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Personal Loan Engagement Ring: Solution for Your Special Moment

Personal Loan Engagement Ring:  Solution for Your Special Moment
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Getting engaged is an exciting time, but the cost of a ring purchase can put a damper on your fun. You might consider a personal loan or other financing option if you don’t have enough in your savings account to pay for the ring purchase outright. Before you jump in head first, here’s everything you should know about a personal loan engagement ring.

Using a Personal Loan Engagement Ring Loan

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Using a personal loan for an engagement ring means you’ll pay interest on top of the cost of the ring. This isn’t necessarily bad, but you should know what you’re getting into and how to make the most of your financial situation. For example, you may find a loan with a promotional period or qualify for a credit card with a 0% introductory interest rate. Looking for a financing option with the best terms will make engagement ring shopping more affordable.

Is It the Best Option to Finance an Engagement Ring?

The best way to buy an engagement ring is to pay cash. Then, you won’t pay interest, and you’ll own the ring without worrying about monthly payments and what will happen if you have a poor credit score.

However, that doesn’t mean financing an engagement ring is bad. But it’s best to compare your options and minimize the cost of financing an engagement ring.

Tips for Finding the Perfect Ring and Cost

Finding the perfect ring is a personal choice. Everyone has different ideas of what an engagement ring should look like or even how much it should cost. There isn’t a specific way to do it.

The key is to buy the ring you can afford, which also makes you and your soon-to-be fiance happy.

Here are a few tips to use.

Pick and Stick To Your Budget

You might have heard of the three months of your salary ‘rule’ that the De Beers diamond company started in the 1930s; that’s an old-fashioned theory and isn’t something anyone must follow.

Instead, you should determine your budget and what you can afford. For example, if you plan to finance an engagement ring, consider what monthly payments you can afford and how much interest you’re willing to pay.

It’s important to look closely at your budget and stick to it. For example, when you shop for an engagement ring, it can be easy to get caught up in the emotion and excitement of it, but paying more than you can afford, only leads to poor personal finance habits when you’re about to start a new life.

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Seek Quality at Low Costs

Being on a budget isn’t the end of the world when shopping for an engagement ring. The key is to know what you want to prioritize.

For example, you might want to buy a higher-quality diamond and save money on the setting or band. If you shop around, you might find companies that sell loose diamonds allowing you to afford a higher quality at a lower price.

While you must still buy the setting and/or band, you can usually save money by buying them separately.

Where to Find Affordable Rings and Financing

Once you’ve set your budget, it’s time to find affordable rings and financing options.

If you need to finance an engagement ring, you’ll need to figure out where to get the funds. Most jewelry stores offer financing options, but they aren’t always with the most attractive terms, and their ring prices are often inflated.

You can also consider a personal loan, credit card, or buy now, pay later option.

No matter the type of lender you choose, be sure you understand the interest rate, terms, and overall cost.

Ask if there is a prepayment penalty or higher costs if you have low credit scores. But, again, knowing all your options and what you might qualify for can steer you in the right direction.

Engagement Ring Financing Options

Like we said earlier, there are many engagement and wedding ring financing options. But, again, knowing your budget and what you’re comfortable paying will help you choose the right option.

Finance a Ring With a Personal Loan

Personal loans are a common way to finance an engagement ring if you don’t qualify for 0% financing or can’t afford to pay the balance off before the 0% rate expires.

Unsecured personal loans have an average interest rate of 11.21%, as of the most recent data available. However, the average credit card rate is currently 24.10%, so a personal loan may make more sense.

Personal loans usually have two to five years repayment terms and fixed monthly payments. This can make it much easier to budget what you can afford and know exactly what loan amount you should consider after looking at your budget.

Finance a Ring With In-Store Financing

Jewelry store financing is a common option since it’s so ‘in your face’ when you shop. The nice thing about in-store financing is that you might get a promotional period with a lower or deferred interest rate.

Like personal loans, compare your options and consider the total cost. For example, if you have the option for deferred interest, look at the total cost. When do you start making interest payments again, and does interest accrue during deferment?

The monthly payments might be higher than you think once interest begins accruing. This is especially important if you accept an offer with an introductory interest rate. Know what the full payment is when the introductory rate expires.

Finance a Ring Under a Buy Now Pay Later Contract

Buy now, pay later programs are available in most retail stores today. This program allows you to buy an engagement ring and pay for it over time.

The most common BNPL (buy now, pay later) companies are Affirm, Klarna, and Afterpay. They typically don’t have the same qualifying requirements as credit cards, but they’ll look at your payment history and available cash to determine if you qualify.

BNPL companies usually have two models – you can break the total into four equal installments or apply for a longer-term loan with low interest rates.

Finance a Ring With a Credit Card

If you already have a credit card, you may finance an engagement ring with it. You may also apply for a new credit card if you have good credit. The key is to only charge up to 30% of your credit limit, so you don’t damage your credit score.

It’s also important to pay attention to the interest rates charged on a credit card. If you don’t have a card with a promotional period or can’t pay the balance off before the promotional period ends, you should know the interest rates charged. With APRs at all-time highs, it can be hard to afford a credit card payment.

Find and Use a Zero-Interest Card

The best case scenario when financing an engagement ring with a credit card is to find a zero-interest card. These offers are reserved for consumers with good credit scores, so focus on improving your credit history before applying.

If you qualify for a zero-interest credit card, do the math and see if you can pay the balance off before the promotion ends. Any outstanding balance will be subjected to regular interest rates and could be more than you can afford if you don’t prepare.

Borrow From Family or Friends

If you have friends or family invested in your desire to buy an engagement ring, they may be willing to help with the cost. For example, you might ask close family members to contribute to the cost of the ring as their wedding gift to you. It might seem strange to ask, but they are giving a gift of a lifetime because they’re helping you avoid paying interest charges.

If you aren’t comfortable asking for a gift, consider arranging a loan with family or friends. Just set clear expectations regarding the repayment terms, and consider putting the agreement in writing.

How to Compare Options for Ring Financing

Before choosing the ring financing, learn how to compare your options so you stay within your engagement ring budget and pay the least amount possible on the loan.

The key is looking at the big picture, especially if you have deferred or promotional interest rates. Knowing the loan’s full cost, including the required engagement ring down payment and repayment term, is important.

Important Factors With an Engagement Rings Finance

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Here are the most important factors to consider when financing an engagement ring, whether you’re considering low-interest credit cards, personal loans, or buy now, pay later options.

The Interest Rate

The interest rate is the factor most people worry about first. This is the charge the lender requires to lend the money. Therefore, the lower the interest rate, the less it costs to finance the engagement ring.

The Monthly Payment

The monthly payment must fit your budget. Your payment includes the principal and interest charges. Pay close attention to any changes the payment may go through. If you have an adjustable-rate loan or deferred interest, the payment may change and affect your budget.

The Terms of Payments

The payment terms refer to how long you have to repay the loan. For example, personal loans and BNPL programs have terms, but revolving debt, such as credit cards, don’t have specific repayment terms.

Know the details, including any prepayment penalties that would increase your total cost.

Economical Options, Quality, and Cost

As you explore your options, consider the overall quality and lifetime cost of your decision. An engagement ring is a lifetime purchase. You don’t want to skimp on value, but you shouldn’t put yourself so far into debt that you have more than you can handle as you start your new life as a married couple.

Additional and Hidden Fees

Some loans have additional fees. Read the fine print and look for hidden fees that would increase your costs. This is especially important if you’re on a strict budget. You have many engagement ring financing options, so finding the one that costs the least is important.

Qualifications for Personal Loan Engagement Ring Loans

Each financing option for engagement ring financing has different qualifying requirements. On average, you’ll need the following:

  • Good credit scores

  • Low debt-to-income ratios (your total debt compared to monthly income)

  • Proof of income and employment to make your payments

Beware Scams for Financing Rings

Whenever you make a big purchase, you should watch out for scams. Getting caught up in the excitement of buying an engagement ring can make you overlook the specifics of a financing opportunity and get taken advantage of by a scam.

Take your time, and consider having another set of eyes with you to read the agreement and ensure the opportunity is legit. This is especially important if you find financing opportunities online. Do your research to ensure they are legit first.


Can You Finance an Engagement or Wedding Ring With Bad Credit?

There may be options to finance an engagement ring with bad credit, but you’ll likely pay higher fees or interest rates. So it’s best to fix your credit before applying for financing to ensure you get the best rates and terms.

What Is the Recommended Amount Spent on an Engagement Ring?

There isn’t a specific amount you must spend on an engagement ring. Instead, you should buy what you can afford. Consider your budget and whether you want to pay monthly for the ring or would rather pay cash and not have to worry about interest and finance charges.

Which Is the Best Option to Finance a Ring

The best option to finance a ring is the one with the lowest cost. For example, if you have excellent credit, qualify for a 0% APR credit card, and have the funds to pay the balance off before the 0% APR expires, that’s your best option.

However, if you don’t qualify or can’t pay it off in full, you will likely get better rates and terms with an unsecured personal loan. They don’t have hefty interest charges, and with a good credit score, you may get great financing options.

Personal Loan Engagement Ring – The Bottom Line

If you have strong credit, you may be eligible for a personal loan. Engagement ring shopping can be a lot easier, knowing you have the funding available to pay for it, but it’s not your only option.

Exhaust all options, including paying cash for the ring, before deciding how to make one of the most important purchases of your lifetime.