Buying an engagement ring can be a really big investment and it is fairly heavy on the pocket. It can take months, or even years of savings just for that one, perfect proposal ring especially if the one you are aiming for is a diamond.
With a wedding just around the corner, spending all that hard-earned cash on just one ring might not leave you with any cushion for emergencies or future wedding expenses. Such a purchase might even be a little risky.
Financing Can Help Buy Jewelry
Engagement rings can cost a massive amount and can definitely make a dent in your wallet. In 2020, couples spent an average of $3,756 on engagement rings. That seems like a pretty big number and many might be held back or daunted by the number of zeroes.
Fortunately, for those customers that cannot afford to make such a large purchase in one go, there are smarter options available, one option is ring financing. If you are not sure what that means, we have you covered.
Here is a quick guide on engagement ring financing. We shall discuss:
- What it really means to finance engagement rings
- Why you should finance a ring
- What to expect while financing an engagement ring
- What to avoid
So what exactly is engagement ring financing?
What Does it Really Mean to ‘Finance’ a Ring?
Financing for engagement rings basically means that you take the ring and pay for it later. This can be done after making a down payment. The rest of the payment can be done in installments over the course of a few months depending on your income.
It might seem too good to be true; bringing the proposal ring of your choice home and being able to make the rest of the payments in more manageable portions.
There are tons of financing plans available, and most of them may even work for you. Keep reading to find out why you should finance your engagement ring and what you must look out for.
Why Financing Engagement Rings Might Be a Better Option
Financing is great if you cannot afford to pay the whole payment in cash in one go or even via credit card. As mentioned earlier, the total cost of your engagement ring can be split into multiple installments which you can pay every month instead of paying the entire amount in one go.
Not only will it reduce the burden of making a large payment, but it also saves you from maintaining your financial standing. Instead of spending all the money on just one piece of jewelry, you can plan:
- Your wedding expenses
- Buy (or pay the rent of) all the necessary items
What to Expect and What to Avoid
Beware of Hidden Terms and Conditions
Although most jewelers are explicit with their terms and conditions, it’s always good to double-check. Some might not include any interest if all payments are cleared within six months or one year and if no installment is missed.
However, if you fail to make a payment for even one installment, it might be a little troublesome as it might collect a good percentage of interest.
It is also crucial that you make sure that there is no hidden fee.
Clearly Understand Their Interest Rates and Policies
As mentioned earlier, the interest rate depends on the company’s policies. Some may not include any if paid within a certain time frame or if no installment is missed. Others may have 8-10% interest on every installment.
In most cases, however, the additional interest amount is quite manageable if paid on time. However, if you miss a payment, your total cost might skyrocket and greatly mess up your calculated budget.
Some brands offer buyers low-interest plans with minimal interest rates, particularly on credit cards. If you feel you might struggle with additional payments, this plan is certainly something to look into.
Find the Right Plan That Suits Your Income
There are so many financing options out there; you just need to find the right one for yourself. A lot of sellers may want to trick you into ‘financing’ by using their sales gimmicks.
Many companies like to twist their words and misrepresent their policies so that they may seem tempting at first. So you must be smart about choosing the financing plan that fits you best.
Be thorough when going through their policies, financing plans, interest rates, and penalties when picking out a plan. What works for others may not necessarily work for you.
Plan Out Your Payments
Planning out your expenses and budgeting is always a good option. Because when you plan, you must have the ‘Better safe than sorry’ mindset. You know what to expect, and always have the emergency fund ready.
Whatever payment plan you end up choosing to finance your engagement ring, be sure to make a note of the amount you need to subtract out every month and plan your monthly expenditure around it.
Do a Background Check
As stated earlier, you must be very well aware of your financer’s policies. But aside from that, you must do a little research on your end as well.
Online customer reviews can give you a very good idea about the financer’s customer service. A lot of financers may resort to harassment when payments are either missed or not done on time.
It’s best to ask around and do a little background check on your own as well.
Eligibility for Financing
Your financier will first evaluate your application and employment history before the whole ring financing procedure begins. So the background check goes both ways.
To fulfill the eligibility criteria for your engagement ring financing, you must have a steady stream of income. Your financier will also go through your history of making payments and whether you have fulfilled those obligations on time.
If you fail to check any of the above boxes, it might put a question mark on whether your financier will approve your financing application.
The Wrap Up
Buying an engagement ring or any sort of wedding jewelry doesn’t always mean having thousands of dollars in cash on hand. With the right payment plan and financing options, you can bring home the proposal ring of her dreams.