If you don’t have money saved up for a ring then Personal Loan For Engagement Ring might be your best option. Because they have much lower interest than in-store financing or credit cards.
Thinking about proposing to your loved ones but don’t have enough money to buy a decent ring?
Then you are in the right place. Because in this post I am going to talk about personal loan for engagement ring in detail. So, by the end of this post, you will get sufficient knowledge on how to get a personal loan for a ring, credit score needed for it, alternatives to a loan, whether is it a good idea or not, and everything related to it.
Personal Loan For Engagement Ring-Is it A Good Idea?
Yes, personal loans might be a good idea for financing an engagement ring. As personal loans have a lot less interest than other financing options. But before concluding on a decision, it would be wise to find out the ins and out of personal loan for engagement ring.
So, first, let’s find out whether it’s possible to get a personal loan for an engagement ring.
Can You Use A Personal Loan To Buy An Engagement Ring?
Yes, you can use a personal loan to buy an engagement ring without any issues.
Personal loans are great. Because like other loans you don’t need to disclose your purpose for a personal loan. You can use it for any personal reason. Buying an engagement ring is considered a personal expense. So, you can use a personal loan to buy an engagement ring.
So, what is the requirement to get one?
Requirements of Personal Loan For Engagement Ring
Though personal loans are low-interest long-term loans and personal loans do not require any collateral. As a result, personal loans are entirely based on your financial history. Here are some of the requirements of a personal loan
- Must have a credit score of at least 670 or higher.
- You have to have a stable source of income or your annual salary minimum should be more than $20,000.
- Debt to Income ratio can not be more than 36%-40%.
- You might have to pay a loan origination fee of 1-8% of the loan fee.
If you full fill all the above criteria then you can apply for a personal loan from any bank or credit union. But it can be different depending on your state.
However, please check as many personal loans offers as you can. This will help you get the best deal. But what if you don’t meet the requirements for a personal loan? Then what are your options?
Alternatives to Personal Loan For Engagement Ring
Apart from your personal savings, there aren’t much better financing options. However, here are a few alternatives to Personal Loan For Engagement Ring
If you are not eligible for a personal loan then a credit card can be a good option. However, the interest rate is pretty high. But if you can get your hands on a new promotional 0% purchase APR credit card then it might be your best choice.
However, your credit limit has to be high. Because engagement rings are expensive. So, if you spend more than 30% of your credit limit on a ring your credit score might take a hit.
Buy Now, Pay Later
Buy now pay later can be another viable option to finance your engagement ring. Moreover, some buy now pay later lenders offer 0% APR and financing directly from the store. But it’s hard to find one.
Furthermore, there might be a credit limit with this option and you might need to pay a downpayment.
Another personal loan alternative can be in-store financing. Some of the vendors offer 0% APR if your financial history is good. However, as they are not any financial institution so they might impose high interest anytime they want.
These are the top alternatives to alternatives to personal loans for buying an engagement ring. Now let’s look at the credit score needed to be eligible for them.
Credit Score To Finance Engagement Ring
This table holds possible credit scores along with interest rates for financing an engagement ring.
|Financing Method||Credit Score||Interest|
|Buy Now Pay Later||Depends||0%-30%|
The numbers might vary depending on your location. But what if you don’t have a good credit score?
Finance Engagement Ring No Credit Check
If you are looking for a no-credit-check engagement ring financing then buy now pay later is your best option. Because they rely on the data from your payment debit card or credit card and previous history with the lender. Some buy now pay later vendors do a soft credit check.
So, it would be a good idea to rely on buy now pay later if you want no credit checks. Moreover, the APR is likely to be 0%.
However, as engagement rings are expensive so with buy now pay later you might have to take a high loan repayment time. As a result, the APR can get to as high as 30%.
Is It Normal To Finance An Engagement Ring?
Yes, it’s quite normal to finance an engagement ring.
According to a 2021 study by The Knot,
The average engagement ring costs higher than $6,000.
This is a 2021 study so imagine the condition of 2023. Moreover, even in the 20th century people had to spend almost a month’s salary to get an engagement ring. So, it’s pretty normal to look for financing when you buy an engagement ring.
By now we have got an in-depth idea of personal loans for an engagement ring. So, it’s time to look at the pros and cons of taking a personal loan to finance an engagement ring.
Pros And Cons Of Personal Loan To Finance An Engagement Ring
Here are the pros and cons of personal loans for engagement rings
- Fixed Interest
- Low-Interest Rate.
- High Loan Repayment time.
- No collateral is needed.
- Flexible than other alternatives.
- A high Credit score is needed.
- Might take longer loan processing time.
- Comes with loan processing and late fees.
- In the longer-term borrower might end up paying more interest than alternatives.
Now you can decide whether it’s a good idea to take a personal loan for an engagement ring. So, it’s time to discover some frequently asked questions.
Engagement Ring Loan Calculator
Are Engagement Ring Loans Bad Credit?
No, engagement ring loans are not bad credit. However, if you fail to repay then it can become bad credit.
Loans for an engagement ring are pretty common nowadays. Though taking a big loan only for a ring is not the best financial decision. However, it’s not bad credit unless you fail to repay. Moreover, if you take credit card debt for the ring make sure the ring price is less than 30% of your credit limit. Otherwise, your credit score will take a hit.
Can You Pay For Engagement Rings In Installments?
Yes, it’s possible to pay for an engagement ring in installments. But you might need to pay high interest.
Many jewelers nowadays offer in-store financing if you have a good financial history. As a result, you can pay for engagement rings in installments. However, please make sure you read the store policy so that you don’t end up paying interest as high as 39%.
How Much Is A Down Payment On An Engagement Ring?
Usually, the downpayment on an engagement ring is between 10%-30% of the ring price. But depending on the financing option it can be as high as 80%.
Both in-store financing and buy-here-pay-later financing option will require you to pay a downpayment. However, the downpayment will differ depending on your financing option. But it should be in the range of 10%-30%.
Do You Have To Pay Off An Engagement Ring Before You Get It?
You have to pay off an engagement ring before you get it only if you pay upfront and have a custom design ring.
In case you choose a custom design for your ring and pay without financing then you have to pay for the ring before. Otherwise, you can choose to pay in installments.
Lastly, let’s find out. Are personal loans good for engagement rings?
Is It A Good Idea To Take A Personal Loan For Engagement Ring?
The answer is a bit more complex than a simple yes or no.
Taking a big debt for the engagement ring is not a wise financial decision. You can choose to buy a less expensive ring that you can afford. However, if you have no other option then a personal loan can be your best choice.
Because a personal loan is the most cost-effective one to purchase a ring. But if you take it longer, the total APR might become higher than other options.
Moreover, there is a loan processing time and late fee too. It’s not interest tax deductible either.
However, comparing others, a personal loan still makes the most sense. But before taking a personal loan make sure, the loan does not become a burden. And choose a loan repayment time that is not high.