Whoever you are and however much money you have, buying an engagement ring is never cheap, and it is never easy. Rings can be quite expensive, with many people choosing to take out finance instead of paying for it in cash. According to a study from TD Bank, the average couple spends just over $2,000 on an engagement ring. While 17 percent of people spent between $2,500 to $5,000 and 7 percent of people put down $10,000 or more for a ring. Some people simply cannot afford to pay this kind of money upfront, so they choose to take out financing for a ring. Before you get a loan or put a ring on a credit card, you should weigh the pros and cons of each financing method.
Pros of Financing
While it goes without saying that anyone who can afford it should pay for the engagement ring in cash, there are some positives to taking out financing for a ring. For one, you don’t have to pay the money upfront to propose to your partner. If it is possible to get 0 percent APR for the first year, you can pay it off with no interest rate. The lower the interest, the less you will have to pay in the end. Taking advantage of a good deal is one thing, but don’t pay outrageous interest fees if you don’t have to. When you are going to spend $5,000 on a wedding ring, you could actually save money if you pay off the loan in good time.
Cons of Financing
Of course, the main concern about financing is that you will have to pay interest. You will end up paying more than you would have to if you paid in cash. You could end up going into a bit of debt over a ring. Don’t do that. Only finance a ring that you can afford. If you don’t pay the money back in the time of the term limit, you will have to pay extra fees and charges. According to the specialists at MoneyPug, a site used to find short term loans, you should only take out financing if you can get as close to 0 percent APR as possible. The negatives of financing are pretty clear. You will have to pay more than you should.
Methods of Finance: Personal Loans
If you‘re thinking about taking out finance for a ring, getting a personal loan should be your last resort. You’ll want to secure a financing deal that provides an APR rate as close to zero as possible. It definitely should not be over 10 percent, which can be lower than a credit card. The average APR for credit hovers around 16 percent. Personal loans can last anywhere from 12 to 60 months, a long time. You should always work towards paying back the loan as soon as possible to avoid extra fees.
Methods of Finance: Credit Cards
While putting a ring on a credit card can vary depending on the interest rate, it is another way to pay for an engagement ring. If you are sure you can pay the money back, this will also build your credit a lot. However, you should always have a high credit score before taking out any loans or putting anything on a credit card. As always, getting close to zero APR will help you pay as little as possible. Paying for it on a card can help you propose earlier, just make sure you can pay the money back.
Methods of Finance: Store Financing
Some jewelry stores will help you finance a ring. This is because they want to make a sale, of course. But it can benefit you. Pay attention to promotional deals, the interest rate, and the hidden fees or charges. If you play your cards right, financing directly from a store can be a great way to afford the ring your partner deserves.
For all budgets and people, buying an engagement ring is expensive and inconvenient. They are pricey, especially if you want to buy them a nice ring. However you look at it, taking out financing should be your last resort, but it is possible to get that rate you are looking for. Get started by shopping around today.