Purchasing an engagement ring is a significant investment. It could be one of the most significant purchases you've ever made. The average national cost of an engagement ring is $5,500, according to The Knot's 2020 Jewelry and Engagement Study, with a quarter of respondents spending between $1,000 and $3,000. 1 This pricing range indicates that you could consider financing an engagement ring. First and foremost, paying cash is always the best option for large purchases such as an engagement ring. Paying cash saves you money on interest, avoids late fees and penalties, and prevents you from purchasing a ring that is out of your price range. If purchasing cash for your engagement ring isn't an option, you might want to consider financing it instead. We look at the various possibilities for purchasing an engagement ring, including jewelry store financing, personal loans, and even paying with a credit card.
Financing for Jewelry Stores
Buying an engagement ring from a jewelry store offers several advantages. Before you buy it, your soon-to-be husband can try on various rings and settings to discover the perfect fit. It's possible that your timing coincides with a spectacular discount, and the business will provide you with an attractive financing option. But, before going to the local jewelry store to finance an engagement ring, do your homework. It would help if you familiarise yourself with the following topics: Any special offers: A low promotional interest rate will most likely be provided to you. This offer may save you much money, but make sure you can afford to pay for the ring within that time limit. The interest rate at regular intervals: After the promotional time has ended, compare the usual interest rate. If you don't pay it off within the particular period, make sure you can afford the payment at the standard APR. Fees or charges that are not disclosed: When making a large purchase, it's a good idea to read the fine print and become familiar with any hidden fees or costs associated with financing choices. Keep an eye out for credit offers with "delayed interest." If you don't pay off the entire sum within the agreed-upon term—for example, 12 months—you'll be charged all the interest you didn't pay during the grace period. You will also be asked to make minimum monthly payments during the grace period. The grace period will end if you miss any payments or are 60 days late on a payment, and you will be charged for any interest delayed.Visa/MasterCard
Another way to pay for an engagement ring is to place it on a credit card, but this method requires some forethought. To begin, you'll want to put the ring on a card with a low APR—ideally 0%. You'll also want a low APR that corresponds to the length of time you anticipate paying off the ring. If you prepare, you won't be hit with a hefty APR when the promotional period ends. You'll need excellent credit to qualify for a low or no APR card. If you don't, you may need to spend some time improving your credit score. While you may be anxious to propose, taking time and adequately financing your ring will save you much money in the long run.Loans for Individuals
Taking out a personal loan to pay for an engagement ring should be your final option. You should pay off the ring before the promotional time ends. It would help if you tried negotiating a 0% financing plan with the jewelry store or placing the ring on a credit card with a low or 0% APR. Suppose you don't qualify for either of those options owing to a low credit score. In that case, a lack of financial history or other factors, a personal loan might be your best option. Here are a few pointers: Look for a personal loan with a lower interest rate—under 10% is a good starting point. Whatever rate you choose, make sure it's less than the typical credit card APR, roughly 16 percent. 3 The average personal loan length ranges from 12 to 60 months; it's best to keep it as short as possible to avoid paying interest. Do you have the financial means to finance that unique engagement ring? How about something a little less pricey? Use the calculator below to determine how much you'll have to pay each month.Make a monthly payment calculation
A personal loan's monthly payment is determined by the loan's size, period, and interest rate (which is highly dependent on your credit score). To obtain an idea of what your monthly payment might be, fill in the blanks below. AMOUNT OF THE LOAN LOAN TERM OF $15,000 36-month period (3 years) PERCENTAGE OF INTEREST RATE OR CREDIT SCORE 15 OR Your Credit Rating PAYMENT EVERY MONTH 519.98 dollars The total interest paid was $3,719.28, and the loan amount was $15,000.00. One final consideration when financing an engagement ring: be sure you're buying a ring you can afford. Overextending yourself and financing a ring you'll be paying for in 10 years isn't the best financial approach to starting a new marriage. After all, there's still the wedding and honeymoon to pay for.Most Commonly Asked Questions (FAQs)
What happens if an engagement ring is destroyed while the payment plan is in effect? Whether you're still paying for the ring has no bearing on what happens if it's damaged—you'll still have to pay back any debt you owe. However, you might be able to get your ring insured through renters or homeowner's insurance. You can also purchase specific engagement ring insurance. What is the proper amount to spend on an engagement ring No one can tell you how much to spend on an engagement ring, but you can get an idea of what others are spending by looking at national averages. Suppose the national average cost of an engagement ring is $5,500, and the national median annual earnings are around $41,500. In that case, most people will spend roughly 13% of their yearly salary on an engagement ring.