Weddings cost rather a lot of money, FACT. Sadly, few of us are lucky enough to have pots of cash just sitting around, which means that unless family chip in, it’s a case of saving or borrowing to pay for the big day.
Borrowing for your wedding
If you do decide to take out a wedding loan, sensible borrowing is key to avoiding a debt hangover once the party is over. Getting the lowest rate will help you pay less interest and save you money in the long run.
In the past, the first port of call for a loan would’ve been your bank. However, since the financial crisis, lending has become riskier for banks and rates on unsecured loans have gone up. As a result, many people are turning away from banks in favour of a new way of borrowing.
Peer-to-peer lending is basically one person lending money to another, but with measures in place to protect both parties. Websites such as Zopa and RateSetter match individuals looking for credit with investors willing to lend money. Borrowers benefit from the lower rates typically offered by these internet platforms, while investors get a higher rate of return than they would if their money was just sitting in the bank.
The government is supporting peer-to-peer lending and business secretary Vince Cable has been quoted as saying, “We have already invested over £80m in alternative sources of finance including peer-to-peer lenders Funding Circle and Zopa”. With lenders set to be officially regulated by the Financial Conduct Authority in 2014, peer-to-peer finance looks set to grow significantly in years to come.