It’s not impossible to buy an engagement ring with a low credit score. You can still qualify for several personal loans, buy now pay later services, and jeweler financing offers. Getting a zero-interest credit card can be challenging with bad credit, so these options are more realistic.
Deciding you want to spend your life with someone is an unforgettable moment. There’s nothing better than finding your soulmate and imagining a future together until you realize the cost that comes with it.
You can’t pop the question without the sparkly jewel, and it wouldn’t make sense. After all, it’s the final touch of the moment. Weddings and engagement rings are the most expensive events after purchasing a home.
The average price of engagement rings in 2021 was between $4,770 – $5,580, depending on the size and design. The best way to afford this large purchase is to have the money ready in your savings account.
But what if you don’t have the means? And you’ve made several bad financial decisions leading to a bad credit score? There’s still hope for a silver ( or diamond!) lining. Check the options below to know what to expect.
The 3 months rule
In the early 1930s, a diamond selling company came up with a campaign suggesting men need to spend a month’s salary on an engagement ring. By the 1980s, the rule was updated to 3 months – by another jewelry seller, of course!
When you’re bad with repayment and debt, it’s best to work with cash. Keeping in mind the average price of an engagement ring, even today, you’ll need to save a 3 months average salary. The short term sounds good and bad, here’s why.
You can’t save 100% of your monthly paycheck, especially if you have rent and other loans to pay off. The most you can do is 50 to 70% which can still be enough for a good ring. But it will include extreme measures, like giving up your social life and living very frugally.
If you want to keep the proposal a surprise, this can be hard to perform. Since your partner probably knows your lifestyle, changing it drastically can’t go unnoticed.
However, if you manage to survive the 3 months, you’ll buy the ring in cash with no lingering obligations. Plus, you get enough time to stroll through different stores to get the best offer.
Try saving for 12 months
Get an average ring price if you know what your partner wants. Add tax to the cost and divide it by 12. If you’re in no hurry, open a savings account and set up automatic transfers for the following year. Each time you get paid, a portion goes towards the ring fund. In a year, you’ll have the total amount.
It seems like a long time, but dodging debt is an excellent decision before starting your new life together.
Buy now, pay later
Afterpay is taking the market by storm. They’re a lender that provides delayed payment on electronics, cosmetics, and even jewelry. Affirm and Klarna work the same way. These lenders are important to you as they take you as a client even if you have a bad credit score.
After applying and approval, they create a payment plan for you in several installments. You can get approved for more than you can afford to pay monthly, so think good. You’ll have the ring in your hand but will have to pay each installment on time for months. Otherwise, you’ll be facing high late fees.
Some lenders provide 0% APR and consider more than just your credit score. Others have a higher annual percentage rate than the average credit card.
If you choose this method, you need to look for stores that work with some of the lenders. This limits your choice, and you might not be able to pick the ring you’ve wanted.
Personal loan
Personal loans are an option for people with bad credit scores too! But, they’ll cost you more. The average APR of a personal loan can go up to 28%.
Apply for a prequalification to know how much you can get approved for. Then, look at the installments plan. Can you afford to pay it every month on time? Personal loans can better your credit, but you have to pick a facility that reports to the credit bureau.
Personal loans can be unsecured, meaning they won’t ask for collateral. You won’t have to provide proof of savings or ownership of a home, car, etc. Collaterals are security for the lender, something they can seize if you don’t pay off your dues.
This is not the case with unsecured loans, so it’s one of the reasons they come with higher APR.
Jeweler financing options
Are you thinking of a specific store to buy your ring? Pay them a visit and find out if they have any financing options. Most jewelers team up with banks or lenders.
Depending on how bad is your credit score, you can use their 0% APR loan or promotional credit cards. They can offer you a credit card with a promotional period of 12 to 24 months pay off, without interest or added fees.
The trick lies in the background accumulating interest. If you still owe money at the end of the promotional period, you’ll get charged the full interest on the ring, not only for the installments you owe.
Jewelers have great offers but can also ask for a 25-50% deposit. Double-check before choosing an option.
Second hand, hand me down and vintage rings
A bad credit score is a sign you are or have been struggling with money. So why not skip the debt and look for more affordable options? As long as you know your partner won’t mind, look for vintage or second-hand rings, online or in-store.
Let your family know about your plans. Ask them about a hand-me-down ring. If you’re next in like for it, you’ll pay respect to your ancestors and save a lot!
Diamonds are debts best friend
Diamonds are an investment, and we agree. But sometimes, you can invest your money smarter.
Moissanite is another cheaper but exceptional stone. It’s derived from meteorites, looks, and shines like a diamond. If your special one loves color, look for other colored gems like sapphire. On the other hand, maybe they’re not a rock person, so you can go for an eyecatching gold filigree ring.
Lab-grown diamonds are the newest option. They’re grown artificially in labs by using advanced technology. A lab-grown diamond has the same molecular composition and looks exactly like natural diamonds. But they’re significantly cheaper.
A 1-carat lab-grown diamond is $800 to $1,000. For comparison natural diamonds are $1,800 to $12,000 for 1 carat.
How to choose the best financing option for me?
Here are a few things to keep in mind before making a decision. An engagement ring is a serious purchase so dive into carefully.
1. Read the fine print
Whatever method you choose, make sure to read the fine print for any hidden fees or interest. Especially when taking personal loans. Some of them can have up to 400% late fees if you miss the pay-off period.
2. Consider the full price
You can be paying over 50% of your ring’s value in interest and fees. Calculate your monthly installments and compare them to the price of the ring. Then, go for the financing option that’s closest to your ring’s price.
3. Compare fees and APR
APR is the price you pay your lender for borrowing money. It’s a broader term that includes your interest rate and fees associated with the loan. It ranges differently, and there can be promotional 0% APR loans or credit cards.
4. Be realistic
Go for the financing option that you can comfortably pay each month. Unfortunately, you might be approved for a higher amount that you can’t manage to repay in the given time. When you’re already dealing with bad credit, getting a new loan that you’re behind on is devastating.
FAQs
Do you need good credit to buy an engagement ring?
A good and excellent credit score opens the door to great offers, like a low-interest rate and fast approval. But it’s not necessary to buy an engagement ring. There are several financing options for those with 600 or lower scores.
How much is a deposit on an engagement ring?
Depending on the store, some jewelers might ask for a 25% downpayment, while others can sell you the ring with no deposit. If you have cash on hand, it’s better to put a downpayment as you’ll lower your monthly installments and interest.
Is $7,000 good for an engagement ring?
One carat diamond ring costs around $6,000. But the national average shows that people pay over $7,000 for an engagement ring. The correct price is what you’re comfortable with – you don’t need to go into debt before your wedding.
Bottom line
With the holidays behind us and Valentine’s day approaching, proposals are all over social media. Unfortunately, the huge and flashy stones can push you into an unreasonable financial decision. After all, your special one deserves it, right?
Diving into debt is not a sensible decision, but doing it right before marriage is even worse. So instead of making an impulse purchase, look for a good financing option. Choose one with low fees, low APR, and affordable monthly installments.
This purchase can help you boost your credit score and enable you to purchase your home next, so choose wisely!
