Asking your significant other to marry you is a huge, exciting step in life. All of the excitement and nerves can easily take over any other thoughts, including your finances. Engagement rings, and the weddings that come with them, are one of life’s most expensive purchases, so it’s important to finance the ring in a way that sets you up for success down the road.
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What is engagement ring financing?
The national average cost of an engagement ring is around $6,000, though most people try to end up around $3,000. While comparing the cost of the engagement ring to what other people spend isn’t recommended, it’s important to be prepared with an idea of how much this will cost so you know if you’ll need help with financing.
Engagement ring financing is a type of financing you take to pay for an engagement ring. This can be in the form of a loan, payment plan, or credit card depending on your specific financial situation and needs.
How does it work?
The way engagement ring financing works depends on the type of financing you get.
For example, if you take out a personal loan, you’ll shop around and compare lenders, and then apply for the loan you choose. If your application is approved, you’ll sign and accept the loan agreement and then the funds will be deposited in your bank account within a few days. You can then use those funds to purchase the ring, and you’ll start making monthly payments to repay the loan.
The most important thing is to know all your options and compare lenders to find the best option for you. In most cases, you’ll receive the funds for the ring and then must pay it back over a period, or you’ll have to pay the price of the ring over time through a payment plan.
What are engagement ring financing options?
The good news is there are several engagement ring financing options available depending on your needs and financial situation:
1. Personal loan for engagement ring
Personal loan funds can be used for just about anything, including buying an engagement ring. If you have excellent credit (680+), you can apply for an unsecured loan and use those funds to purchase the ring. Or, if your credit score isn’t great, you can apply for a secured loan (with collateral) or use a cosigner to help improve your chances of getting approved.
Interest rates for engagement ring loans can vary widely depending on a variety of factors such as the lender, your credit score, the amount you are borrowing, and the length of the loan. That said, the average personal loan interest rate is 10.72%. The better your credit score, the better your chances of securing a lower interest rate on the personal loan.
Keep in mind, personal loans often come with fees and penalties that can increase the cost of the loan. It is a good idea to shop around and compare rates, fees, and terms from multiple lenders before taking out a loan to ensure that you are getting the best loan available.
Once you receive the funds from the bank, credit union, or online lender, you can use the funds to pay for the engagement ring. Then, you will start making monthly installments, or payments, to repay the loan amount plus interest over time.
2. Buy now, pay later engagement ring loans
Buy now, pay later services can break up your purchase into smaller installments, sometimes with low or no interest. This option is best if you can afford to pay off the engagement ring within 3 – 6 months. If so, it can help you extend your budget without adding additional financial stress.
While it is common for major online retailers to offer this financing option, it isn’t available at all retailers. If buy now, pay later is available, you can choose this option and the number of monthly installments. Then, rather than being charged the full balance upfront, your credit or debit card will be charged for the installment amount each month until the ring is paid in full.
Many BNPL programs, such as Klarna and Afterpay don’t charge interest on purchases. Other services, such as Affirm, don’t charge interest on payment plans of less than four months but do charge interest (up to 30%) on longer repayment plans.
Additionally, you don’t need good credit to qualify, as many BNPL loan applications don’t require a credit score check. However, while on-time payments aren’t reported to the credit bureaus, late payments are, so it can still affect your score if you don’t make the monthly payments.
Where to get a personal loan for an engagement ring?
If you’re looking to get a personal loan for engagement ring financing, there are primarily three places you can get one: Banks, credit unions, and online lenders.
| Banks |
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| Credit Unions |
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| Online Lenders |
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If you’re going with a different type of financing, talk to the jeweler about your options or research credit cards online that may fit your needs.
When to apply for an engagement ring loan?
There are a few factors to consider when deciding when to apply for an engagement ring loan. First, you don’t want to apply too early because you’ll have to start repaying the loan, plus interest, usually the month following when you get the funds. You don’t want to have the funds and be repaying the loan without having bought the ring.
However, keep in mind it can take a week or two to complete the application, approval, and funding process. If you want to buy a ring tomorrow, you likely won’t have the funds in time.
If you know you’re going to propose, it doesn’t hurt to do your research ahead of time to understand the options available to you and decide which best suits your situation. However, when it comes to actually applying for financing, you may want to do it two to four weeks out from buying the ring.
Alternatives to loans for engagement rings
Loans aren’t the only way to finance an engagement ring. In fact, there are several alternatives to explore:
1. Zero percent (0%) APR introductory credit card
Zero percent introductory credit cards do not charge interest on balances during the promotional period, typically ranging 12 to 24 months. During this time, even if you carry a balance from month to month, you won’t accumulate interest. This can be helpful for large purchases like an engagement ring because it gives you time to repay the cost without earning even more through interest. However, there are a few important things to note:
- These cards do have limits, and if the ring purchase exceeds 30% of your overall available credit, your credit score may be impacted.
- You must repay the balance before the period is over; otherwise, you’ll be hit with APR on the outstanding balance.
- You typically need a credit score of 690 or higher to qualify.
2. Jeweler payment plans
Many jewelers offer their own financing options as well, including store credit cards. If you have already picked out an engagement ring from a particular jeweler, you can ask them about available payment plans. This may include a credit card with a promotional period of one year or 18 months with 0% APR. If you are able to pay off the engagement ring within this time period, it could save you a lot of money in interest.
It’s important to beware, however, that high interest rates will kick in when the promotional period ends and the interest may be retroactively charged. Standard interest rates are around 30%.
In-store financing may be a good option, though, if you have excellent credit can qualify for the low or no-interest plan, and are able to repay the ring in full before the promotional period ends.
3. Borrow from friends or family
If you have friends or family members who would be willing to loan you some money to buy a ring, you can explore that option. If you go this route, be sure to document the amount you’re borrowing and how you plan to repay it. Keep in mind that not repaying the money can impact your relationships.
4. Consider a more economical ring
Engagement rings don’t have to cost thousands of dollars. Talk with your partner about their expectations, and maybe even do some shopping together to get a better understanding of the different types of rings, stones, metals, and retailers out there.
There are many ways to save on engagement rings that you may not be aware of. For example, gemstones other than diamonds, such as moissanite and white sapphire, can be far less expensive but appear similarly. Additionally, lab-made diamonds can be a third of the price of real diamonds but chemically and physically identical. Finally, silver can be much more cost-effective than gold or platinum. You may also choose to shop from a retailer that hosts sales or sells second-hand rings. These are all great options to consider to save on engagement rings.
If you need to buy a less expensive ring now, remember that you can always upgrade later when you’re more financially stable.
5. Save
If you don’t want to finance a ring at all, your other option is to simply set aside enough savings to cover the cost. This may take more time, but it prevents you from having to go into debt to buy the ring.
How engagement ring financing affects your credit?
There are a few ways engagement ring financing will affect your credit score:
- When you apply for a loan, the lender will complete a hard credit inquiry which will decrease your score by a few points for a short period of time. This will stay on your credit report for two years, but your score will typically rebound quickly.
- Taking out more debt can affect your score because it increases your debt-to-income ratio and depending on the type of financing, can increase your credit utilization.
- Making payments can also impact your score. If you make payments on time each month, your score will likely increase. However, if you make late or miss payments, your score will decrease. If you default on the loan, your score can drastically be affected.
Pros and cons of engagement ring loans
| Pros | Cons |
|---|---|
 Low interest rates for borrowers with excellent credit |  Taking on debt |
| Many options depending on your situation | High interest rates for those with poor credit |
| Flexibility with pricing | Fees and penalties |
| Can cause you to buy a ring out of your budget |
Is engagement ring financing a good idea?
If you want to finance an engagement ring because you can’t afford an expensive ring that you or your partner have been eyeing, that’s not usually a good idea. Bringing debt into a new marriage can be tricky, especially if it’s not something you can afford. That said, if you’re smart about financing and choose an option that’s best for you and your financial situation, it can be a good idea.
Make sure you have an excellent credit score so that you can qualify for better terms and lower interest rates. Also be sure you can afford the monthly payments. Choose a ring that’s in your budget, even if that means you have to upgrade in the future, and do plenty of research to learn if financing with a loan or working with your jeweler is a better option.
Engagement ring loan for bad credit
If you have bad credit, financing an engagement ring may not be a great idea. Bad credit means you’ll have a harder time qualifying for financing, and your interest rates will likely be much higher. This means higher monthly payments, and knowing you have a wedding to pay for as well. This combination can make the start of your new marriage challenging.
However, don’t be discouraged. There are loan options if you have bad credit, including personal loans through online lenders.
Pros and cons of engagement ring loans for bad credit
| Pros | Cons |
|---|---|
| Flexibility with buying a ring | High interest rates |
| Can help build credit | Fees |
| Can lead to overspending | |
| Impacts credit score if not paid on time |
How to compare lenders while financing your engagement ring?
Comparing lenders to finance your engagement ring works very similarly to how you’d compare lenders for other types of financing. As with other types of loans, it helps to get pre-qualified. Getting pre-qualified for a personal loan involves submitting a form with your personal information to a lender in exchange for the loan terms you potentially qualify for, such as the loan amount and interest rate. Though those numbers might change, this will give you a more accurate estimate of loan terms to help make comparison easier.
Getting pre-qualified will not affect your credit score so you can do so with as many lenders as you wish. The more lenders you can get pre-qualified with, the more loan options you will be able to compare.
Some factors to consider when comparing loan options include:
1. Total amount
Make sure you carefully consider how much of a loan you need, and find a lender that offers that amount. Also ensure you’ll be approved for that amount.
2. Interest rate
Interest rate can vary on a number of factors such as your credit score, credit history, income, existing debt, and others. The better your credit score, the lower the interest rate. Find a lender who offers the lowest interest rate possible to save the most money over the life of the loan.
3. Fees
Some lenders charge fees such as origination fees, application fees, late payment fees, and early payoff penalties. Understand what fees you may face so that you aren’t blindsided.
4. Repayment terms
Term is the amount of time you must repay the loan. Typically, terms range from 12 to 84 months. The longer the term, the lower the monthly payments but the more you’ll pay in interest. The shorter the term, the higher the monthly payments, but you’ll owe less in interest, so you’ll pay less overtime.
5. Monthly payments
The monthly payments will depend on the total amount of hte loan, the interest rate, and the loan’s term. Be sure the monthly payments are affordable because if you make a late payment or miss one altogether, your credit score will be affected.
How to apply for a personal loan for an engagement ring?
Once you’ve done your research, compared lenders, and chosen the right one for you, check your credit score and ensure you meet all loan requirements. Then, fill out the loan application. Doing so online will be the fastest, but you can also sometimes do it in person depending on the lender. You will need the following documentation in physical or digital format:
Valid State Driver’s
License or State ID
Proof of current
employment
(Paystubs)
Valid checking account
for direct debits
Most recent
W2 or 1099
Once you fill out the application, the lender will determine whether you’re approved for the funding. If so, they will send you the loan agreement to review and sign, and then they will deposit the funds into your bank account.
FAQs
Yes, you can get a bank loan for an engagement ring. Typically, this will be a personal loan offered by the bank that you can use to purchase a ring.
Your repayment terms depend on the type of financing you have, but if you have a loan, you’ll be required to make monthly payments to repay the loan plus interest.
Yes, most jewelers offer some type of payment plan to help with financing if you don’t want to take out a loan. These plans typically have no or low interest, and you’ll have a lower monthly payment.
This is completely up to you and your partner. Consider factors like what you have in savings, other outstanding debt, and other bills you’re paying to calculate what is most affordable for you. Overspending on an engagement ring when you don’t have the funds can quickly lead to a cycle of debt, so you want to be realistic.
Yes, you can use a wedding loan to finance an engagement ring. This is a good option if you have a healthy credit score and steady employment as it will help you to get a low-interest rate on the loan. You can approach a bank or a credit union for a wedding loan for your engagement ring. Ultimately, deciding to use a wedding loan to finance your engagement ring purchase comes down to your personal financial situation and priorities.
