How To Finance an Engagement Ring

You’ve found the person you want to spend forever with, and you’re excited to begin the next chapter of your lives together as an engaged couple. 

Understandably, finances may be one of the last things on your mind as you plan to pop the question. But an essential part of the process includes funding that shiny new ring your partner will soon show off to friends and family. 

So as you browse online or window shop at your local jewelry store, you may wonder how much does an engagement ring really cost, anyway?

If that number sounds a bit daunting, you’ll be happy to know that various payment plans exist to help you pay for this significant piece of jewelry. 

Is It Smart To Finance an Engagement Ring? 

Most financial experts would advise you to plan for an expensive jewelry purchase. This includes budgeting and saving the amount needed to purchase the jewelry in cash. 

However, if you don’t currently have the necessary funds – or want to avoid depleting your savings – financing may be the best option. Fortunately, there are innovative and financially healthy ways to do so. 

Now let’s get into some of the financing options available to most buyers.

Jewelry Store Financing

One way to finance your new bling is through an in-store payment plan, which most jewelers and jewelry retailers offer.

With an in-store payment plan, you may take advantage of a low-to-no-interest promotional period and pay the ring off over 2 – 3 years. 

If you choose this type of financing, be aware of when the promotional period ends and try to pay the ring off before then to avoid paying heavy interest fees. 

Choosing a jewelry store payment plan may be best if:

• You have good credit.
• You can take advantage of a no-interest promotional period. 
• You’re confident in your ability to pay the ring off within the promotional time frame. 

Credit Card 

A credit card is another popular financing option for paying off an engagement ring.

If you get approved for a 0% introductory credit card, you can take advantage of no interest charges during promotional periods of 6 – 18 months. 

You and your new fiance may also enjoy travel perks with the credit card, which could come in handy for the honeymoon.

Just like with the in-store financing option, you’ll want to keep track of any promotional period timeline and the credit limit on the card. Your credit score could be negatively impacted if the ring’s purchase price exceeds 30% of your overall available credit. 

Choosing a credit card may be best if:

• You meet the standard qualification of a credit score of 690 or higher FICO. 
• You qualify for a zero-interest credit card with a high credit limit. 
• You’re confident in your ability to pay off the engagement ring during the offered promotional period.

Personal Loan

Another kind of financing to consider is a personal loan, which is a type of loan you can borrow from a bank, credit union, or online lender – and you can use it for almost any purpose. 

If you decide to finance an engagement ring with a personal loan, you’ll be provided with a lump sum of money you’ll have to pay back in monthly installments. 

It’s wise to shop around and look for the lowest offered annual percentage rate (APR) before committing to a personal loan. 

Depending on the loan’s terms, the time frame you have to repay the loan varies widely and can range from several months to several years. 

Choosing a personal loan may be best if: 

• You have good credit, allowing you to qualify for low rates.
• You prefer to pay the ring off over an extended period.

Buy Now, Pay Later Loan

Nowadays, many jewelers partner with third-party lenders that offer a buy now, pay later plan, such as Klarna, Afterpay, and Clearpay, just to name a few. 

When taking advantage of this payment plan, you can conveniently get approved while still in the store – and usually without a hard credit check. 

You’ll put a certain percentage of the purchase payment if approved. You’ll then pay off the remaining balance in zero-or-low-interest increments over a given period.

Buy now, pay later plans may be an appealing option if you lack credit history since you don’t need a certain credit score to qualify. However, avoid late payments, as they’ll likely be reported and can negatively affect your credit. Some plans may also charge late fees if you miss payments.

Choosing a buy now, pay later loan may be best if:

• You’re planning a large, one-time purchase (like an engagement ring) that you can comfortably afford to repay.
• You have a lower credit score or a thin credit history.

Home Equity Loan 

Another financing option to consider (if you’re a homeowner) is a home equity loan. This lets you borrow a lump sum of money based on how much equity you have available in your home. 

Lenders find this loan low-risk, as it involves you agreeing to use your home as collateral. For this reason, you may also find it relatively easy to obtain this kind of loan. 

For this type of loan, you agree to pay the loan back – including any interest – by making regular monthly payments. Lenders will likely limit you to borrowing a maximum of 85% of your home’s equity. 

A scary downfall to this financing option is if you’re unable to pay the loan for whatever reason, you could face foreclosure on your home.

When you should consider

You may consider a home equity loan for financing your new sparkler if:

• You’ve built equity in your home. 
• You’re looking for low, competitive interest rates. 

Which Financing Option Is Best?

So you’ve decided to finance your partner’s engagement ring. But which option is best for you? Keep a few things in mind to make the best choice: your overall budget (that you can comfortably afford), your credit score, your timeline for paying off the debt, and other expenses you’ll need to keep up with simultaneously.