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Engagement Ring Financing – A Quick Guide to Your Options

Engagement ring financing options

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Getting the right engagement ring for your significant other is a momentous occasion that should be remembered with joy. Unfortunately, with most engagement rings being priced in the 4- or 5-digit range, there’s often a bitter-sweet feeling to buying an engagement ring.

In fact, these price ranges can be so steep for some people that they often have to save for months or deprive themselves of other purchases in order to buy an engagement ring.

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So, how can you finance your engagement ring in the most efficient and effective way without breaking the bank? Here are the 5 main ways for engagement ring financing you should consider:

Cash for Outright Purchase

Paying in cash is always the best way to finance an engagement ring purchase. Yes, it’s difficult to save up such a large sum sometimes. Yes, we often have to save for a long time in order to do it which makes spontaneous proposals much more complicated.

And yet, it’s still the best thing you can do in this situation. This is important to point out because many people immediately default to some of the other 4 options below and don’t even think about paying in cash because it’s often too difficult or takes too long.

This is a mistake.

Paying in cash brings a lot of benefits to the table – it saves you money on interest and it has no risk of surprising late payment penalties and fees. Most importantly, however – it forces you to stick to your budget. It may not seem too romantic to “settle” for a more affordable ring instead of getting credit, however, you’d be surprised how often you can find affordable high-quality options when you look a bit more into things.

Online Shopping

Speaking of finding affordable options, online shopping is often the best way to get your hands on  budget-friendly and high-quality engagement rings. With the right online jewelry shop, you can save as much as 50% off your purchase without compromising on the quality of the ring.

The reason for this is that the online business model is simply more efficient than brick and mortar jewelry shops. Online shops are able to cut a lot of their business expenses and keep larger stocks more easily and thus – offer lower prices.

The obvious problem with online jewelry shops is that it’s harder to inspect the quality of what you’re buying. If you work with the right vendor, however, that’s not really a problem. Reputable online jewelers such as James Allen or Blue Nile offer not only high quality rings and good prices but also present their rings with HD 3D and 360-degree visual graphics. Plus, a good vendor will also offer a money-back guarantee period to make your purchase even safer.

Credit Card

If you’re positive that you won’t be able to save up cash for an engagement ring online, credit cards are an easy alternative. The problem with credit cards is obvious, however – huge interest rates.

It is possible to get a credit card with a low APR (annual percentage rate). In fact, it’s possible to even get credit cards with 0% APR. However, this is contingent on you having a very high credit score which not everyone has. Even if you can get a low-APR credit card, you’ll still have to calculate the period for this low interest and plan to pay back the money for the ring in time before the interest jumps up.

If you have a low credit score and you can only get a credit card with a high APR, however, it’s best not to buy an engagement ring that way. Instead, either try to first improve your credit score or save up cash. Or both.

Some jewelry stores, like Blue Nile, offer their own credit card. These often have very good terms, but ensure you read the terms and conditions carefully to avoid high interest rates. 

Personal Loan

If you can’t get the right credit card, another option to consider is drawing a personal loan. This should be your last resort, however, as the conditions of such loans usually aren’t very good for the consumer.

As with the credit card, you should look around for a safe loan with as low of an interest rate as possible. As a rule of thumb, don’t settle for anything above 10%, it’s just not worth it. Additionally, make sure the term of the loan is as short as possible and find a way to pay it back quickly – this will limit the amount of interest you’re going to pay.

If you do have a bad credit score and you’re only offered high-interest loans, make sure to search around for reputable lenders that lend money to people with low credit scores. There are a few of them and lots of loan sharks, so look carefully.

Jewelry Store Financing

Jewelry store financing is one of the benefits of many jewelry stores over online vendor. However, most reputable and well-established online vendors also offer financing options, including James Allen. If you can’t find a low APR credit card, this is usually a much safer and better choice than personal loans.

With this method, you can often get a very low interest rate – often lower than the average credit card and loan interest rate – and there are often lots of promotional deals you can benefit from.

Do read the fine print, however. Some vendors have hidden fees and charges in many of their big purchases. There are also the troublesome “deferred interest” credit offers that can charge you huge interests at once after a minor payment delay.

Also, look for the periods of promotional deals. Some of them are set up in such ways that they can drastically ramp up your interest if the promotion expires in the middle of your payment schedule.

All in all, while Jewelry store financing has its occasional traps, it’s usually a better choice than personal loans and credit cards. As long as you’ve found a reputable vendor and you’ve read the fine print, you should be able to get a good deal.

Wrapping Up

Buying an engagement ring is a big decision and often a high-ticket purchase. It’s important to set your budget and your boundaries, or you may find yourself buying a ring you can’t afford.

The best option is to pay cash, because that way,  you aren’t starting out your marriage with debt. There are more useful ways to use that money, like putting a deposit on a house.

If you can get 0% financing via promotions, make use of it, but avoid pitfalls by carefully reading the fine print and sticking to the conditions.

If not, your next best option is to get a personal loan at low interest rates.