Are you in love and ready to pop the question? Once you have that perfect proposal planned, the only thing left to do is buy the ring. Choosing the ring itself is a formidable task on its own, but financing that ring can also be a major cause of stress. But don’t fret – we’ll tell you everything you need to know about financing an engagement ring.

How much will it cost?
Many jewelers will tell you that the engagement ring should cost you three paychecks. The average engagement ring costs about $5,200 and almost 12% of couples reported that they spent over $8,000. However, the amount you spend on the ring is a personal choice and you should only spend within your comfort level.

How can I find a good deal?
Shop for diamonds that are just below a common threshold. For example, if you are looking for a 1.0 carat diamond, consider buying a .90 carat diamond. The aesthetic difference is not very noticeable, and you could save around $1000. In addition, consider buying the loose diamond by itself, and purchasing the setting separately. This can help you make sure you are getting exactly what you want, and also not paying additional costs for “convenience.”

Do some research and use the internet! There are many websites that will help you identify the size and style of ring you want, and the going rate you can expect to pay for it at the jewelry store. This knowledge can help you negotiate with the jeweler – don’t settle for the sticker price unless you know it is already a fair price.

How will I pay for it?
Many jewelry companies offer 0% interest for the first 12 months, but can charge around 25-29% interest if the debt is not paid off in full within the first 12 months. This could cost you much more than you originally anticipated if you fall behind in your payments.

In addition, you should be aware that applying for financing will add an inquiry on your credit report. If you accept the financing, you will also have a new account with a balance on your credit report. Both of these instances could have a negative effect on your credit score, which can affect your ability to secure additional credit in the future. This is something you keep in mind if you and your new fiancé hope to buy a home together soon.

What are my options if I don’t want to apply for jewelry store financing?
Another option to avoid paying the 25-29% interest rate after 12 months would be to finance the ring at 0% and then use a lower rate balance transfer to pay off the balance before the 12 months are over. This strategy can have unforeseen consequences, so be sure you do your research.
Alternatively, consider paying cash. If you have the time, plan ahead and begin to put money into a savings account each month until you’ve reached the desired amount. You could also opt to purchase a less expensive ring now, and purchase an upgrade for a special occasion – such as your fifth or tenth wedding anniversary. Also, buying a more conservative ring will allow you to save for another big expense coming up in your near future: the wedding.

Yes, purchasing an engagement ring can be nerve-wracking, but not with the proper knowledge and preparation. Good luck, and happy shopping!

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