’t panic. Trimming your costs isn’t so hard if you know how to go about it. These ideas can help.
1. Limit Your Guest List
Consider shortening your guest list to include only close friends and family members. This can be a blessing in disguise for certain types of weddings. For instance, a destination wedding is especially difficult to coordinate for more than 100 people.
2. Find a Free or Low-Cost Venue
The wedding venue is often your biggest expense — unless you move the ceremony outside or to a private home. Depending on the location, you can reserve a park pavilion for around $100. A permit to hold a wedding ceremony at a national park is around a few to several hundred dollars. Forgoing a fancy venue puts a lot of money back in your pocket.
Utilizing a few previously owned items is a real budget saver.
• Wedding decor. Gently used decor is often sold online at a fraction of the cost. Keep your eye on Craigslist, Facebook Marketplace, eBay, and Etsy for items that work with your theme.
• Wedding dress. A wedding dress that costs thousands brand-new can be thrifted for a few hundred dollars. If you really want to save money on wedding attire, consider borrowing a dress from a good friend or family member.
4. Ask Friends and Family to Gift Their Skills
Do you have a photographer in your network? What about an aspiring caterer or florist? While it’s worth paying for their skills, you can also try exchanging something of value. Babysitting for busy parents is always a winner.
You can also ask for services in lieu of a gift. Tactfully articulate your desire to start your new life on a budget, while respecting their need to earn a living. If they say they can’t do it, don’t push.
5. DIY Whenever Possible
Many details that cost a fortune to outsource may be pulled together with the help of friends and family.
• Centerpieces. Your table decor can be made ahead of time by the wedding party or a group of aunties.
• Invitations. It’s so easy to make your own wedding invitations. Even if you’re unskilled, you can use online tools like Canva to create your design. Save the result as a photo file for cheap printing. Image files cost as little as 10 cents to print. Compare that to formal invitations that typically cost several dollars each to print.
• Catering. Know someone who makes an incredible main dish or specializes in smoked barbecue? They may be willing to help out for little more than the cost of groceries and supplies.
• Flowers. Making your own bouquet from flowers sold at the farmer’s market or grocer is an easy way to save a lot of money. Check out a YouTube video tutorial, and you’ll be on your way.
6. Use a Faux Wedding Cake
A faux wedding cake is one that is made just for appearance. It’s frosted to look like a real cake but underneath it’s just Styrofoam or cardboard. It can provide a stunning bit of decor for a wedding at prices of $25 and up. Then you can serve a simple, delicious sheet cake as dessert.
7. Time Your Wedding Strategically
Wedding season traditionally runs from May to October. This is when demand is highest — and prices too. If you can plan a wedding for the off-season (say, December or March), demand and prices are lower. You may be able to get the venue you want for the price you want.
8. Compare Vendors and Negotiate
Do shop around. It may be tempting to use the first vendor you meet if you like them or opt for the person your best friend says is fabulous, but it is really worthwhile to get a couple of bids and compare. You could save a bundle.
The Key to Having Your Dream Wedding Within Budget
Your dream wedding doesn’t have to spawn a nightmare budget. Be mindful of what you really want and what you can really afford. If a backyard potluck is all it takes to make you happy, then don’t worry about what other people say you “should” do.
As you move ahead with your plans, go ahead and feel great about sticking to a budget that frees up funds for other purposes, like your first home or a lengthy honeymoon. Because saving for a dream wedding is just the first step in a couple’s life together.
The Takeaway
Budgeting for a wedding can help you start married life on the right foot financially. First, find out the average costs in your area for major wedding expenses — venue, catering, music, photography. Then determine how much money you can pull together from family, your current savings, paychecks you’ll receive before the big day, or investigate personal loan options.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
What is the average cost of a wedding?
There are a couple of different ways to look at the typical price tag. The average cost of a wedding is currently $36,000, but the median is $10,000, which may give you a more accurate idea of the price most people spend.
How much should I budget for a 100-person wedding?
While the average per-person cost of a wedding is currently $284, it’s up to you to determine how much you are comfortable spending. You can lower costs by having a wedding at home, in a backyard, or park. You might have friends and family prepare food, or have a cocktail party reception vs. a sit-down, five-course dinner.
What are some ways to reduce wedding costs?
Ways to reduce wedding costs include getting married in the off-season, avoiding pricey venues, inviting fewer guests, DIY-ing flowers and food, and renting or borrowing anything from a wedding dress to decor.
How can I estimate the costs of my wedding?
There are a number of good ways to estimate the costs of a wedding. You can develop a budget based on the usual breakdown of costs for a ceremony and celebration, you might research local costs from vendors, or use an online calculator tool.
What are different ways I can pay for my wedding?
Some options for paying for a wedding include saving for it (or dipping into your savings account), seeking funding from family and friends, or taking out a personal loan.
What is a low budget for a wedding on average?
For a low-budget wedding where no meals are provided for guests, plan on spending a few hundred dollars. At the very least, you need to pay a fee for a marriage license and an officiant. You can wear something you already have, eat a potluck meal, and take your own pictures — and it can still be magical.
Photo credit: iStock/Prostock-Studio
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
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Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
