Engagement ring financing in Canada

Picking the perfect engagement ring while sticking to your budget can be difficult. If you don’t have a ton of savings, you may be considering financing. There are several financing options including personal loans, in-store financing, credit cards and more. Our guide covers your options for engagement ring financing in Canada options are, as well as features to consider when choosing the right type of financing for your needs.

How to finance an engagement ring

Whether you opt for a jewelry store financing plan, a personal loan or another finance option, all engagement ring financing tends to work the same way: Once you’ve settled on an engagement ring, you’ll take out a loan to pay for some or all of the cost of the ring. You can then make monthly payments on the engagement ring until it’s paid off. Depending on the type of financing you get, you may also have to pay interest on the loan.

Depending on the lender, it can take as little as a few minutes or up to several business days to get your application for an engagement ring loan approved. Your loan contract will likely require that you make monthly repayments, but you may be able to choose a bi-weekly or even weekly payment schedule.

Options for engagement ring financing in Canada

If you don’t have all of the cash on hand to pay for the ring of your partner’s dreams, these are some engagement ring financing options:

1. Jewelry store financing

Many jewelry stores in Canada offer in-house financing, either through a lending partner or an in-store credit card. One benefit of in-store jewelry financing is that it’s one of the simplest methods for financing an engagement ring. A sales associate helps you apply in the store, and you find out almost immediately how much you’re approved for.

Perhaps the biggest advantage to going with jewelry store financing though is that it often comes with a long interest-free period, typically ranging from 6-12 months, although you may find some offers up to 24 months or more. The important thing to keep in mind about these offers is that if you don’t fully pay back the loan by the time the interest-free period is up, you might be charged a very high interest rate – often between 30% and 40%.

Jewelry store financing can be relatively easy to qualify for, but the amount of financing and loan terms you’ll be approved for will depend on factors like your credit score, personal financial situation and how much you plan to spend.

Here is a list of popular jewelry stores in Canada offering engagement ring financing:

• Peoples
• Spence Diamonds
• Michael Hill
• James Allen

2. Personal loan

A personal loan is another way to finance an engagement ring in Canada. It usually comes with a term of one to seven years. You won’t find a 0% annual percentage interest rate, but with a good credit rating, you could see interest rates of less than 11%.

Loans through banks, credit unions or peer-to-peer lenders will typically be unsecured and your rate will largely depend on your credit score and your ability to repay your loan. Other less traditional personal loan lenders may offer secured loans, which means you will need to use collateral in order to secure the loan. You can compare options for personal loans to finance an engagement ring in the table below.

Compare personal loans to help you pay for an engagement ring

3. Credit card

Another good way to finance an engagement ring is by paying for it with a low interest credit card. Low interest credit cards typically come with standard interest rates between 9% and 14%. The perk of using a low interest credit card is that as long as you make the minimum payment, you’re not fixed to a set repayment schedule. Like with any lending product, the credit card limit you’ll be approved for will depend on your credit rating and personal finances.

It’s important to be cautious paying for an engagement ring with a standard rate credit card, as those usually come with interest rates around 20%. So unless you plan to pay off the ring quickly, you could end up paying a lot extra in interest.

4. Layaway

Some jewelry stores offer layaway plans. With a layaway plan, you put down a deposit (e.g. 20%) to essentially reserve the ring. The ring stays with the store until you pay it off in full. You’ll make regular payments at 0% interest within a certain timeframe, usually within 6-12 months. If you don’t pay off the ring by the deadline, the store keeps the ring and the deposit.

6 things to consider when comparing engagement ring financing in Canada

You should compare the following features when trying to find the right loan for your needs:

• Interest rate. The interest rate you pay will significantly impact the total cost of the loan, so it’s important to compare your engagement ring financing options and choose a competitive, low interest loan. Factors that affect the interest rate you’re offered include your credit score, your ability to make your repayments, the amount you wish to borrow, the desired loan term and the lender you select.
• Fees. Fees add to the cost of a loan. Go through the loan contract to find out how much you might have to pay in application and/or administration fees, late repayment fees and early repayment penalties.
• Loan amount. The amount you can borrow differs between lenders. Generally, maximum personal loan amounts are between $25,000 and $35,000, but some lenders offer unsecured loans up to $100,000. The maximum amount for in-store jewelry financing will vary based on what you can qualify for and what you want to purchase.
• Loan term. Getting a longer loan term can be tempting as the monthly payments will be lower. However, the longer you take to repay your engagement ring loan, the more you’ll pay in interest, which ultimately increases the cost of your loan. Ideally, you should repay the loan as soon as you can.
• Eligibility criteria. Some providers of engagement ring financing require applicants to have good credit scores. Others provide loans to people with fair or bad credit, provided they have a steady source of income. Learn more about the best bad credit loans.
• Unsecured or secured. Personal loans are usually either secured or unsecured. Taking out a secured loan means you will need to put up collateral. An unsecured loan doesn’t require you to put up any collateral, but you’ll usually be offered a less competitive interest rate.

How much should I spend on an engagement ring?

The average cost of an engagement ring in Canada is around $3,5000. Old-school wisdom says you should spend two or three months’ salary on an engagement ring, but that’s no longer a hard-and-fast rule.

There are two things you need to consider when figuring out your engagement ring budget:

• Your partner’s ring preferences
• Your financial situation

Once you know what ring style you’re looking for, then you’re ready to start thinking about financing. Get a sense of the price range of that style by shopping around. It might be more than you expect, keeping in mind the average amount Canadians spend on a ring.

Before you buy an expensive ring on credit, establish how long you’ll take to repay the debt. Account for other expenses that you’ll encounter going forward, including your eventual wedding plans. Review how a large purchase would affect your existing debts.

What happens if they say no?

No one goes into a marriage proposal thinking that their partner is going to say “no,” but unfortunately that doesn’t mean it doesn’t happen. So, what should you do if you took out a loan to pay for the ring?

First things first, you should try to return the engagement ring to the retailer you purchased it from. Most retailers offer a specific amount of days, usually at least 30, for you to return an item for a complete refund. You’ll need to reach out to whatever store or online retailer you bought your engagement ring from to find out about their specific return policy.

If you financed the ring, things might get a little trickier. While many loan providers allow you to get out of a loan if the funds have not yet been disbursed, it’s usually not easy to get out of a loan if you’ve already received and used the money. In this case, look to see if your lender has early repayment fees. You can pay off the loan early, but you’ll still likely have to pay off any interest that’s accrued or fees they charge.

Representative example: Tim finances an engagement ring to propose to Lucy

Tim needs to buy an engagement ring so he can propose to his girlfriend, Lucy. He has picked out the perfect ring – but it costs $5,000.00. He has already saved $1,800 to spend on a ring, so he’ll need to find a loan to cover the remaining $3,200. Tim compares engagement ring financing options from four lenders to find the best deal.

	Lender A	Lender B	Lender C	Lender D
Amount borrowed	$3,200	$3,200	$3,200	$3,200
Interest rate	12.99%	9.90%	0%	7.99%
Loan term	36 months	24 months	24 months	36 months
Admin fee	$32	$0	$79.99	$0
Total Interest	$687.80	$340.39	$0	$409.42
Total cost	$3,919.80	$3,540.39	$3,279.99	$3,609.42
Monthly payment	$108.88	$147.52	$136.67	$100.26

Tim decides to apply for financing from Lender C. Although this lender charges an admin fee when some others don’t, and although it has a higher monthly payment than some other options, its 0% interest rate means the loan will cost less in the long run.

Pros and cons of engagement ring financing

Frequently asked questions about engagement ring financing in Canada

• Can I get engagement ring financing with bad credit in Canada?

  Yes, you can get engagement ring financing in Canada even if you have bad credit. The first place to look for financing is at the jewelry store itself. Store credit cards often have lower requirement thresholds than typical credit cards. So you may find you can qualify for in-store engagement ring financing even with bad credit, especially if you can prove that you can afford to pay it back with a regular source of income.

  Beyond in-store financing, you can look into applying for bad credit loans, like installment loans, to help finance an engagement ring. Keep in mind that bad credit loans tend to come with much higher interest rates – sometimes 40% or more. So make sure you thoroughly compare your options, and can afford to pay that extra interest, before you sign on the dotted line. Read our full guide to bad credit loans to learn more.

• What's an early repayment, or prepayment, penalty?

  Some lenders charge a fee if you wish to repay your loan earlier than scheduled. This is known as a prepayment penalty or early repayment penalty. If you think you’ll be able to pay off your loan faster, make sure the lender you choose doesn’t charge any early repayment fees.

• Can I use my engagement ring as security?

  Some non-traditional lenders will let you use assets, such as engagement rings, as security for loans. Make sure you consider the APR of these loans as they tend to be more expensive than more traditional lenders, like banks and credit unions, since they are targeted at bad credit borrowers. On the other hand, secured loans from these lenders usually have lower APRs than unsecured loans since you’re offering up collateral.

• Is there any catch with interest-free in-store financing offers?

  In-store financing deals usually come with a requirement to apply for a retail credit card, or a high interest rate applies once the interest-free finance period comes to an end. Make sure you know the terms of the offer before you apply for in-store financing.

• Can I return the ring?

  Generally, jewelry store owners will allow you to return the ring within a reasonable time. You should familiarize yourself with the store’s return policy, but you’ll usually find that you can return unused rings within a specified time period after purchase, which is usually 30 to 90 days, depending on the store.

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