An engagement sounds like a nice plan, especially after you’ve found your crush, and your relationship with her looks like a match made in heaven. But here is the challenge, you don’t have enough money at the moment to purchase an engagement ring to pop up the well-known question. And guess what? You’re running out of time and have to make a move immediately. There is no need to hit the panic button as there are several options available at your fingertips, ranging from low-interest credit cards to in-store jewel financing. This guide is here to guide you through what you should know about this area.
What is Engagement Ring Financing and How Does it Work?
Taking out a loan to finance your engagement ring works like every other thing or How much loan do you need that will cater to the ring purchase? How long will it take to access your funds? And what lender will be ideal for your loan request? These are questions worth asking. The complexity of your loan depends on your lender. For financial institutions, such as a bank, you may have to wait about a week or two before you can access the money. Also, this option comes with higher interest rates.
Once your funds are ready, you can purchase your engagement ring of choice through a credit card, cash, or cheque. You can spread your payments anywhere between a year and seven years. If you are concerned about high-interest rates, some loans offer zero-percent financing; this does not show on the credit report.
Are There Downsides to this Option?
When procuring a loan to purchase an engagement for your loved one, ensure that you can repay it. By failing to do so, there may be a rift between you and the lender, which may, indirectly, affect your relationship.
Are there Other Options?
You may not consider personal loans ideal due to the high-interest rates. Hence, you can always take advantage of jewellery store financing. Some reputable on-site jewel retailers provide customers with no-interest financing. However, there are penalties for defaulting on payments.
Another option is to finance your engagement ring through credit cards, especially those with low or no-interest. By doing so, you can cover your purchase before the expiration of an intro APR. But note that credit cards have a high revert rate, which can be at 16% APR or more.
To access these options, you have to create a new retail credit card, which can affect your credit score; this happens when the credit line acquired is less than the amount charged. The reason behind this outcome is that credit scoring models are used to determine your debt usage ratio by comparing your available credit to your balance.
Whereby your balance exceeds more than 20% to 25% of your available credit on your credit card, your credit score will dip. For example, if you get a credit line of $7,000 and purchase an engagement ring with the funds, your account will be maxed out from the onset, which will affect your credit score.