Beti ki shadi se bada baap ka kya farz hota hai?

A father’s biggest duty is his daughter’s wedding.

Two fathers, one spending ₹2.5 Cr and the other spending ₹6 lacs on their respective daughters’ weddings, make this statement in an episode of Made in Heaven on Prime Video.

The show is about big fat Indian weddings. But it is the reality of our lives. Nearly everyone wants a colossal, dreamy wedding for themselves and their children. Many spend their life’s savings on a wedding. Those who cannot afford it may be willing to borrow for it.

For example, the staff at my father’s hotel, most of whom come from marginal backgrounds, generally spend about 8-10 times their annual salary on their wedding. Some of them do not have the means, so they borrow. A wedding is usually the biggest celebration in their lives. So, they are happy to borrow.

Marriage loans are a big market in India. Lenders often advertise dream weddings to lure people into borrowing. Ads on television and social media depict a sense of comfort and empowerment in taking such loans. 

“Wedding expenses are running high? Don’t worry when you can take a marriage loan in a few clicks!”

“The daughter is getting married. So what if the lehenga is a little expensive? Your bank is with you.”

There is no discussion of the payback terms. No mention of interest rate and tenure. Only the feel-good and convenient parts of the loans are advertised.

And lenders spend heavily on maintaining a good narrative and ensuring that loans are offered to you whenever you search for them.

A simple Google search of “marriage loans” shows hundreds of platforms from where you could borrow. All premiere banks, NBFCs, and lending platforms feature in Google’s top hits. If you search “marriage loan problems,” the top hits are still loan offers or posts on “Why should you consider a marriage loan?” and “How is it good for you?”.

A survey by IndiaLends in 2019 suggested that 20% of all loan applications received from young Indians aged 20-30 years in 2018-19 were for marriage. About 19% of this population wanted loans for travel purposes and 11% for lifestyle-related uses. Only 11% wanted loans for starting up their business.

Another survey by IndiaLends timed around the second wave of Covid, that is, roughly around the first half of 2021, suggested the average ticket size for marriage loans was the highest at ₹4.13 lakh, followed by medical expenses at ₹4 lakh, household expenses at ₹3.43 lakh, and for business at ₹2.62 lakh.

Typically, you could borrow anywhere between ₹10,000 and ₹40 lakh as a marriage loan. Interest rates could vary from 10.5% to 37% per annum. Loan tenures range from 3 months to 5 years.

Taking loans to build an asset that you could use or monetize for years is understandable. Some personal finance experts might even encourage you to take such loans. But marriage, although a once-in-a-lifetime event for most”, is an expense. The longing to create one dreamy, colossal day could cripple your personal finance for years to come. It could mean delaying your other goals or starting a family.

So, why do people take marriage loans? In most cases, the older generation took marriage loans to affirm their social standing. Today’s generation is doing it to keep up with the social media personas they have built.

This reminds me of a quote by Morgan Housel, one of the greatest thinkers of our times in the world of finance, in his book Psychology of Money – Spending money to show how much money you have is the fastest way to have less money.

I rang up a few friends who work in some major banks to understand more about the marriage loan scene in India. Here are a few takeaways:

• • Most marriages are arranged marriages. A girl’s father would want his daughter to marry in a family wealthier than his own. He will take loans to match the “wealth standards” of the boy’s family. The girl’s father and brother will repay the loan. It does not impact the newly wedded couple.
  • The loan may be taken in the form of overdraft facilities in the family business as it is a cheaper alternative than personal loans for marriages.
  • Many families use the zero-interest EMI option to purchase the gifts to be given in marriage – car, AC, washing machine, mobile phone, jewellery, etc. This again saves them from paying high interest rates on personal loans.
  • Very few couples take marriage loans. Young, high-income earners are more likely to take loans for a marriage.
  • Delinquencies in marriage loans are low. No matter how much trouble they face with their personal finances, most borrowers will repay the loans.

One thing is clear from this – the marriage loan survey figures we saw earlier are understated. If overdrafts and consumer loans were accounted for, the actual figure would be much bigger. Many people also take loans from friends, relatives, and local lenders.

You generally take personal loans when you cannot afford something. The question, then, to ask yourself is, do you really need a marriage loan? You may want it, but do you need it? Can you take a smaller loan than what you had planned for? You could limit or eliminate your loan requirement by maybe

• • having one less function, 
  • scaling down the menu, 
  • inviting fewer guests or 
  • switching to a more affordable venue. 

There are multiple variables to a wedding. You could prioritize the factors most important to you and where you could settle for a middle ground. Limit your spending towards those factors.

After all, there is so much more to life after a wedding.