Purchasing an engagement is one of the larger purchases you will make in your lifetime, with the exception of a mortgage and a vehicle. Obviously, it would be best to just pay cash for your engagement ring, however most individuals are still paying off student loans, or not quite making a large enough salary to do so yet. Many people decide it’s best to finance their engagement ring, and this article will show you the best ways to finance that ring.
Tips On Shopping For Engagement Rings
Before we look at the financing options, here are some tips that can save you money.
- Look for diamonds that weigh just under certain weight intervals. For example, if you wanted a 1.0 carat diamond ring, you could possibly get a .90 carat diamond ring for $500 to $1000 less. The difference from a .9 carat ring and a 1 carat would be hardly noticeable and it would save you decent money.
- Buying the diamond stone loose rather the already mounted can be advantageous, allowing you to inspect the diamond fully.
- Do not be afraid to negotiate the price at jewelry stores. Usually you can knock about $100 or more off the sticker price of the ring if you negotiate well. Also all diamonds look nice at first glance, so as a result you might be tempted to buy the first diamond you see. Shop around, compare prices, as this is a very large and important purchase.
5 Ways to Finance an Engagement Ring
Here are five ways to finance your engagement ring.
Option 1: In Store Financing
Jewelry stores all offer multiple financing options such as store credit cards. Many of these financing options might sound very attractive as they offer 0 percent financing for a certain amount of months etc. However once the promotion period is over, the interest rates are very high. The interest rates can range from 23% to as high as 29% so be careful.
Take your time and read all the terms of the deal. Check out how long the promotion period is, if it will take you a while longer to pay it off before the promotion expires then you shouldn’t make the purchase. Also there is usually a catch to this promotion, if you miss a payment or fail to pay off the balance in fall during the promotional period, then you will be charged interest back to the date of purchase, or pay interest starting when you missed the payment.
Also, if you have to get the store credit card for the promotional deal, evaluate if its even worth having this credit card. Will you ever use is again? You could be tempted to use the card to finance further purchases you don’t really need as well. Keep in mind your credit is checked when applying for the promotional period. Once you accept the financing for the ring it will show a new credit source with the balance you owe on the ring. This could potentially have an effect on your credit score which is important if you are about to buy a house or a vehicle.
Option 2: Buying The Engagement Ring On A Credit Card
On the surface using a credit card might seem like a bad idea because of the high interest rates, and the fact the card companies allow you to make small minimum payments which takes a longer time to pay off the debt, meaning you pay more interest. However if you are smart about it you can try the following:
Find a credit credit card that is offering a zero percent interest period for the first 6-12 months to new customers. Sign up for the card, purchase the ring, then pay off the ring before the promotional period ends.
Even if you had enough cash to buy the ring outright, you could put it on a credit card with a 0% interest period, then making the payment during the 0% period would earn you rewards or cash back if you are using a rewards credit card.
Some of the following credit cards tend to have these promotional features:
- BankAmericard Cash Rewards Credit Card
- Citi Double Cash Card
- Chase Freedom Card
Keep in mind to qualify for these cards, and most cards with a good promotional offer, you will need to have good credit to qualify for the card.
Option 3: Get a A Loan For An Engagement Ring
If the two above options of financing through a jewelry store, or using a credit card to purchase the ring don’t work out, you’ll like have to settle for receiving a loan. This is obviously the more costly of the options, but if you can’t get any 0% financing this could actually be a lower interest then the interest you would pay on a credit card.
If you have just average credit you should have no problem qualifying for a loan, with interest rates lower then you would see on credit cards. If you have great credit, you will have even lower interest rates making this a decent option. However if you have poor credit, either you won’t qualify or you will be stuck with sky high interest rates.
If you have very poor credit or no credit at all , there are a few things you can try to do as shown below:
Option 4: Get a Loan From Family/Friends
Nobody really likes asking their family or friends for money, however for a special item such as a ring the changes are good they would be willing to help out. You do not need to spend a fortune on the ring either. For example if are young and just out of college and you buy her a $30,000 ring she is gonna know you put yourself in debt for it. Also, the old saying that you need to spend 2-3 months worth of salary on a ring simply isn’t accurate anymore. Look for a nice ring that has a reasonable price.
Option 5: Finance the Ring via Online Jewelry Stores
There are many online jewelry stores that allow people with bad credit to finance an engagement ring. This should be a last resort option, as you do not know the actual quality of the diamond among many other reasons.