Millennials Embrace Wedding Loans, 'Marry Now, Pay Later' Schemes; But Is It The Way To Go?

A growing number of millennials are choosing to take financial responsibility for their weddings, ushering in a trend that challenges societal norms. According to the IndiaLends Wedding Spends Report 2.0, 41% of brides and grooms planning to self-fund their weddings intend to use their savings, while 26% are open to considering personal loans, disrupting the conventional taboo associated with wedding financing.

The report, based on a survey of 1,200 millennials conducted in October-November 2023, sheds light on the emerging trend of financial independence among the younger generation. Notably, 68% of those considering borrowing are contemplating amounts ranging from Rs 1 lakh to Rs 5 lakh.

However, this financial autonomy comes with its challenges. For those without substantial savings, borrowing becomes a necessity. The study indicates that 33% of self-funding couples are yet to decide on their financial approach, raising questions about the potential burden on those with limited resources.

The Rise of 'Marry Now, Pay Later' Schemes

In addition to traditional wedding loans, a novel financial solution has entered the scene-'Marry Now, Pay Later' (MNPL) schemes. Spearheaded by SanKash, a fintech lending platform, MNPL collaborates with hotels across various cities, offering a unique approach to wedding financing.

CEO and Co-Founder of SanKash, Akash Dahiya, revealed the overwhelming response to the MNPL scheme, stating that within a week of its March launch, the platform received over 100 queries worth Rs 8 crore from Delhi's National Capital Region (NCR). MNPL covers a range of services, including food, venue, decoration, and trousseau, presenting a comprehensive solution for couples looking to ease the financial strain of wedding expenses.

Wedding Loans Vs MNPL Schemes

While the terms 'wedding loan' and 'Marry Now, Pay Later' schemes are often used interchangeably, they represent distinct financial products with different structures and offerings.

Wedding loans, provided by banks and fintech lenders, are traditional personal loans tailored for wedding expenses. Borrowers receive a lump sum upfront and repay it through fixed monthly instalments. Notable institutions offering wedding loans include Axis Bank, ICICI Bank, IDFC First Bank, and HDFC Bank.

On the other hand, MNPL schemes operate through fintech lenders partnering with hotel chains. SanKash, for instance, evaluates the customer's credit profile and employment background, pays the hotel on behalf of the customer, and sets up equated monthly instalments (EMIs) with their non-banking financial company (NBFC) partners.

Loan Tenure And Charges

ICICI Bank and IDFC First Bank offer wedding loans with varying interest rates, amounts, and tenures. In comparison, MNPL schemes like SanKash provide a maximum fund limit of Rs 25 lakh, assessing customers through third-party data.

To sweeten the deal, MNPL schemes often offer a three-to-six-month interest-free period, followed by a flat-rate interest ranging from 0.5% to 1.5% per month, depending on the customer's credit profile. Repayment tenures can extend from three months to 36 months, with no penalties for early repayment.

Cautionary Considerations for Borrowers

Before opting for a wedding loan or MNPL scheme, borrowers are urged to understand key terms such as interest rates, loan amounts, and repayment schedules. It is recommended to compare annual percentage rates from different lenders to secure the best deal and be aware of any prepayment penalties during lock-in periods.

However, financial experts caution against taking out loans for weddings, emphasizing that weddings are already expensive affairs. Dev Ashish, a Securities and Exchange Board of India (SEBI)-registered investment advisor, advises against wedding loans, urging couples to reconsider their budgets and align their expenses within their financial means.

Starting married life with a loan repayment can limit financial flexibility for joint investments and long-term goals. Instead, couples are encouraged to assess their financial situation, establish a realistic budget, and openly communicate about their priorities, ensuring a stable start to their married life.

While the allure of easily accessible loans for weddings may be tempting, financial experts advocate for prudence, advising couples to borrow only what is necessary and to focus on financial responsibility.

*Inputs from Moneycontrol*