How to Finance an Engagement Ring

Jewelry store financing

Most jewelry stores offer engagement ring financing in the hope that you will shop with them for the big day. Many offer special promotions, like deferred payments or 0% interest for a set number of months. Look at the financing terms carefully and make sure you understand any hidden costs or penalties for missed payments. If you’re getting 0% interest, for example, you want to be confident that you can pay off the debt during the 0% promotional period — and know what the APR will be if you can’t.

Credit card

Charging an engagement ring on a credit card with a 0% promotional APR can be a smart move. These rates are typically available for 12 months or more. Your ring purchase should earn reward points and, if the card has a sign-up bonus, it may also help you get those bonus points. Calculate how much you’ll need to pay off each month so you can pay the card off before the promotional rate ends and make sure it fits in your budget. Just like the promotional rates sometimes offered by jewelry stores, you don’t want to be stuck with a sky-high interest rate.

When is it a good idea to finance an engagement ring?

Financing an engagement ring is serious business. It means taking on new debt and squeezing new payments into your monthly budget. You can feel confident financing an engagement ring if your budget shows that you earn more than enough to make the monthly payments. Financing makes sense only after you have an emergency fund in place and a plan for paying your bills if your financial situation goes sideways.

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Here are some questions you should ask yourself before agreeing to engagement ring financing:

Is my credit score high enough to qualify for engagement ring financing? Whether you are applying for in-store financing, a 0% intro APR credit card, or a personal loan, a good credit score helps your chances of approval. If your credit score is not high enough to qualify, you’ll need to find a cosigner, put up collateral, or choose an alternative way to finance your purchase. It’s always a good idea to work to improve your credit score before you apply for financing.

If you’re using jewelry store financing or a credit card: What happens if I don’t pay the ring off during the promotional period? Say you purchase a at 0% interest for 18 months. You’ll need to make a minimum monthly payment to pay it off before the promotional period ends and your interest rate goes up. But what if you’re hit with an unexpected expense — you’ll find many of those with a wedding — and can’t make your monthly payments? That means that at the end of 18 months, you’ll still owe money. Now, let’s say the interest rate jumps to 17% (which is not uncommon). You could end up paying hundreds in extra interest charges. If you’re opting for 0% financing, make sure you can pay off the entire balance by the end of the promotional period.

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