It’s no surprise that many couples choose to finance an engagement ring. In fact, couples spend an average of $3,250 on this celebratory purchase, according to a 2021 survey by jewelry insurer Brite.co.
However, with numerous financing options, from loans to credit and beyond, it’s important to choose the best one for your situation.
Here’s what to know about engagement ring financing:
Assess personal loans, credit cards, in-store financing, and Buy Now, Pay Later (BNPL).
| Average rates | Possible fees | Availability | Time to funding | |
|---|---|---|---|---|
| Personal loans | 4.99% to 36% | – Origination fees – Prepayment penalties – Application fees – Interest | Can be used for almost all purchases | Could arrive in a week |
| Credit cards | 16.9% | – Balance transfer – Cash advance – Interest – Over-the-limit fees | Can be used for almost all purchases | Approval may take up to a week or longer |
| In-store financing | 26.72% | – Interest – Returned payment fees | Varies by store | Varies by store |
| Buy Now, Pay Later | N/A | – Non-sufficient funds | Varies by store | Usually same day |
Personal loans can be used for a variety of reasons, one being engagement ring financing.
You’ll find online lenders, traditional banks, and credit unions offering unsecured personal loans (where you don’t have to offer any collateral for borrowing) and with wide borrowing ranges from hundreds to thousands of dollars. (There are also secured personal loans that require collateral if you don’t have the credit or cosigner to qualify for an unsecured loan.)
Related: Learn more about getting a personal loan on Credible.com
If you choose a personal loan for engagement ring financing, then consider comparing as many lenders as you can to find the best rates and repayment terms for your budget.
| Lender | APR | Minimum credit score | Loan amount | Repayment terms |
|---|---|---|---|---|
| Avant | 9.95%-35.99% | 550 | $2,000 to $35,000 | 12 to 60 months |
| Best Egg | 8.99%-35.99% | 600 | $2,000 to $50,000 | Several options available |
| LightStream | 5.99%-23.99% | 660 | $5,000 to $100,000 | 24 to 84 months |
| Marcus | 6.99%-19.99% | 660 | $3,500 to $40,000 | 36 to 72 months |
Another option for engagement ring financing is using a credit card. Ideally, you can consider a card with a 0% APR introductory offer on purchases, which gives you a set period of time to make payments without costly interest.
Most retailers, including jewelers, offer an in-store financing option. It’s similar to a credit card but can only be used for purchases made within the store. It’s possible to find in-store financing with a 0% introductory APR, if you pay in full within a specified time frame.
Another option is using a Buy Now, Pay Later lender. This type of financing lets you purchase the ring and make payments over a specified number of days or months. It’s offered by companies like Affirm, Klarna, and PayPal.
While you’ll often hear “spend so many months’ worth of your salary,” it’s better to evaluate how much you can afford and your financial situation. Review your current budget (or create a new budget) to see what money you have available after expenses. This can help determine if there’s room for a large purchase or if you need to consider financing options.
If financing is the likely choice, you can use a personal loan calculator to determine how much of a monthly payment you can take on while staying within budget.
If possible, start by using as large of a down payment as possible so you have less to finance and can pay the remaining balance sooner. After you’ve established the amount you’re comfortable spending each month, look for the financing options that work within your personal budget the best, for the least amount of cost.
Evaluate the following factors before you take out a personal loan or enter into another type of financing agreement for an engagement ring:
Interest is what the lender charges you for borrowing, and it’s the largest contributing factor to the overall cost of the loan. The lower the interest rate you qualify for, the less you pay for financing. Also, as you review financing options, compare annual percentage rates or APRs, which account for the interest rate and the lender fees.
It’s important to know what your monthly budget can withstand before you agree to a monthly payment amount. If a payment is too high for budget, then consider borrowing less or putting down a larger down payment towards the ring.
Lenders set different terms for repayment, frommonths to years. The longer the repayment period, the lower your monthly payment is, but you’ll pay more interest over time. Ideally, you’ll pay your engagement ring balance off as soon as possible to avoid or decrease interest charges.
Many finance options also include fees, such as late payment fees, prepayment penalties, or annual fees. It’s critical to understand what fees you’re responsible for since they would add to the overall cost of the loan.
It’s possible to finance an engagement ring with bad credit, but it’s likely to limit your options or yield higher interest rates. Look for personal loans for bad credit. Or you might consider adding a cosigner to the personal loan to increase your odds of approval.
Scams try to take advantage of borrowers who might not qualify for a personal loan or other financing options. For example, payday loans might offer what seem like rates that are too good to be true for poor credit, but usually these loans carry triple-digit interest rates.
You’re better off going with a reputable lender that will work with borrowers who have fair or poor credit.
If you decide a personal loan is your best financing option for an engagement ring, consider the following before you apply:
Related: Learn more about getting a personal loan on Credible.com