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Your Engagement Ring Financing Options

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Couples paid an average of $5,900 for an engagement ring in 2019, reported The Knot. While paying cash is the ideal form of engagement ring financing when looking to minimize costs, for many Americans that may not be an option.

Personal loans, jewelry store financing, credit card special financing and borrowing from friends or family are common forms of financing. But take time to explore your options, because some lenders will offer more favorable terms and interest rates.

1. Jewelry store financing
2. 0% APR credit card
3. Borrow from friends or family
4. Personal loan

1. Jewelry store financing

Because they know that many consumers can’t afford to buy an engagement ring in cash, many jewelry stores offer their own financing options, which can offer lower APRs than you may find on a personal loan.

Some can come with a promotional 0% APR. These APRs can last for 12 months or longer, after which the APR will adjust to its normal rate. One thing to be mindful of, though, is deferred interest. If you don’t pay off your balance within the promotional period, you could be charged interest back from the original purchase date.

2. 0% APR credit card

These days, there are plenty of credit cards on the market offering a 0% introductory APR for a particular period of time, often between 12 and 18 months. If you know you’ll be able to pay off the total amount before that introductory period ends and you meet lender creditworthiness standards, this route can save you money because it’s basically an interest-free loan.

This financing option can have extra perks if you choose a credit card with both a 0% APR period and cash back — consider it as a small discount on your ring. However, there are two notable downsides:

  • Hard to qualify for: Most of the credit cards that fall into this category require at least a good credit score, which starts at 670.
  • May pay interest: Ideally, you would pay off the balance before the introductory APR period ends. But if that’s not the case, you could be charged interest from the purchase date. Figure out how much you’d have to pay each month to repay the debt in its entirety before the promotional period ends.

3. Borrow from friends or family

Depending on your family situation, you may have family and friends who want to contribute to your celebration. While it may not be the norm anymore that the bride’s parents foot the bill for the wedding, a 2019 WeddingWire report still finds that parents and other family members are contributing nearly 55% of the total cost of weddings.

If you have loved ones who want to chip in for the big day, you may consider asking them to loan you the money for the engagement ring. There are a couple of benefits to this option. First, you can avoid inquiries on your credit report as you apply for financing. You also save yourself the interest payments you might run into with one of the other options.

However, make sure you’re clear on how you’ll repay the amount. Lending between family or friends can be damaging if you fail to pay back what you borrowed.

4. Personal loan

A personal loan is a flexible form of financing, whether for an engagement ring or other major purchase. You can find these loans through banks, credit unions and online lenders. Minimum borrowing amounts start at $1,000 or more, repayment terms range from 12 to 60 months or longer, and APRs average 7.63% to 26.15% or higher depending on your credit.

The process for using a personal loan to pay for an engagement ring is simple:

  1. Determine your needs, such as how much you need to borrow, how long you’d prefer to be in repayment and what you can afford in monthly payments.
  2. Shop lenders for those that offer competitive terms for your credit profile. You can do this by applying for prequalification with a few lenders to see what kinds of loan terms you may get. This process doesn’t affect your credit. You should also review lender fees.
  3. Choose a lender and formally apply. Expect to fill out the application online, and to be asked for personal information such as your Social Security number and income. You’ll also submit to a hard credit check, which will lower your score by a small amount.
  4. Submit supporting documentation as requested by the lender. This may include proof of income, for example.
  5. Wait for a formal decision. Depending on the lender you may get a decision the same day you apply or within a few business days.
  6. Receive your loan funds by direct deposit or by check. Some lenders can fund your loan within one day of loan approval.
  7. Pay for your engagement ring. With funds in your bank account, you can use the money to buy an engagement ring.

Personal loans can be an effective financing choice for people who can’t save up to buy a ring in cash and who may not qualify for a financing option with a 0% APR introductory period or who need a longer repayment period.

However, there are some downsides to look out for with this type of financing. First, loan interest rates are based partly on your credit score. If you have a fair or poor credit score, there’s a good chance you’ll get stuck with a high interest rate. Also, many personal loans come with a loan origination fee of 1% to 8% of your loan amount, which is deducted before loan disbursement or added on top of your balance.

Before you finance your ring, try the following

Talk to your fiance about a budget, if you can

It’s no longer the norm that the person popping the question buys a ring and gets down on one knee without discussing it with their partner. The Knot reported that only about a third of proposals are truly a surprise, and a majority of couples discuss the ring purchase ahead of time.

Couples who open this line of communication have the opportunity to discuss the engagement ring budget as a team. With marriage just around the corner, this is a great opportunity to start talking openly about finances. It can be a part of a larger discussion about your wedding budget and future financial goals.

Consider opting for a more economical ring

While diamonds are still the overwhelming favorite center stone for engagement rings, there are other options on the market that can help reduce the cost of the engagement ring if your partner is on board.

For example, moissanite is the second most popular center stone. These stones resemble diamonds but can save you thousands of dollars for a one-carat stone. Other popular stone options that can help you reduce your ring budget include sapphire and morganite.

You can also save money on the engagement ring by choosing a more affordable band option. Silver and white gold are both more economical than platinum. Additionally, you can opt to buy the stone from a diamond wholesaler rather than a retail store to save upwards of 25% on your diamond.

Save up months in advance using a budget

Once you’ve decided to pop the question, postponing can often feel burdensome. But giving yourself some extra time to save up for the cost of the ring might be the right choice.

An engagement ring is a big investment, but it’s just one of the many expenses you’ll have when it comes to planning a wedding. Allowing yourself the time to save can help to ensure you’re ready for the cost of the engagement ring, as well as the wedding expenses to come.


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