"How Can I Afford An Engagement Ring?!"

Buying an engagement ring can often be one of the biggest and most important purchasing decisions you’ll make. It’s right up there with buying a car and your first house.

Financing programs are a great way to help afford the ring of her dreams. Here’s a quick introduction to financing options and how they work.

No interest programs.

Most jewelers offer lines of credits to qualified customers with long term, no interest payment plans. The most common programs allow you pay over 6 months or 12 months. Each month, you pay a set amount – typically 3 to 5% of the original purchase – and then in the final month, a big payment is due to settle the remaining balance. If you make all payments, then all the interest is forgiven and your purchase is interest free. For example, if you buy a $5,000 diamond ring using credit, you might pay $150 per month for the first 11 months and then owe $3,350 in the 12^th month. However, if you miss even one payment, you will be charged a very high interest rate (typically 20%+) so make sure you make every single payment to avoid these steep interest charges!

How to qualify.

To get a credit line, you need to apply by filling out an application and proving your identity. The “issuing bank”, which is the financial institution that will be granting you credit, does a credit check on you and instantly determines how much credit to offer you. What the bank considers is how much credit you have elsewhere (such as credit cards, student loans, car loans or mortgages) and if you’ve paid your other bills on time over the past few years. The more credit you have elsewhere and the better your payment track record, the more credit they will typically grant to you. This track record is also known as a “credit score” and the higher the score, the better.

Using financing along with other payments.

It is common for a young professional’s credit limit to be less than the amount he wants to spend on a ring. For example, if you are looking to spend $7,500 on an engagement ring, don’t be disappointed if you only receive a $4,000 credit line. Be prepared to pay the balance with money you’ve saved or using one of your credit cards which has room under your limit. We suggest contacting your existing credit card companies and asking if they would consider raising your limit (which is a good sign that your credit is good!) to help make than initial deposit if necessary)

Using your line of credit in the future.

What’s great about a line of credit is that you can use it again in the future as long as your account remains in good standing. That means you can get long term financing on your wedding band purchase, anniversary presents, etc. So don’t think of financing as a one-time use. Think of it as the start of a long term relationship with a jeweler who will offer great service, great values and the opportunity to pay for purchases over a long period of time!