How to Finance an Engagement Ring in 2022

Anja Winikka
October 22, 2021
5 min read

​​If you’re getting ready to pop the question, congratulations! This is a huge milestone in your relationship — and buying an engagement ring might be one of the largest purchases you’ve made in your life so far.

Is there a right budget for an engagement ring?

Before you start binging all the articles out there saying that an engagement ring should cost you anywhere between one to three months’ paychecks, remember: how much you want to spend is a personal choice between you and your partner. Many couples choose to allocate funds to other big things, like their wedding ceremony or a down payment on a house!

In recent years, most couples have typically spent anywhere between $1,000-$5,000. That’s a huge range to work with! Whether you buy a ring from a jewelry store or an online retailer makes a difference too; you can often get just as good quality stones online for cheaper.

And if you’re wondering whether to opt for a diamond or not? Don’t sweat it—now more than ever, couples are making alternative choices that reflect their personalities and values. Consider a different stone! Emeralds, moissanite, and sapphires are just as beautiful and timeless, and they’re growing in popularity right now.

Financing a ring through a jewelry store or a credit card

Many jewelry stores offer a variety of financing options since a cash payment isn’t always possible. One of the most common options is in-store credit cards with reduced-interest financing offers. If you can get a low interest rate—aim for 0% APR—on one of these cards and you make all your payments on time, this could be a great option! But there are some details to consider before you get on board.

Before you decide to finance through a jewelry store, consider whether you can afford to pay off the ring before the promotional period ends. Be sure you double check how long the promotion lasts and whether the rate disappears under certain conditions (like if you miss a payment). Remember that after the promotion period, the regular interest rate will apply—and these can get pretty high.

In particular, look out for “deferred interest.” It’s a common term of agreement when financing through a jewelry store, and it means that if you don’t pay off the full amount within the promotional period (usually 12 months), you will be charged all of the interest you weren’t charged during that time. Yikes!

For other credit card options, check with your bank—you might be able to get a card that offers a 0% APR promotional period—and unlike financing through a jewelry store, deferred interest isn’t a concern here. The only caveat is that you typically need good to excellent credit in order to qualify for one of these cards. If you don’t have great credit, don’t worry! You can work on building your credit score while exploring other options to finance your engagement ring.

Getting a Personal Loan

If cash and credit aren’t ideal options for you, a personal loan could be a good way to finance a ring. Loans provide unsecured funds that you repay in monthly installments, usually over a period of 2-5 years, and rates can vary anywhere from 5.99% APR to 35.99% APR between lenders. If you have a high credit score, you’re probably eligible for a lower rate; if you have a low credit score, you may only qualify for a higher interest rate.

The only drawback of a personal loan? There’s no promotional period, and you’ll end up paying interest. Depending on the rate you qualify for, the total cost of the ring and loan may come to more than you’re prepared to pay. Loans sometimes involve an origination fee of up to 10% of your total loan amount, and you could encounter pre-payment penalties if you pay off your loan ahead of the repayment period. All things considered, if you don’t qualify for a loan with interest rates lower than 16%, a credit card could be a better option.

While cash is typically the best way to go for a large purchase like an engagement ring, sometimes it’s not possible. Sit down with your partner to discuss your budget, and work out the best ring financing option for both of you and your joint goals!

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