An engagement without a ring is like a wedding without a cake — not nearly as sweet.
But what if you don’t have enough money for the perfect ring? Spending more than you can afford might be a recipe for disaster.
Financing an engagement ring is a common practice that can help make your wedding plans more financially feasible and set you down the path to marital bliss on a balanced budget.
Planning on taking the next step?
According to The Knot’s 2019 Jewelry and Engagement Study, the average cost for an engagement ring was $5,900. Add that to the $28,000 average wedding price tag and you’re looking at a hefty bill for your special day.
In a perfect world, you could buy your engagement ring with cash savings. But in the real world, that isn’t always the case.
If you’re set on buying a ring that you can’t afford to pay for in cash, financing is the next best thing. By spreading the payment over several months, you’ll be able to get the ring you want without breaking the bank.
How to finance an engagement ring
You have several engagement ring financing options at your disposal. What you pick depends on your budget, timeline, and credit score.
Although using a credit card is one of the most common ways to finance an engagement ring, it takes some planning to get the most out of this method.
Since credit cards charge high-interest rates, making a large purchase that you can’t pay back right away isn’t the best idea. But some credit cards offer introductory zero-percent APR interest rates for the first twelve months or more after you apply. These offers often require an excellent credit score, but if you’re eligible, it can be a great way to get what amounts to interest-free financing.
If you’re lucky, you might be eligible for a sign-up bonus for making a large purchase within the first three months of getting the card. After factoring in the card’s cash-back or reward-miles plan, you could end up saving a considerable amount of money when you take this approach.
But be careful — if you don’t pay off your credit balance within the introductory offer period, you can get slapped with an even higher interest rate down the road. Take the time to plan your payment schedule and set aside the funds every month to avoid extra costs.
Buy now, pay later services
An increasingly popular way of making large consumer purchases is through “buy now, pay later” lenders like Affirm, Klarna, PayPal, and Afterpay.
These services partner with vendors to let you apply for an installment loan for your purchase. Interest rates can be as low as zero percent APR if you pay off the loan within a specific amount of time or number of installments. You won’t find these payment plans at every jewelry retailer, but they can make for simple and affordable engagement ring financing when available.
Although this approach often means lenders do a credit check before approving you, they’re usually a bit more lenient than credit card issuers. They also don’t report your payments to the credit bureaus, so borrowing from them won’t affect your credit score. They’re a good option for those who want an easy alternative to using credit to purchase their engagement ring.
Make sure that you can keep up with your payment schedule. Late payments can lead to penalty fees or higher interest rates.
Jewelry store financing
Many jewelers offer in-house financing or store credit cards with as low as zero percent APR promotional interest rates. As with the credit cards mentioned above, these plans usually require you to pay off your purchase in a given time frame or you risk paying much higher interest rates.
You should be particularly careful of deferred interest clauses that allow lenders to charge you retroactively for all the interest you didn’t pay during the promotional period if you don’t manage to pay your balance in the agreed-upon time.
In-house financing tends to have less stringent qualifying criteria, so it might be easier to get approved for this if you have poor credit.
Taking out a personal loan to finance your engagement ring purchase can be a good option if you want to make smaller payments over longer periods of two to seven years.
You won’t get zero percent interest, though, so this approach will likely cost more in the long run than the other options on this list. But rates are still better than what you’d get with most credit cards and are often fixed, making it easier to schedule equal payments.
As with most loans, the better your credit score, the better rates you’ll get. Finding a co-signer to take on some of the debt can sometimes help if you can’t get the rate you want. And remember —: you should always shop around to get the best loan rate.
How to compare options for financing?
When comparing financing options, you should keep in mind the following factors:
The lower your interest rate, the less you end up paying in the long run. Try to get zero percent APR and watch out for deferred interest if you can.
Take the time to calculate how much you can afford to pay each month. If you’re unsure whether or not you’ll be able to make your payments, consider borrowing less.
Some promotional offers require you to pay off your balance within a specific time frame. However, if you need to reduce your monthly costs, you might prefer to spread your payments over a longer period. Remember that the longer your repayment term, the higher your total cost.
Always read the fine print when comparing financing offers. Some personal loans charge origination fees, like a deposit, while others charge prepayment penalties if you try to pay off your balance ahead of schedule. Credit cards sometimes charge annual and cash-advance fees, and almost all financing plans charge late payment penalties.
Can I finance an engagement ring with bad credit?
You can usually still find engagement ring financing even if you have a bad credit score. But be prepared to pay higher interest rates than you’d get with good credit.
In-house financing and “buy now, pay later” programs are generally more accessible to poor- or fair-credit people than the best low-interest personal loans and credit card promotions. But all types of financing have options for those with lower credit scores.
You can also find a co-signer to help you get approved and receive better rate offers.
The bottom line
If you’re resistant to the idea of financing your engagement ring, other options exist.
The first is simply to save up enough money to pay cash. That way, you save on interest and can focus your time and energy on planning for your big day. Sometimes family members are happy to chip in and help, too.
You can also save money by shopping for your ring online. Some reputable online retailers offer up to fifty percent rebates on certain online purchases. Less money spent on an engagement ring can mean more to spend on your wedding or honeymoon.
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