So you're ready to marry the love of your life! Congratulations! You’re probably on cloud nine thinking about starting a life with your best friend. You've also likely been talking about engagement rings and you've imagined what yours would look like. Many people consider financing an engagement ring as the right thing to do. After all, you should have a great engagement ring that you love and can show off to the world right?
Financing an engagement ring can be very expensive but the cost of financing is not something most people think about. I'm sure you want to start your marriage off on the right foot financially as newlyweds. Well, the last thing you want is to find yourself in a high-interest debt cycle from financing a ring. Especially if you also have a wedding to budget and pay for.
That being said, in this article, we'll cover what to consider, and the best alternatives when it comes to financing an engagement ring!
Average costs of engagement rings and wedding bands
Did you know the average cost of an engagement ring these days is about $5,500? Keep in mind that this cost doesn’t include the wedding bands. The average cost of wedding bands for both the bride and groom is a little over $1900. So once you add the cost of the bands, you’re really getting up there in the amount of money you may end up spending on rings. For many, thinking about this amount of money, makes financing for an engagement ring seem attractive.
Why you should pay cash vs. financing an engagement ring
Given the fact that so many people are dealing with student loans, a couple planning a wedding is likely to already have student debt that they are bringing into the marriage. And so paying cash for an engagement ring is always the better option. Even if neither of you has any debt, paying cash is still a good idea. This is simply because, once it's paid for, you don't have to worry about a monthly payment schedule or accumulating interest. You can instead focus on planning your beautiful wedding and keeping those costs in check. Because as you likely know, the average wedding can cost a pretty penny too!
To save successfully for an engagement ring, start by opening a dedicated savings account. Next, build saving for the ring into your budget so you have a specific amount of money you put aside each time you get paid. While you save, you can finetune your budget in terms of how much you'd like to spend. You can also start researching the four C's based on your budget: Carats, color, cut, and clarity!
Financing for an engagement ring: Save the most money
If you however prefer to go with financing an engagement ring, keep in mind that not all financing options are created equal. Here are some key money tips to help you with the process.
Find a jeweler that offers zero percent interest for financing a ring
When financing an engagement ring focus on finding a jeweler that offers a great deal on financing - as in zero percent! There are jewelers that have their own in-house financing options that offer zero-percent financing. Some may require a minimum purchase amount and some require you to make a cash down payment.
It's important to know that the zero percent rate may only be in effect for a certain period of time. For instance 12 months. So be sure you read and understand the terms and conditions so you know what you’re getting into.
Use a credit card with zero percent interest
You could also use a non-jeweler credit card that offers a zero percent interest rate. Lots of issuers offer introductory rates of zero percent for a period of time. So do your research to see what offers are available. Again, you want to pay attention to the terms being offered before you sign on the dotted line.
Get a low-interest personal loan
You may also be able to get a low-interest loan from your bank or credit union if you have other accounts with the financial institution or can prove your creditworthiness.
Don’t go with just any jewelry credit card
I would highly recommend that you avoid financing an engagement ring with any jeweler that doesn’t offer some kind of special financing or intro rate. You also definitely don’t want to sign up for just any credit card because it’s offered to you. This is where you can get into trouble with super high-interest rates. Instead, do your research to find the lowest interest or preferably zero-percent interest.
How to quickly pay off your financing for an engagement ring
Regardless of how you secure financing, you’ll want to pay it off as quickly as you can. It's a good idea to create a plan to pay off your purchase as quickly as possible. Here are some key tips:
Know the terms and create a plan
You can avoid paying a lot in interest if you pay off the balance quickly. If you get a credit card with a zero percent intro rate, you should make sure you can pay off the balance within the length of time specified. You can do this by creating a debt repayment plan.
For example, if you get a card with zero percent interest for 12 months, make absolutely sure you pay your balance in full within the 12 months! If you go over 12 months, you may have to pay interest from the original purchase date. This is because the interest is “deferred”. And if you get hit with paying all the deferred interest, this could add up to be hundreds or even thousands of dollars so you obviously want to avoid this at all costs.
Cut back on non-essential spending
You want to throw as much money at that debt as possible and this means cutting back on non-essential spending. By doing this, you can put all the extra funds towards your paying off the ring. This could mean cutting back on eating, happy hours and etc.
For example, buying a $10 lunch every day of the week adds up to $50 per week. Add in a happy hour on Fridays and there’s another $50. If you cut these expenses you could save up around $100 a week to put towards your ring payments. That’s almost $400 per month. These small costs can add up big time. It might hurt a little to cut back, but it will be worth it!
Look at your budget together with your spouse so you can work on your plan together. Once you have your ring paid off, keep saving that $400 and invest it for your future! You’ll never be sorry you saved money.
Alternatives to financing an engagement ring
When it comes to financing an engagement ring, it's worth looking into various alternatives to see if you can save more money. Here are some ideas:
Check out online retailers vs. brick and mortar stores
Because online jewelry retailers don’t have to pay for traditional brick-and-mortar stores, they can offer lower prices. They also usually have larger selections to choose from. If you want to explore an online retailer, make a virtual appointment so you can meet with your jeweler in a virtual showroom and see rings in a super fun atmosphere.
Consider pre-owned rings vs. financing a ring
Another alternative to purchasing an engagement ring traditionally is to check out pre-owned rings. If you’re open to purchasing a used engagement ring you can score really good deals! Plus once the ring is shined up and polished, no one will ever know!
Try out lab-grown vs. natural diamonds
Lab-grown diamonds are becoming more popular because they are ethical and more sustainable. Given all the concerns about conflict diamonds and the impact of mining on the environment, this is a great and also budget-friendly option.
It's all about financing a wedding ring the smart way
When it comes to financing your engagement ring, take an honest look at your budget. Based on this, do your research to find the best terms and then create a plan to pay off your ring as quickly as possible. Ideally, to avoid financing, you can start saving for your dream ring now in cash.