June 22, 2021

Engagement Ring Loan Calculator

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Ready to pop the question, but still working on the ring? Financing a ring could be a smart move for some. Calculate monthly payments with this guide.

Before you go home with your partner's dream ring, it pays to be prepared.

With this calculator you'll know:

  1. How much your monthly loan payment will be
  2. How many months you'll be paying off your loan
  3. How much you'll pay in total, including interest

Stick around for money-saving tips for engagement ring shopping, financing FAQs, and more.

Engagement Ring Loan Calculator

How to Calculate Engagement Ring Loan Repayment

With our calculator, you'll know exactly how much your engagement ring loan payments will be. Here's how to use it:

  1. Enter the loan amount that you want to borrow.

  2. Enter interest rate that the lender will charge on the loan.

  3. Enter term (years) that you'll be paying back the loan.

Once you hit "Calculate", you'll see your loan repayment mapped out with different graphs. Make sure you can commit to the payments each month. Otherwise, you risk loan default.

The last table uses an amortization schedule to further break down your payments. It shows you how much of your monthly payment is paid on the principal and how much is paid on interest.

With a lower interest rate, you pay less overall. This is because more of your monthly payment goes toward principal instead of interest.

Once you understand your loan repayment, find out what other options you have to buy an engagement ring below.

Ways to Finance an Engagement Ring

Personal Loan
One way to buy the engagement ring is with a personal loan.

Personal loans are offered by banks, credit unions, and online lenders. You make monthly payments over the course of 3-5 years to pay off the principal loan amount, plus interest.

Your credit score, debt-to-income ratio, and employment status help lenders decide what interest rates to offer you.

The average interest rate for a personal loan is around 12%.

The two main types of personal loans are secured and unsecured. Secured loans require collateral (like a car) in case you're not able to pay the loan. Because of this, they also usually have lower rates. Unsecured loans don't require collateral, but it's harder to qualify for good rates.

  • Lower rates than credit cards
  • Good for people with great credit
  • Secured loans easy to qualify for
  • Can require collateral
  • May come with an origination fee
  • Some lenders have prepayment penalties
  • Requires a hard credit pull

Jewelry Store Financing
Most big jewelry stores, big or small, will offer financing options. To entice you, they might offer 0% interest for several months - usually 6, 12, or 18.

Or, they might have a store "credit card" that comes with other perks, like discounts on other jewelry.

However, any jewelry store financing comes with a catch.

They may cancel your 0% interest and deferred payments if you don't pay back the full amount during the "promotional period" or if you submit a late payment.

Even worse, you may be charged retroactive interest (also called deferred interest) at extremely high rates, like 30% - 50%.

For this reason, jewelry store financing is not the best option. If it's your only option, be sure you can follow all the terms outlined in the financing agreement. Look over the terms very carefully before agreeing to anything.

  • Convenient
  • This option is okay if you follow the terms
  • Best for responsible borrowers
  • High interest rates
  • Potential for retroactive interest charges
  • Terms are inflexible
  • May require down payment

Deferrred/retroactive interest: This is when stores offer 0% interest for a promotional period but retroactively charge you interest on the original purchase amount if you miss a monthly payment or don't repay the full amount within the promotional period.

It's used by many stores, especially large jewelry retailers like Kay and Zales. Review this study on deferred interest to get the all facts.

Credit Card
Another option is to purchase the ring with a credit card. This approach has its advantages and disadvantages. Like jewelry store financing, this option may be alright if you can commit to regular, on-time payments.

Many credit cards offer 0% interest promotions for several months. Some also offer attractive sign-up bonuses if you spend a certain amount within the first 3 months.

This could be a smart move if you know you can pay off the entire balance before the 0% interest period ends.

If you're not using a new card with a low-interest promotion, you may want to avoid using a credit card altogether. In most cases, the interest rates charged by credit cards are extremely high (20% - 40% APR) and you won't be able to pay off the entire balance in one month.

  • Good option for new cards
  • Might get sign-up bonus
  • Might earn rewards/travel points
  • High interest rates
  • Not worth it without 0% interest
  • Not good for existing/open cards

Engagement Ring Financing FAQs

How much of a down payment do you need for an engagement ring?
Engagement ring financing may require a down payment of anywhere from 10%-80%, depending on the retailer. For example, Kay requires a down payment of about 20%, Tiffany & Co. requires between 25%-80%, and Zales requires 15%.

How long can you finance an engagement ring?
How long your financing is depends on your lender:

  • Jewelry store financing: 6-18 months (for 0% interest)
  • Personal loan 1-5 years
  • Credit Card: 12-18 months (for 0% interest on a new card); otherwise, definitely

Do you spend 3 months salary on an engagement ring?
The 3-month or 2-month rules are outdated and unnecessary. Your budget is highly personal and should be determined by your income, lifestyle, debt, current savings, and other big purchases you plan to make in the near future. Find out more with our engagement ring calculator.

Is it smart to finance an engagement ring?
Financing an engagement ring can be a smart move if you pay off the entire balance on time. Try to pay it off before your 0% interest promotional period ends. Otherwise, you may incur a lot of interest charges (20%-40%) that can add up quickly.

How Much Should I Spend on an Engagement Ring?

"Your engagement ring budget should be two months of your salary." Sound familiar?

Here's the thing: That rule is just an invention of De Beers. Back in 1940, the diamond company created a marketing campaign to encourage husbands to spend generously on the ring.

Unfortunately, it stuck around for so long that many still believe it. In reality, your budget should be based on multiple factors:

  1. Your income
  2. Your lifestyle
  3. Your debt
  4. Your current savings
  5. Other big purchases you plan to make soon

Our engagement ring budget calculator accounts for all 5 of these essential factors to give you the best budget for your personal needs.

Calculate How Much to Spend

How to Save Money on an Engagement Ring

Here are some of our best tips for cutting the cost of your significant other's engagement ring:

  1. Don't shop during peak times
    Avoid buying a ring between Thanksgiving and Valentine's Day, as that's when prices are highest.

  2. Know before you go
    Before you buy, research the 4Cs (carat, clarity, cut, and color) so you'll have the knowledge you need to negotiate the best deal.

  3. Go just under whole and half carats
    You can save almost 20% just by buying a diamond a fraction of a carat smaller (0.9 instead of 1.0). And no one will be the wiser.

  4. Don't get too caught up on quality
    Diamond color and clarity are not as important as you think!

    Instead, focus on getting an excellent cut, which makes the diamond more brilliant and can hide flaws.

    For the best balance of price and quality, we recommend H color and VS2 clarity. This will ensure that you get a white diamond that appears eye-clean, yet won't break the bank.

    For more of these expert tips, see our full article on how to get a diamond for best value.

  5. Customize the ring online
    Diamonds at online retailers can be as much as 50% cheaper than popular mall jewelry stores.

    If you're thinking about buying an engagement ring, James Allen is one of our top recommended online retailers, and they offer a no interest for six months financing plan.

Bottom Line

You're ready to find her perfect ring, but make sure your finances are in order!

Getting a personal loan to finance the ring is a better option for borrowers with good credit. This is because you're in the best position to get a competitive rate - one that's much lower than jewelry store financing or credit cards.

Just make sure you're spending an amount that's proportionate to your lifestyle, debts, and savings, and you'll be in the best position to start a financially healthy life with your spouse-to-be. Congrats to you both!

Holly Zorbas is a guardian of content and community at CreditDonkey, a diamond jeweler comparison and reviews website. Write to Holly Zorbas at holly.zorbas@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.

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How Much to Really Spend on an Engagement Ring

By Allison Martin - Tips for How to Buy Engagement Ring
Forget the "2 months' salary" rule. Find out how much money you should REALLY spend on an engagement and wedding ring here.
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