Updated July 14, 2022

How to Finance an Engagement Ring

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Thinking of financing your engagement ring? It can be a smart move in some cases. Learn about your financing options and things to watch out for.

Is Financing an Engagement Ring a Good Idea?

An engagement ring is often the first major purchase of your new coupled life. It's a big decision that shouldn't be taken lightly.

How many months salary do you plan to spend on an engagement ring?

Spending two months' salary on the ring is quite unrealistic for most people. You shouldn't feel discouraged by it. A more realistic approach is to balance her expectations and your financial ability.

Still, you may find that you need some help. Financing an engagement ring is not always a bad idea. Here are some pros and cons:

It makes sense to finance a ring if you:

  • Have a good credit score to qualify for lower interest rates
  • Have no trouble making the monthly payments
  • Have a plan to pay off the loan on time
  • Don't want to wait to save up before proposing to the girl of your dreams

Financing a ring may not make sense if you:

  • Have poor credit and can't get a low interest rate
  • Will struggle to pay the monthly payments
  • Have other higher priority financial obligations

If you decide to finance, you have to be smart about it. Keep reading to find out how to make financing your ring work out for you.

Bottom Line: If you have to finance the engagement ring, it's too expensive for you. As a new couple, you'll have a lot of future expenses so it's best not to start your new lives with debt. The ring is a drop in the bucket compared to the cost of the actual wedding and doing life together.

Whether you decide to finance your ring or buy outright, choose James Allen. They offer a large selection to fit any taste and competitive pricing (other jewelers may rip you off with a 40% markup). Every diamond is certified so you can expect quality for your budget.

Best way to finance an engagement ring: Some jewelry stores offer 0% deferred financing for up to 12 months. This means you can finance a ring AND pay no interest if you pay off the balance before the promotional period ends.

How to Finance Your Engagement Ring

Financing an engagement ring is not necessarily bad if you know what you're doing. It could give you a more manageable payment strategy.

Below, we've listed the options in our order of preference. With the first being the most desirable and the last being the riskiest.

1. Open a New Zero-Interest Credit Card

Many credit cards offer a long 0% APR promotional period ranging from 12 to 18 months. This means for up to 18 months, you will have no interest on purchases.

But make sure you have a plan to pay off the ring before the promotional period ends. Otherwise, you'll be hit with a high interest rate on any unpaid balance.

For example, let's say you get a card with 15-month 0% APR and the ring costs $5,000. Make sure you are capable of making monthly payments of $334 ($5k/15). Let's say after 15 months, you still have $1,000 left unpaid. You'll be charged interest on the $1,000.

This is our favorite option. In fact, it could be smart to do this even if you do have the cash to pay for the ring outright.

Many reward cards have a sign up bonus if you meet a minimum spend requirement. Buying a ring will allow you to easily meet that requirement so you get a nice bonus. That's extra cash or travel miles you can use towards your honeymoon.

However, you usually need good credit to qualify for these types of promotions. And plus, you'll be limited to the credit limit given.

Pros:

  • Long 0% APR period gives you time to pay off the ring interest-free
  • Earn sign-up bonus and rewards for your purchase
  • Can also be used to buy other things

Cons:

  • Need good credit to qualify for 0% APR promotion
  • Also need good credit to get a higher credit limit
  • Usually high interest rates after the promotional period ends

2. Take Out a Personal Loan

A personal loan is an option if you want to avoid credit cards. You'll get a lump-sum of money that you can use for any purpose. The interest rate is fixed. You'll also get a fixed monthly payment over a set term.

Interest rates for personal loans tend to be lower than credit card rates, starting at around 6%. The terms are usually 2 to 5 years.

This could be a good option if you have good credit and can qualify for a low rate. And if you need over 2 years to pay off the ring.

This option may not be great if you have bad credit. The worse your credit is, the higher the interest rate you will pay. In that case, you may be better off with a low interest credit card.

Pros:

  • Get fixed rate that's usually lower than credit card rates
  • Depending on the lender, you can get a longer repayment term
  • You can choose a loan with a high enough credit limit for your needs

Cons:

  • Need good credit to get a low interest rate to make financing worth it
  • May come with origination fee and other extra fees

3. Buy Now, Pay Later Plans

A lot of jewelers are partnering with "buy now pay later" payment services.

For example, James Allen offers Splitit at no extra cost or interest. This service automatically splits your payment over 3 months on your own credit card. This is good if you don't want to be out the entire lump-sum at once.

Brilliant Earth offers financing through Affirm. You can choose your repayment term, and could even quality for 0% APR. You know upfront what your monthly payment is, and the total interest charges.

These options could be good for easy, on-the-spot financing. They also don't impact your credit as much as opening a credit card or taking out a loan (unless you don't make the payments).

Pros:

  • Easy to apply right on the store's checkout page
  • Know your terms before you agree
  • Often can get a 0% interest plan
  • Usually just a soft credit check, so it won't hurt your credit

Cons:

  • Generally shorter repayment terms
  • Usually, there are fees for late payments
  • Not all jewelers offer this, so you'll be limited to your options

4. Finance through the Jewelry Store

Many jewelry stores offer in-store financing options, usually between 6 months to 24 months.

Some offer 0% interest for a certain timeframe. But watch out. This is usually 0% deferred interest. The terms are very tricky.

Deferred interest means that if you don't pay off the amount in full by the stated time, you'll be charged interest on the full amount from the date of purchase. This can add up to a mountain of interest even if you only have a small balance left.

How deferred interest works: You get a $5,000 engagement ring. The financing term is 25% APR with 12-months interest-free. Let's say after 12 months, you did good but still have $500 left to pay. However, you'll be charged interest on the entire $5k from date of purchase. That comes out to $1,250 in interest charges, plus ongoing interest on the remaining $500.

If you choose this option, you MUST be sure that you can pay it all back before the promotional period ends. Many customers are shocked to see that they suddenly owe thousands of dollars in interest, despite only having a few hundred left to pay.

Pros:

  • Usually easier to qualify for than credit cards for those with lower credit
  • Some retailers offer 0% financing options

Cons:


  • Be careful of deferred interest - must pay it off in time
  • Usually very high interest rates after the promo period

If you're considering this option, ask these questions and make sure you fully understand the answers:

  • How long is the promotional period, and what is the interest rate after that?
  • How is the interest assessed? Does it start from the day of purchase?
  • Will the promotional rate be revoked as soon as I miss a payment?

5. Get a loan from family or friends

Some engagement ring buyers turn to family and friends for financial help. This option can be good and bad.

The good thing is that you won't get credit checked. So it can be helpful if you have bad credit. Your family may even not enforce interest (or very low). And if you miss payments, it won't show up on your credit report and negatively affect it.

But on the other hand, it could ruin a relationship between you and a loved one, if you don't make good on returning the loan.

Money issues with family can be dicey. It's best to make the agreement as official as possible, even if it's someone you're close to. Agree to repayment terms and sign an official contract. It may sound strange, but it will definitely save you from family drama down the line.

Keep in mind that with a credit card, personal loan, or jewelry store financing, your credit will be affected if you don't make payments on time.

Pros:

  • Will not impact your credit
  • Family and friends probably won't charge you a lot of interest
  • They'll probably give more flexibility to pay back

Cons:


  • Could ruin relationships if you don't pay back the loan
  • Owing family/friends money could make things awkward

Other Options if You Don't Want to Finance

If borrowing money sounds too risky to you, here are some other options:

  • Split the cost: It is becoming increasingly common for the couple to split the cost of the ring. 20% of brides help pick up part of the tab on the ring, especially if it means being able to get exactly what they want.

  • Start with a starter ring: You can also consider starting with a less expensive, simple ring. Then upgrade it later in your marriage when you're more financially stable.

  • Opt for a lab diamond: Lab grown diamonds are now as much as 75% cheaper than natural diamonds. You can always swap it out for a natural diamond later.

  • Consider alternatives: If you're not stuck on a diamond, there are tons of alternatives that cost way less! From diamond look-alikes to colorful, unique gemstones, there are many options for budget friendly engagement rings.

The most important thing is that you and your future spouse are on the same page. You definitely need to have a candid talk about finances and expectations. It'll do wonders to help you start your new life together on the right foot.

Did you know? Over 40% of brides-to-be want to be involved in the ring selection process. And over 1 in 3 women think the engagement ring should cost less than $1,000.

No matter what financing option you choose, be sure to do your research and read all the fine print before you sign. Otherwise, that sparkly diamond could become a major financial headache.

How Long Will It Take to Pay Off Engagement Ring?

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Can You Finance an Engagement Ring With Bad Credit?

The good news is that having bad credit shouldn't get in the way of purchasing an engagement ring. It just might make the process a little longer.

Many jewelers offer special financing plans for customers with bad credit. Those plans often involve a higher interest rate and less repayment flexibility. Other jewelers offer layaway programs with a 20%-30% down payment, allowing you to start making payments before you pick up the ring.

If you have bad credit or no credit, some jewelry stores or financers allow someone with good credit (such as a parent) to co-sign on a loan. But keep in mind that this also puts the burden on the co-signer if you aren't able to make the payments.

How Much Can You Afford?

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The first step in buying an engagement ring is setting your budget. It's a personal choice. It should not be influenced by things like the "two months' rule" or the national average.

Start by being honest with yourself. Factors you should consider when determining your ring budget include:

  • Your income
  • Your monthly expenses
  • How much you can save each month
  • Wedding and honeymoon costs
  • Your future goals, like buying a house

Your ring shouldn't put you in debt or delay your other financial goals. An engagement ring is only the start of your lives together.

Of course, the best option is to save until you can afford to pay for the ring with cash. But if that's not your situation, there are financing options.

When my boyfriend asked me whether I would prefer a ring or a house, I instantly said house. I preferred to build a life then all the shiny things that come with getting married.

Meghan Brumbley, owner and lead planner of DC Engaged

Best Places to Buy an Engagement Ring

The Bottom Line

It's best to save up and buy your engagement ring in cash. But there are situations when financing could make sense for you. The most important thing is to make sure you have a concrete plan to pay it back on time.

If you're committed to going big when it comes to your engagement ring, consider shopping with an online retailer like Blue Nile or James Allen. You'll get a much bigger selection than at stores as well as a much better price.

Michelle Kaiser is a retail analyst at CreditDonkey, a diamond jeweler comparison and reviews website. Write to Michelle Kaiser at michelle@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Read Next:

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How to Buy an Engagement Ring

Tips for Diamonds
You hear a diamond is forever when shopping for an engagement ring. But that doesn't mean you need to pay for one that long.
How many months salary do you plan to spend on an engagement ring?
26% Less than 1 month salary
24% 1 month salary
27% 2 months salary
13% 3 months salary
9% More than 3 months salary
Source: CreditDonkey poll of 9,359 respondents. Totals may not add to 100% due to rounding.
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