Engagement Ring Financing 101: What To Know Before Popping The Question
Are you ready to pop the question, but worried about the steep price tag for an engagement ring? Don’t let the cost of this symbolic piece of jewelry stop you. Engagement ring financing can turn that special moment into reality without breaking the bank. With flexible and accessible payment plans, you can finance your dream ring to help make your purchase more affordable.
Key Points
- Engagement rings can easily cost a few thousand dollars, which you may not have readily available.
- To help cover this expensive purchase, engagement ring financing options are available.
- Be sure to weigh the perks and drawbacks of each option to choose the route that suits you best.
Engagement Ring Financing Options In Canada
Several financing options are available that can provide you with the funds needed to buy that precious ring.
Personal Loans
A personal loan provides you with a lump sum of money that you can use to cover various expenses, including the purchase of an engagement ring. You’ll then repay the principal borrow, plus interest, over a set term via multiple installments.
Most personal loans come with fixed interest rates, which means your payments stay the same during the loan term. This makes it ideal for those who have a strict budget and want predictable payments.
| Note: While you need good credit to qualify for the best rates, you can still qualify for a personal loan with bad credit. In this case, you’ll need to apply with an alternative or online lender that works with bad credit borrowers. Just be aware that you’ll pay higher rates and may be offered smaller loan amounts. |
Credit Cards
If you have a credit card with a high credit limit, you may be able to use it to pay for your engagement ring. That way, you won’t have to take out a separate loan to cover the cost of your engagement ring.
Moreover, many credit cards offer rewards or cash back programs, meaning spending a few hundred or thousand dollars can help you rack up quite a few points with one big purchase. Similarly, credit cards often include purchase protection or extended warranty benefits, which can safeguard your ring against theft, loss, or damage for a certain period.
| Alert. Only use a credit card if you can pay off the full balance by the bill due date. If you’re unable to pay your balance off in full by the billing due date, you could be faced with sky-high costs, which can snowball and lead to financial issues down the road. Moreover, charging a big purchase can increase your credit utilization ratio, which can negatively affect your credit score. |
Lines Of Credit
A line of credit is a flexible option that lets you access funds up to a certain limit, withdraw as needed, and pay interest only on the amount withdrawn. This option is great for large purchases like an engagement ring, as you’re not required to make any principal payments, only the minimum monthly payment.
Moreover, lines of credit may offer higher borrowing limits than credit cards, making it easier to cover large purchases.
| Note: Many lines of credit have variable rates, so your payments could increase if interest rates go up. |
In-Store Financing
Jewellers often offer in-house financing, allowing you to purchase an engagement ring and pay over time directly through the store, often with a simple application process. These plans often feature little or no interest for a short period as an incentive, though rates can be quite high if you don’t repay the balance within the set time.
| Tiffany & Co. | Tiffany & Co. offers Select Financing through Financial Network, Inc, allowing customers to apply online and finance their purchases with flexible payment plans. |
| Peoples | Peoples Jewellers provides a Buy Now, Pay Later plan through the Peoples Jewellers Credit Card, offering 0% interest plans with terms ranging from 90 days to 24 months, depending on the purchase amount. |
| Swarovski | Swarovski has partnered with Klarna to provide a Buy Now, Pay Later plan to customers, allowing purchases to be split into equal installments. |
Buy Now, Pay Later
To expand their prospects, an increasing number of engagement ring retailers are offering a buy now pay later (BNPL) arrangement on higher-cost goods. A fairly straightforward option, this program allows you to repay your purchase in installments over a specific period of time.
Generally, BNPL services are offered through third-party providers such as Affirm and Afterpay. Most offer an interest-free option that you have to repay in 4 installments. However, if you’re looking for a more long-term option, you’ll find terms that stretch up to 5 years, but you’ll have to pay interest.
Other Zero-Interest Options
There are some cash advance services that allow you to access small amounts of money with no interest or credit checks, such as:
- Bree: Get up to $500 interest-free with Bree.
- Nyble: Use Nyble to access up to $250 without interest.
- KOHO Cover: KOHO offers up to $250 interest-free.
- Money Up: Get up to $1,000 interest free with Money Up.
How Much Do Engagement Rings Cost?
The average cost of an engagement ring in Canada is approximately $3,500, though prices can vary widely depending on the stone, setting, and retailer. Certain factors can keep costs low, such as choosing a lab-grown diamond, smaller carat size, or non-traditional gemstone, like Moissanite. On the other hand, premium materials and designer brands can drive prices well over the $6,000 mark.
How To Compare Your Engagement Ring Financing Options
Before you get started, there are a few things to keep in mind when you’re looking for the right financing options.
- Interest Rate. If you have solid credit, then you can likely access a zero-interest promotional offer or get a good rate on a personal loan. Determine if it’s better for you to wait and build credit, or if you are willing to take a higher rate of interest, even if it means paying more.
- Term. Consider the duration of the loan itself. Longer terms can help make monthly payments more manageable, but you’ll pay more in interest over the life of the loan. A shorter term can help you save on interest, but you’ll need to make bigger monthly payments.
- Fees. Check for additional charges like origination fees, late payment penalties, or prepayment fees. These costs can add up quickly and affect the total amount you’ll pay, even if the advertised interest rate looks appealing.
| Note: Financing can be convenient, but it may lead to higher costs overall. Moreover, missing payments can hurt your credit score and financial health. Be sure to consider your financial situation before getting a loan. |
How To Save When Shopping For An Engagement Ring
Rather than take out a loan to purchase an engagement ring, you can take steps to save up for it. If time is on your side and you’re not in a rush to pop the question, you might want to take this avenue instead. Here are some tips to help you save money to buy your love an engagement ring:
Put Away A Percentage Of Your Paycheque Every Month
The more time you give yourself to save, the easier it will be to put enough away so you’ll end up with enough to cover the cost of the ring. To do this, put a little away every month into a dedicated savings account. Take out either a specific percentage or dollar amount from your paycheque every time you get paid, and over the course of a few months, you should have enough to buy the ring in cash.
| Note: If you’re not disciplined enough to manually transfer a certain amount of money every month, consider automating your savings. |
Wait For Sales And Discounts
Buying a ring when it’s on sale is a great way to save a few bucks. Keep your eye on jewelry stores in your area and wait for a sale to be advertised, then make your move.
Consider More Affordable Metals
The actual metal part of the ring can make a huge difference in the price that you end up paying. Typically, platinum can be more expensive than gold. So, instead of opting for this precious metal, consider going with white gold instead to help you save quite a bit of money when shopping for your engagement ring.
Go Easy On The Carat Weight
You’ve likely heard of 1-carat, 2-carat, or even 3-carat diamond rings. Every notch you go up in weight will cost you.
The thing is, the carat weight won’t necessarily influence the beauty or value of the diamond. So, consider keeping carat weight low if you’re looking to save some money on this big purchase.
Bottom Line
If you don’t have the funds readily available to cover the full price tag of an engagement ring, there are financing options available. If you’re ready to take out a loan to finance your engagement ring purchase, Loans Canada can point you in the right direction. We can match you with the best option based on your unique financial situation.
