Most major jewelers offer financing plans, some of which feature 0% interest for a limited period of time. For example, Jared offers interest-free financing for 12 months, or 12 months at 0% followed by low-rate financing for six months. Kay Jewelers offers 12 months interest-free. Blue Nile offers no-interest financing for six and 12 months, or equal payments for 24, 36 or 48 months at 9.9% (the time period depends on the amount financed). Zales offers 0% interest for six, 12 or 18 months, again, depending on the amount charged.
Obviously, using a personal loan to finance an engagement ring will tack on a considerable amount of interest to the total cost of your ring. But if a 0 percent financing offer isn’t available to you, a personal loan could be a better option for financing an engagement ring than putting the ring on a credit card at the double-digit regular APR.
In reality, people fall in love and choose to get married at all different stages of life. I realize that you may be considering financing an engagement ring to be able to pop the question, ring in hand, sooner. If you’re going to finance an engagement ring, here’s how to be smart about it.
A personal loan can be an alternative to opening a new credit card. While you won’t get interest-free financing that way, you may qualify for a loan with a low fixed rate lasting for anywhere from 12 to 48 months. The advantage to this type of financing is that you’ll have a fixed monthly payment, and know exactly how much you need to pay each month until the loan is paid off. In other words, there is no risk that you will see your rate skyrocket if you fail to pay off the balance when the promotional rate expires.
If you haven’t socked that much away, don’t worry. All of the major jewelry stores offer financing, with many of them promoting interest-free financing for six to 12 months. (No interest, no payments is no longer allowed thanks to the CARD Act). But there’s a catch: miss a payment or fail to pay off the balance and you’ll pay a lot more.
As with all types of engagement ring financing, there are a few things to watch out for, though. Your interest rate will depend in large part on your credit scores; the better your credit, the lower your interest rate. If your credit isn’t strong, you may wind up with a higher rate. (Think of interest as the opposite of a discount on the ring. Instead of paying less, you pay more.) You can check your credit scores for free on Credit.com to see where you stand.
For something like a diamond, it’s obviously best to pay cash. But, we get it: You’re head-over-heels and you’re considering financing the ring so you can pop the question sooner. Here are the best ways to finance an engagement ring.
Grayson Bell was a college student when he decided to propose to his girlfriend (now wife). But with a part-time job as his only source of income, paying cash for a nice ring was out of the question. While discussing the dilemma with his mother, she offered to loan him the money. It turned out to be a smart move. “She had contacts at a prestigious jewelry market in another state,” he recalls. “She was able to get a ring at 60% off the appraised value. It was a great deal and a custom ring specifically designed for my wife.”
Another option is talking to your bank or credit union about getting a personal loan. Interest rates vary, but if you have a good relationship with your financial institution, getting a short-term loan with a fixed payment amount for a set period of time could save you from the pitfalls of retailer financing.
One more potential trap: Applying for one of the accounts will create an inquiry on your credit reports. Plus, if you accept the financing, you’ll have a new account with a balance listed on your credit reports, and that could potentially have a negative effect on your credit scores. That’s something to keep in mind if you hope to buy a home together soon, for example.
† Monthly payment shown is equal to the promo purchase price (excluding taxes) multiplied by 2.1242%, rounded to the next highest whole dollar, and only applies to the selected financing option shown. If you make your payments by the due date each month, the monthly payment shown should allow you to pay off the purchase price within the promo period if this balance is the only balance on your account during the promo period. If you have other balances on your account, this monthly payment will be added to the minimum payment applicable to those balances.
Many jewelry stores offer store credit cards or other financing options. What’s more, store salespeople may be incentivized to push you towards these options. Sometimes, these offers may be competitive (for example, offering 0 percent or even 0 percent and no payments for many months). But after these promotions expire, most of these cards have very high interest rates.
The average engagement ring ran $5,598 in 2013, according to the TheKnot.com. That’s no small chunk of change. While it’s ideal to save enough to pay cash for a ring, there may be times you just can’t — or won’t — wait.
Bell is a personal finance blogger now, and shares how he dug out of $50,000 in credit debt on his website. But at the time he was just a student who needed to find a way to finance his engagement ring. “All in all, the experience was a good one,” he says. “Looking back now, I realize I should have waited to just save up for the ring, but in my college years, I wasn’t thinking about that or my financial future. I paid off my loan on time and thanked my mother for what she did.”
Are you willing to go into debt for love? If you are ready to pop the question, but haven’t saved for the ring you want to buy, you may be tempted to finance the purchase. But do that, and you may find that already pricey engagement ring costs a lot more than you planned.
Even if you can afford to pay off the ring prior to the promotional APR expiring, consider whether opening a jewelry store credit account is the right move. In the best case scenario, you’ll pay the ring off and may never use the account again. Or you might be tempted to finance future purchases from the store that you don’t really need.
Few favorable terms from jewelers Chances are, you’ll shop locally for an engagement or wedding ring, but if shopping from the comfort of your couch is more your style, that can work, too. Shopping for jewelry online is becoming increasing popular, thanks to websites such as Blue Nile, James Allen or even Costco. Global sales of online fine jewelry are expected to capture 10 percent of the market by 2020, according to Research and Markets.
Whichever method you choose to finance an engagement ring, review your credit reports and scores before you apply for the loan. And be sure to read the fine print so you understand the terms of the loan. Paying more than you expected is stressful, and you’ll have enough stress planning — and paying for — your wedding!
Of course, practicing restraint and saving enough to pay in cash to avoid going into debt is best, it isn’t an option for everyone. Before you decide to finance an engagement ring, it’s important to know what you’re signing up for and some creative alternatives for cash-poor romantics.
In addition to taking most major credit cards, both brick-and-mortar and online jewelers often offer dedicated private-label credit cards. However, the terms of these retail cards tend to make the majors look like a bargain. Although jewelry sales abound as Valentine’s Day approaches, regardless of when you buy it, you’ll generally realize savings through a jeweler’s card only if you pay off the ring before any 0 percent promotional period expires.
Rack up rewards, or open a new balance transfer card If you already have a card with a low interest rate and plenty of available credit (meaning the card is nowhere near being maxed out), that’s could be your best bet. Even better: charging the ring on a rewards card, rack up any points, miles or cash back, and then apply for a 0 percent balance transfer card with a generous promotion period, such as 12 to 15 months. Again, you’ll have to make sure you pay off the balance during the 0 percent APR or else you’ll socked with interest on the rest of the balance.