Financing A Wedding Ring: Is It Possible?

Planning a wedding can be a costly affair, and engagement rings are no exception. The average cost of an engagement ring in 2023 was $5,500, according to The Knot. With such a significant expense, many couples may consider financing options to help spread out the cost. This article will explore various ways to finance an engagement ring, including personal loans, credit cards, and specialised programs. It will also discuss the pros and cons of each option and provide guidance on choosing the right financing solution.

Personal loans for engagement rings

Personal loans are a popular option for engagement ring financing. Well-qualified borrowers may get a low-interest rate on an unsecured personal loan that can be used to purchase an engagement ring. These loans provide a lump sum of money that you pay back in fixed instalments, with interest, over time. Annual percentage rates on personal loans start at around 6%, and repayment terms are usually between two and seven years. The fixed monthly payments can be easier to budget for than revolving payments on credit cards.

You can use a personal loan calculator to see estimated rates and payments on engagement ring loans, based on your credit score. Pre-qualifying will allow you to see personalised rates and terms without affecting your credit score.

Borrowers with good or excellent credit, little existing debt, and high incomes are more likely to be approved for the lowest personal loan rates. Those with lower credit scores may still qualify, but they may pay more interest.

Personal loans are best for buyers who want to shop around for a competitive interest rate. If you qualify for a low rate and need two or more years to pay off the ring, a personal loan is a good option.

However, it's important to remember that applying for any type of financing can lower your credit score for a few months. Make sure you can afford the monthly payments and that you're not spending more than your budget allows.

Credit cards for engagement rings

If you're planning to propose to your partner, you might be in the market to buy an engagement ring. Engagement rings can range from a few hundred dollars to thousands, depending on your partner's preferences and your budget.

Couples spent an average of $5,500 on engagement rings in 2023, according to The Knot. If you don't have the cash to pay for the ring upfront, you can consider financing options such as credit cards, "buy now, pay later" plans, personal loans, or in-house financing from the jeweller.

• Introductory 0% APR Credit Cards: These cards offer promotional periods of 15 to 21 months with no interest charged on purchases. This option is ideal if you have a high credit score (typically above 690) and can pay off the balance within the promotional period to avoid high-interest rates. Additionally, choosing a card with travel rewards can provide additional benefits for your honeymoon. Examples of such cards include the Capital One Quicksilver Cash Rewards Credit Card and the Chase Sapphire Preferred® Card.
• Credit Card Rewards: If you can pay off the ring in one payment and have good credit, consider using a travel rewards credit card to earn a sign-up bonus that can be used for your honeymoon. Cards such as the Chase Sapphire Reserve® and the Capital One Venture Rewards Credit Card offer lucrative sign-up bonuses and travel credits.
• Flat-Rate Earning Credit Cards: If your engagement ring purchase doesn't fall into a bonus-earning category, consider using a card with a solid flat-earning rate. The Chase Freedom Unlimited® card, for example, offers 1.5% cash back on all purchases, including your ring.
• Credit Card Protection: Some credit cards offer purchase protection in case of theft, damage, or loss. For example, the Platinum Card® from American Express covers items purchased with the card for up to $10,000 per incident and $50,000 per calendar year.
• Credit Limit: Ensure that your credit limit is high enough to cover the cost of the ring. If not, consider making another purchase first and paying it off to build your credit score and prove your creditworthiness. Alternatively, ask the jewellery store if you can pay for the ring using two different credit cards to stay within your limits.
• Timing: Carefully read the terms and conditions of the credit card before applying. Some cards with introductory 0% APR offers have time restrictions, such as purchases made within 14 months of account opening. Plan your ring purchase accordingly to take advantage of the interest-free period.
• Foreign Transaction Fees: Avoid using a credit card with foreign transaction fees if you're buying the ring abroad, as these fees can negate any cash-back benefits.
• Return Policies: Be aware that credit card return protection policies typically exclude jewellery. Discuss the return policy with the jewellery store before making your purchase.

Buy now, pay later plans

Buy now, pay later (BNPL) plans are a popular option for financing wedding rings. These plans allow you to purchase the ring now and pay for it in instalments over time. Here's what you need to know about BNPL plans:

How BNPL Plans Work

When you buy a wedding ring with a BNPL plan, you typically pay a percentage of the total cost upfront. Then, you make equal payments over a short period to repay the remaining balance. The repayment term and interest rate will vary depending on the provider. Some providers offer a pay-in-four plan, where you make four equal payments every two weeks, with the first payment due at checkout. Others may offer longer terms that charge interest.

Applying for a BNPL Plan

To apply for a BNPL plan, you'll usually complete a short application with a soft credit check, which won't negatively impact your credit score. Providers may consider factors such as the funds available on your debit or credit card, your purchase history with the lender, the price of the ring, and your credit score. While there may be no minimum credit score requirement, having a higher score can improve your chances of approval and qualifying for a lower interest rate.

Benefits of BNPL Plans

BNPL plans offer several benefits, including:

• Convenience: BNPL plans are often integrated into the checkout process when buying a wedding ring online, providing a seamless financing experience.
• Potential for low or no interest: Depending on the repayment term and your creditworthiness, you may be offered a BNPL loan with little or no interest, helping you save money.
• No hard credit check: Since BNPL providers typically perform soft credit checks, you don't have to worry about your credit score being affected by the application process.

Drawbacks of BNPL Plans

However, there are also some potential drawbacks to consider:

• Late payment penalties: If you can't stick to the payment schedule, you may owe late fees and interest charges, which can increase the overall cost of the ring.
• High instalments: The payments under a BNPL plan may be higher than the minimum payments on a credit card or other financing options, so ensure you can afford them.
• Limited impact on credit score: BNPL providers generally don't report on-time payments to the major credit bureaus, so using BNPL may not help build your credit score. However, late payments can be reported and negatively impact your score.

Examples of BNPL Providers

Popular BNPL providers in the wedding ring market include Affirm, Klarna, Afterpay, ShopEZCredit, and Flexiti. These companies partner with various jewellers to offer convenient financing options to their customers.

Jewellery store financing

Many jewellery stores offer in-house financing to help customers pay for their engagement rings. These are usually instalment loans, where you make incremental monthly payments towards the loan balance, plus interest.

The advantages of jewellery store financing include convenience and immediate ring ownership. If you’re able to get approved quickly, you can potentially walk away with the new ring on the same day. Jewellery stores also often run financing promotions, offering 0% financing for a fixed period.

However, there are some disadvantages to jewellery store financing. You may experience strong sales tactics and pressure. Sometimes, offers may be presented to you that aren't actually the best for your financial situation. Most retailers will also need to run a hard credit check, which can temporarily decrease your credit score.

Engagement ring loans

There are several options for engagement ring financing, including personal loans, credit cards, and "buy now, pay later" plans. Here is some information on engagement ring loans, a type of personal loan:

When to Choose an Engagement Ring Loan

How to Qualify for an Engagement Ring Loan

To qualify for an engagement ring loan, you will typically need a good or excellent credit score. However, those with lower credit scores may still be eligible but may pay higher interest rates. It is recommended to boost your credit score before applying by lowering high-interest debt and checking your credit report for any errors.

Advantages of Engagement Ring Loans

Disadvantages of Engagement Ring Loans

One disadvantage of engagement ring loans is that you will need to go through the loan application, approval, and funding process before purchasing the ring. This can be a longer process compared to other financing options.

Frequently asked questions