Believe it or not, an engagement ring is a big-ticket purchase like a car or a house. Diamonds themselves are some of the most expensive jewellery a person buys or owns. That’s why some people bide their time to pop the question. They have to align their finances first for the wedding and the marriage.
It’s true that you don’t need to break the bank to acquire the ring that will make your partner say yes. You have probably heard of the three-month-salary rule and intend to break it. Still, it doesn’t hurt to look into other options to fund the purchase.
Cash remains king, but financing is viable for purchases that can range from hundreds to thousands of dollars as the carats will show. The option offers perks that a pure cash transaction doesn’t.
Take a good look at the most common ways to finance your quest for the perfect engagement ring.
This method is as close to saving money for an engagement ring. For example, a jewellery store will ask you to put 10 to 15 percent of the ring’s purchase price as an initial deposit or down payment. You will then make multiple payments toward the balance. Upon completion, the store will send or ship the ring to your doorstep.
Layaway plans make sense when the product is of high demand; you are practically asking the store to keep the item for you until you have the funds.
Jewellery stores typically offer financing plans. Some tie their financing with a credit card from major networks like Visa and Mastercard. Other shops require you to apply for their in-house credit card to take advantage of special financing promos and exclusives.
The terms and conditions for each financing package vary and require a good reading, especially the footnotes. Before you get dazzled by the 0 percent interest rate, learn about the following:
- The promotion and its mechanics to take advantage of the advertised rate. For example, do you need to spend X amount to pay off the ring in X months with no interest?
- What happens if you fail to make the payments within the prescribed period? What about late payments?
- What is the regular annual percentage rate if you are not able to complete the payments on time or you miss a single instalment?
- Is the regular APR variable or fixed? How is it calculated?
Using a credit card is one of the fastest ways to buy the most coveted engagement ring. The perks of signing up for a new card include an introductory rate of 0 percent and rewards that can help fund your honeymoon. To get approved for a new credit card, you need a credit score, credit history, and proof of income.
Credit cards are blamed for getting people into debt, but if used properly, they help people build credit and get better financing terms for mortgages and car loans. Consider doing these:
- Crunch the numbers to determine if you can afford the fees.
- Pay off the balance in full or within the interest-free period.
- Keep your credit utilization ratio below 30 percent.
These are taken out for any purpose, including weddings, vacations, home improvements, and college tuition. You can borrow at least $1,000 up to $100,000, depending on your qualifications. To get approved for such a loan, you need good to excellent credit score, low debt-to-income ratio, and high income.
Any caveats for this type of loan?
- No asset backs a personal loan, so it represents a higher risk to lenders. As a result, its interest rate is generally higher than that of comparable products.
- Be aware of origination fees that lenders charge for processing the loan.
- Some personal loans have prepayment penalties, so you may not be able to pay them off earlier than the scheduled term.
The general rule of buying an engagement ring and borrowing money for it is that you stick to what you can afford to pay. You can stealthily ask you’re significant other for their style for a ring, and then you can survey physical and online jewellery stores.
You can also save more if you shop online for engagement rings. You will come across plenty of dainty choices for half-carat diamond rings whose cut can show off their brilliance. If you are looking for more, you can peek into scores more in the inventory.