Can you finance an engagement ring with bad credit?
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Buying an engagement ring is exciting, but figuring out how to finance that important purchase can be daunting. The national average cost of a diamond engagement ring is $6,000, according to The Knot 2021 Jewelry and Engagement Study. But if you’re like a third of engagement ring shoppers, you’ll probably spend $1,000 to $4,000.
You can finance an engagement ring with bad credit, although it may not be the right option for your long-term financial goals. Let’s take a look at where you can get financing for an engagement ring with bad credit, what factors to consider, and if it’s the right option for you.
With Credible, you can compare personal loan rates from various lenders in minutes.
Can you get financing for an engagement ring with bad credit?
Yes, it is possible to finance an engagement ring even if you have bad credit. But keep in mind that even if you may be approved for a financing plan, you may not be able to get the best rates and terms.
Lenders look at your credit score and history to determine the rate to offer you. If you have a lower credit score or little or no credit history, lenders consider you a riskier borrower than someone with good to excellent credit. So, lenders will charge higher rates or offer stricter terms to compensate for the risk of someone with bad credit defaulting on the loan.
What credit score do you need to finance an engagement ring?
Since some lenders work with people with bad credit or shallow credit histories, it’s possible to finance an engagement ring with virtually any credit score. But FICO scores of 579 and below are considered bad credit, which lowers your chances of getting financing with low rates and flexible terms.
Regardless of your credit score, you have several options for financing an engagement ring. Keep in mind that your credit history and financial situation will determine which one is best for you.
Here are some engagement ring financing options to consider.
Personal loans are usually unsecured, meaning you don’t have to provide collateral for the loan. You can use them for a variety of purposes and they are available from banks, credit unions, and online lenders.
Some best personal loans have fixed rates, long repayment terms and a fast application process. Although personal loans for bad credit are available, these options are limited, may include additional fees, and approval time may take longer.
Credible, it’s easy to compare personal loan rates from multiple lenders — without affecting your credit.
Finance through a jewelry store
In-store financing can be a convenient option, especially when the jeweler extends a 0% purchase APR for a specified period. Store credit cards can be easier to secure with poor credit, and they can offer rewards when used in-store.
But many of these cards can only be used in a specific business. And if you still have a balance when the promotional period expires, you’ll start earning interest at the card’s regular rate – and retail credit card rates tend to be much higher than credit cards. traditional.
Paying for an engagement ring with a credit card allows you to continuously draw down and pay down your line of credit. If you make your payments on time, it can even help improve your credit.
Similar to in-house jewelry financing, some credit cards come with 0% APR introductory offers, which could help you avoid paying interest for a while. But like other introductory APR offers, you’ll start earning interest if you still have a balance when the offer ends.
Ready to buy now, pay later
A buy now, pay later loan lets you split a large purchase into several interest-free payments. Some lenders do not require credit checks or extensive credit applications to qualify.
Interest-free installments are an advantage if you can’t afford to pay more than the original purchase price. The downside is that you may need to provide a down payment and the amount of credit given to you may be limited.
What to Consider When Choosing Engagement Ring Financing
A commitment is an important milestone to celebrate, but just because your funding is approved doesn’t necessarily mean it’s the right option for you. Consider the following when choosing engagement ring financing:
- Costs – Fees can quickly add to your overall refund amount. For example, credit cards may charge annual fees, personal loans may come with origination fees for processing the loan (especially if your credit score is lower), and almost all options will charge fees if you miss or make a late payment. Some lenders may also charge a prepayment penalty if you pay off the loan early.
- Interest rate – Getting the lowest interest rate is important, but you also need to determine if the rate is variable or fixed. Fixed rates won’t change during your term, but variable rates may change over time, which will increase your overall refund amount.
- Monthly Payment Amount — Before financing an engagement ring, review your budget to make sure you can comfortably afford the monthly payments.
- Repayment period – A short repayment term could put unnecessary pressure on your budget, while a longer repayment term could significantly increase your overall costs if the interest rate is high.
If you want to use a personal loan to fund an engagement ring, Credible lets you compare personal loan ratesall in one place.
The best way to buy an engagement ring is to save money so you don’t have to finance the purchase. This allows you to avoid interest charges and the stress of keeping up with a monthly payment.
But financing an engagement ring can make sense if you can get a good interest rate, comfortably make monthly payments, and improve your credit in the process. If you can only qualify for a credit card or a high-interest loan, or if the monthly payments are putting too much of a strain on your budget, financing an engagement ring could turn your token of love into debt. stressful.