How wedding loans work

marriage it's one of the oldest

traditions shared by millions of couples

around the world

weddings take on many shapes and sizes

and are always evolving American

weddings paint a familiar picture a

white dress an exchange of vows a

bouquet toss all at a ceremony

traditionally paid for by the family of

the bride

but that tradition is changing the

average American wedding costs nearly

thirty nine thousand dollars and a

growing number of newlyweds to be are

relying less and their families to pay

for their dream ceremonies and are

instead choosing to go into death

these young couples dreaming of

Instagram about wedding venues cigar

bars candy buffets photo booths and the

like are now spawning a new breed of

personal debt championed by Silicon

Valley tech startups according to

experts wedding loans are more of a PR

play rather than a new type of loan they

are simply unsecured personal loans

rebranded to attract new borrowers

especially those who are in their 20s

and 30s but FinTech lenders say they are

issuing double the amount of wedding

branded loans in 2019 than the same

period the year prior promising fast and

easy payments directly to your bank

account online lender earnest which also

issues loans for vacations and home

improvement projects uses the tagline

inspired by Pinterest make it happen

with low interest to market it's wedding

loans while prosper offers couples

engagement ring financing and extra cash

for their honeymoon

upstart promotes its use of artificial

intelligence machine learning to measure

nearly 1500 signals that determine an

applicant's ability to pay back alone

the company says education area of study

and job history are all taken into

consideration when evaluating applicants

upstart co-founder Paul Gow says that

these innovations enable them to loan to

first-time borrowers without

well-established credit histories when

we look at our wedding loan borrowers

they are a most common length of credit

history is only five years for most

lenders that's a really short amount of

time lenders typically looking for eight

nine 10 plus years of credit history to

make make a determination of whether

someone's a good credit risk and if

you've got a 670 credit score only five

years of credit history it's going to be

pretty hard

to get a low interest rate loan or

credit card from anybody and and I think

that certainly is part of the appeal for

upstart I think that's that's the

problem we're trying to solve in the

world the average wedding loan upstart

grants is eleven thousand dollars for

either a three five or seven year term

the annual percentage rate which is the

rate charge for borrowing and represents

the yearly cost of the loan can

fluctuate between as low as 5% all the

way up to nearly 36 percent depending on

the applicant upstarts average wedding

borrower is 28 years old and GU notes

that in upstarts case they're 20% less

likely to default than those who take

out other types of loans he also adds

that online loan providers can offer

lower interest rates than credit cards

making FinTech funds a superior choice

Raquel Pitino and usage Ramirez are a

couple who live in San Diego and turn to

upstart for a twenty thousand dollar

loan to help fund their wedding this

fall which they expect to cost near

thirty thousand dollars they have an APR

of just over 20 percent for a five-year

term with a minimum monthly payment near

five hundred and thirty dollars they met

in 2013 while serving in the Navy it

began dating two years ago last October

Patino proposed to Ramirez and now the

couple are planning a wedding to match

their elaborate engagement that night I

had a mariachi group come and I had a

bouquet of roses and in the middle was a

gold rose but it was the actual box for

the ring like out of nowhere and see

like this money actually grew out there

and she's like just singing serenading

pretty much and that happened

the experts worried that the efficiency

and ease these companies promised could

become more of a burden than a benefit

as Americans become swamped with the

debt in the first quarter of 2019 total

household debt breached thirteen point

six trillion dollars but the growing

reliance on unsecured personal loans is

not exclusive to weddings

according to TransUnion the market for

personal loans had an all-time high in

2018 after growing to 138 billion with

21 billion added that year alone

indicating that an increase in wedding

loans may just be a symptom of a much

larger problem fin tech companies like

upstart prosper and earnest led the

charge by offering loans that don't

require assets or personal property as

payment if a borrower defaults fin tech

companies issued 38% of all us personal

loans in 2018

Mitch Hockenberry a certified financial

planner says the lenders reasons for

targeting younger borrowers may be less

than altruistic and so why they're

targeting the younger guys and gals is

because what they're looking at is to

simply say that generation is much more

okay with just working on payment plans

instead of having to take out this big

dollar amount of say $30,000 from your

savings account and hand it over to

somebody that's a hard pill to swallow

but they're used to paying for their

food coming through GrubHub they're used

to getting into an uber and paying you

know that route they're used to all

these little quick payments

how can Barry also points out that

regardless of why you take out the loan

in the first place one of the most

common sources of arguments in marriage

originates with money and bills so

starting off your marriage in debt just

invites future arguments while the money

may be easier to borrow many couples

have a hard time calculating just how

much money they need in 2009 the average

cost per guest in the United States was

a hundred ninety four dollars but in

2018 is searched to two hundred fifty

eight dollars an ear 33% increase

research from online wedding marketplace

wedding wire indicates couples aren't

well prepared for just how expensive a

wedding can be the average budget

surveyed couples allotted toward their

wedding with sixteen thousand dollars

but in reality the price tie ended up

being closer to thirty thousand dollars

according to wedding wire roughly half

of couples spend more than planned so

what causes such large budget

discrepancies jeffra Trump our wedding

wire senior creative director says one

of the main reasons is that couples

don't realize the cost of providing

personalized experiences

really want to provide a really good

experience for their guests and what

that means is that they're amplifying

the details throughout their wedding so

then you're getting your her guests

headcount increases right so it could be

interactive food stations personalized

favors like cigar bars or other type of

like interactive experiences actually at

the wedding there's additional things

too where couples are really seeing so

much more inspiration around them and

more things that they actually want to

utilize for their personal approach to

the wedding and that's increasing the

cost as well Lauren came executive

editor than not notes that where you get

married can also make or break your

budget it's the most expensive place to

get married in the u.s. is Manhattan

it'll cost you almost ninety seven

thousand dollars on average and the

least expensive place is Idaho and that

comes in closer to sixteen thousand New

York Boston Washington DC in San

Francisco all ranked amongst the highest

price cities in the country to host your

special day in 2018 couples shelled out

most of their money on the reception

venue with an average cost about $15,000

engagement rings live music and

videographers and photographers which

can cost couples over five thousand

dollars together once all said and done

couples spend an additional forty five

hundred dollars on average on their

honeymoon I think a lot of couples are

looking to have a unique wedding really

personalizes their relationship and

their love story and they don't want to

do the same thing that their friends

have done so they're looking to totally

unique venues like boat houses or barns

or even art museums and sometimes that

does add to the cost and sometimes you

can snag a deal it all depends on where

you're getting married in the country

the time of year plays a big role if you

want a Saturday versus a Friday night

even the season can help dictate the

cost but then use are generally one of

the most expensive decisions you'll make

because they often include your catering

in 2019 millenials dished out a

considerable amount more than their

predecessors spending ten thousand

dollars more on their weddings than

gen-x couples

the increase in cost along with the

continuing trend of couples marrying

later in life has also changed who's

responsible for paying the bill the US

Census Bureau found that the median age

of marrying couples increased in nearly

29 years old in 2018 this is largely due

to couples prioritizing education

careers and travel before tying the knot

and the increase in age may explain why

weddings are paid for differently and

getting more expensive and fifty percent

of couples say they are but we do think

that that's because the age is is older

right so you have more financial ability

to pay for more of that whereas if you

take it back to even 10 15 20 years ago

people were in their early 20s getting

married they didn't have a lot of

funding to do that they had to turn to

their parents but for couples like

Pitino and Ramirez sometimes the entire

cost of the wedding has to come out of

their pockets we didn't want to ask for

our families really honestly because

we're two women and not a lot of family

members tend to take it as serious as

any other regular wedding the couple

acknowledges some would advise against

taking out a $20,000 loan for just one

day but they have a plan to tighten up

their budget to pay it off completely in

two years this is a sacrifice that they

are willing to make but before you take

out a $30,000 loan there may be steps

you can take to prevent overspending is

that a band is it the location is it the

number of people were inviting so

literally those top three and agree on

that and literally write it down like

put it on your refrigerator on the wall

and stick to it financial advisors agree

personal loans can be used wisely

especially when used toward purchases

that are important to you but they also

agree that the decision to use one and

your plan to pay it back is a

conversation both you and your partner

need to have before the special day

invest in you ready set grow CNBC and