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Picking the right ring while sticking to your budget can be challenging, especially if you haven’t saved up in advance. Fortunately, there are multiple financing options to consider — from personal loans to in-store financing or low-interest credit cards.
Can you finance an engagement ring?
Contrary to popular belief, most people don’t pay cash for engagement rings — much the same as they don’t pay cash for other major purchases such as cars, furniture or expensive appliances. For one thing, even if you have the money, you might be better off holding onto those savings for emergencies. Or, you may want to use some of those funds to help pay for the wedding.
Ultimately, financing an engagement ring can be a good way to save your cash for other expenses and allow you to pay for the ring over time. However, if you plan ahead and set aside a special ring fund — perhaps in a high-yield savings account — paying cash for an engagement ring could be a smart move.
How much does an engagement ring cost?
The average cost of an engagement ring is around $5,500, according to a study by The Knot, a wedding planning website, but it really depends on the couple. In fact, nearly half of those surveyed only spent between $1,000 to $4,000, and 9% of engagement ring buyers spent less than $1,000.
The main cost of the ring depends on the center stone, with diamonds being the most expensive. And, as with any stone, the larger the gem, the bigger the price tag. Your choice of metal also affects the price, although not as drastically. Gold and platinum are typically the most popular choices, but platinum is definitely pricier. The cost also depends on how elaborate the design is and how many accent stones you choose.
Calculate your loan costs for buying an engagement ring
The cost of your loan depends on the lender, loan type, interest rate and loan term. Exact costs vary depending on your eligibility. Use our engagement ring financing calculator to compare monthly payments based on different interest rates and loan terms.
A personal loan could be one of your best options for engagement ring financing because of the wide selection of lenders available. Loans through banks, credit unions and online lenders are largely unsecured, and personal loan rates may start as low as 6%. But your rate largely depends on your credit score, income and other financial details.
The Finder Score crunches 6+ types of personal loans across 50+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
Many big-name retailers offer in-house engagement ring financing, with some extending no-interest financing for a limited period. Just be wary of high interest rates once the promotional periods end, and expect stiff penalties if you miss a payment.
Pros
One-stop shopping and financing
Possible promotional deals
May be easier to qualify for
Cons
Rates could be very high after promo period
Not all stores offer financing deals
May have expensive late fees
Credit cards
Depending on the cost of the engagement ring, you might be able to put it on your credit card and vow to pay it back as quickly as possible. Bonus: If you have a card that earns miles, you could use those toward your honeymoon flight!
Or, you could apply for a credit card with a zero-interest promotional period — sometimes up to 18 months. Credit cards are usually easier to qualify for than loans, but rates are typically quite high after the promo period ends.
Pros
Fast financing
Period of interest-free financing
Usually easier to qualify for
Cons
High rate after promotional period
May need a good credit score to qualify
Approved credit limit may be too low
HELOC or Home equity loan
If you own a house and have at least 20% equity, you could leverage your home’s equity to finance an engagement ring. Your two main options are a fixed-rate, lump-sum home equity loan or a variable-rate home equity line of credit. You can typically get better rates with home equity financing, but the loan process can take a while. Plus, you’ll put your house at risk of foreclosure if you can’t make the payments.
Pros
Typically better rates than personal loans
Option of lump sum or revolving line of credit
Cons
Uses your home as collateral
Longer loan process
May not have enough equity to qualify
Tips when getting an engagement ring loan
Make a budget. Figure out how much you want to spend, then find a ring that fits into your budget — there are so many options.
Compare loan interest rates. The interest rate you qualify for affects the loan’s total cost significantly, so shop around to find the best rate.
Beware of fees. Some lenders charge fees on top of interest — which adds to the loan’s cost — so make sure you’re aware of any additional fees.
Consider the loan term. If your goal is small monthly loan payments, a longer loan term is the way to go. But if you want to save on interest, consider a shorter loan term or paying more than your minimum payment when you can.
Assess the eligibility criteria. Most lenders require good to excellent credit scores to qualify. You may still qualify for a loan with bad credit, but you’ll typically pay a higher rate, or you may need collateral to secure the loan.
How much should you spend on an engagement ring?
There is no magic price to spend on an engagement ring — and you can forget the whole three months’ salary rule. The right price for an engagement ring is what you can afford, combined with the style that makes your loved one happy. And there is no price on happiness.
How much you spend on an engagement ring is a decision between you and your partner. Not every spouse-to-be even wants the giant diamond ring — or even a diamond at all.
If you want the proposal to be a surprise, you may not be able to discreetly ask your significant other what they prefer. However, you could ask family members or friends for a little input. Or, as many couples do, you could shop together.
Either way, here are a few things to consider:
How much do you want to spend?
Is your partner willing to sacrifice some quality for a larger stone, or vice versa?
Does your mate want a diamond or a less traditional ring instead?
Is an ethically sourced ring important to you or your partner?
Do you want to purchase the engagement ring and wedding band as a set?
Another option to consider — which is growing in popularity, says The Knot — is to purchase a less expensive, “temporary” ring. Then, you can save up for the “permanent” ring or pick one out together after you’re engaged. And, for modern couples, it’s not unheard of to share the ring’s cost.
Bottom line
Getting married is a big decision that often comes with a big price tag. So, if you’re ready to pop the question but don’t have enough cash for the ring, consider personal loans, in-store financing, credit cards or other jewelry financing options.
Frequently asked questions
What is the three months’ salary rule for engagement rings?
Back in the 1930s, diamond-giant De Beers came up with a marketing campaign that suggested a diamond ring — equal to a month’s worth of your salary — would prove your love and commitment. Eventually, around the 80s, that idea evolved into allocating three months to the ring purchase. These days, that theory is thought to be outdated.
What if I don’t qualify for engagement ring financing?
If you don’t meet the eligibility requirements to get an engagement ring loan, don’t despair. One option is to ask if you can borrow money from a friend or family member. You could also earn extra money by getting a second job or reducing your expenses to save more.
How do most people pay for engagement rings?
While some people can pay cash for an engagement ring — or have an heirloom in the family — most people use credit cards, personal loans or in-store financing.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf. See full bio
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