Credit Loans

Wedding Ring Financing For Bad Credit

If you’re reading this, you might be thinking about getting engaged to that special someone in your life. Or, you’ve already gotten engaged and want to purchase a ring to show the world how much you love your new fianceé. Or maybe you could be interested in learning more about personal loan financing options for some of life’s big, one-time purchases. Either way, CONGRATULATIONS! You have stopped by the right blog post. Whatever situation you’re in, read on to learn more about wedding ring financing for bad credit!

For many people, when it’s time to take an intimate relationship to the next level, they want to mark the moment in their lives with a ring that will symbolize such a big commitment. 

Finance An Engagement Ring

No matter what you choose, figuring out how to finance a ring can be an expensive purchase. And if you have bad credit, the stress of picking the perfect engagement can be more significant. Without the financing solutions that come with good credit, you may be popping another big question:

How are you going to pay for it? Can you get engagement ring financing? 

In this post, we’re going to take a look at what it means to have bad credit and how you can work around your score and purchase the engagement ring that will be a perfect fit for your partner—and your budget.

Your Credit Score 

Before you begin looking to purchase an engagement ring, it is essential to understand where your financial profile stands. The best way to do that is to know your credit score.  

Your credit score is a sort of financial risk assessment of you. Essentially, your credit score tells a potential loan lender what they need to know about your ability to repay money that you borrow or lines of credit that you use.

We all know that it’s better to have good credit as opposed to bad credit. Your score affects your financing options the most. But, many people don’t know how good or bad their score is, or even how it is created.  

Your score is calculated by companies called credit bureaus. They review your creditworthiness based on the following factors. 

Payment history

This is the record of your late and on-time payments to your creditors. Late fees and unpaid bills weigh the most on your credit. Always pay your bills on or before their due date to keep this factor from affecting your score. 

Credit Utilization Ratio 

A credit utilization ratio is the measurement of the amount of available credit you’re using at any point in time. For example, if you have a $200 balance on a credit card with a $1,000 limit, your credit utilization ratio is 20%. The lower this number is, the better for your credit. 

Credit History 

This lists all the accounts you have had or are currently open. A strong history of accounts in good standing will boost your credit score. 

New Credit 

If you are applying for financing on one thing, any relatively new accounts to purchase other things may indicate some erratic spending behaviors. 

Credit Mix 

This is a review of the different types of accounts you have. Managing different types of loans, a line of credit, or installment payments can show a pattern of good financial habits. 

Do I Have Bad Credit? 

After reviewing this data, the bureaus issue a score between 300-850: 

  • 300–499 Very Bad Credit
  • 500–600 Bad Credit
  • 601–660 Fair
  • 661–780 Good
  • 781–850 Excellent Credit

As you can see from the chart above, scores that are 600 and below are considered bad credit. If you are unsure about your score, you don’t have to wait for the next potential lender to perform a credit check. The three major bureaus—Experian, Equifax, and TransUnion—provide free access to credit scores and information about how to improve them.  

With the national average of engagement rings close to $6,000, many people look to financing solutions to make this purchase happen. Let’s take a look at some of the more popular avenues in engagement ring financing:   

Personal Loans 

A personal loan can fund your engagement ring purchase quickly. There are two types of personal loans available: Unsecured and Secured Loans.

A secured loan is a loan that is backed by collateral or tangible assets like your home, car, or the money in your bank account. An unsecured loan is a loan that doesn’t require any collateral and is only backed by the borrower’s creditworthiness. 

Secured vs. Unsecured Loans

With a secured loan, you are more likely to get a low interest rate. However, if you can’t repay the loan, you run the risk of losing your collateral. On the other hand, unsecured loans usually have higher interest rates but are easier to get approved. For example, for payday loans—one of the most accessible loans to obtain—the approval and disbursement process can take just a couple of hours. 

Quick Cash Loans

Payday loans and other quick loans are also available to people who have not-so-good credit, providing access to money that traditional lending institutions won’t offer. 

These loans work best when people can repay them before the end of the loan terms. When considering all the options available, a personal loan may be the best option to get your ring fast. 

Point of Sale (POS) Financing 

We’ve all seen the advertisements that scream, “Buy Now, Pay Later!” Those ads are explaining the concept behind the point of sale (POS) financing.

Like any installment plan, point-of-sale financing allows buyers to purchase items from a merchant through a series of payments scheduled over some time. In this scenario, the merchant is the primary lender instead of a financial institution. As long as the buyer agrees to the lending terms and (typically) makes a down payment, the merchant “sells” them the product. 

How Does POS Financing Work?

Merchants make POS financing—also known as a POS loan or in-store financing—available only to customers that open a store credit card. This card is good only at the merchant’s store and perhaps some affiliate or partnered retailers. For example, popular jewelry stores like Zales and Kay Jewelers have credit cards available that you can use to purchase the ring you want outright. Then, you will make payments on that credit card like you would any other account with a balance.

The trick with a merchant-based credit card lies in the details. Interest rates are typically very high, and financing terms can change if a balance remains on the card for more than a year or two. 

The New Way To Borrow?

Store cards are known to require a good score for approval, but if you find the engagement ring of your (or your beloved’s) dreams, you should research the details. If you can afford to pay off the card quickly, this option may be a good one for you. 

The explosion in online retail has created even more options for the “buy now pay later” model. Third-party apps and websites partner with major retailers to sell products like engagement rings to their members. Through these services, customers can set up payment plans that will cover the total cost of the item in anywhere from two to four equal payments. As with most online vs. brick-and-mortar retail experiences, these online options offer more convenience.

A Loan from Friends & Family

Another option to finance an engagement ring could come from those closest to you. A loan from a friend or family member could help you avoid the high interest rates and tight loan terms that come with many lenders.

They could have available funds in a savings or checking account that can be transferred to you as quickly as any other loan, all without the hassle of an application process. If you choose this route, it’s recommended that you put any agreement in writing and stick to it. There’s no reason to let an issue like money bring stress to your most important relationships.  

Make an unusual choice. 

Who said diamonds were anyone’s best friend? Sometimes, saying “I love you” doesn’t have to require you to open a new account. There are tons of online auction sites and marketplaces where people sell their old jewelry. Additionally, independent jewelry makers and designers sell one-of-a-kind engagement rings made from unique precious stones and metals. 

There are even sites like Etsy.com where buyers can connect with craftspeople who create custom engagement rings engraved with names and particular messages. And nearly all of these options are available at a fraction of the price of traditional jewelry options.  

Don’t Get a New Credit Card.

Yes, it is possible to get credit approval and finance an engagement ring with one of those cards with a 0% APR. But opening up a new account for a purchase like an engagement ring may be more trouble than it’s worth. Many of these cards only offer that rate for a limited amount of billing cycles after credit approval.

After these special introductory periods, that APR can go from 0% to anywhere from 14%-24%. That means that any remaining balance on that ring will be hit with those surcharges. In addition to the current debt that you may have, remember that every new credit card has the potential to create a new bill for you and your new spouse. 

Engagement Ring Financing

Getting engaged is one of the single most important moments in your life, without question. Finding that special someone is a gift, and it’s natural to show them how much you care with the perfect engagement ring. Engagement ring financing could give you the means to propose a moment that both of you will never forget.

Just remember that consider all the financial responsibility that comes with it, including the monthly payments, when it comes to the right purchase. The perfect engagement ring doesn’t have to go from the bottom of your pocket—just from the bottom of your heart.  

Yep, that was pretty cheesy. We know. We’re just excited about your engagement. Congratulations!

References:

https://www.amount.com/blog/point-of-sale-financing

https://www.theknot.com/content/how-much-to-spend-on-engagement-ring

https://www.credit.com/blog/three-ways-to-finance-an-engagement-ring-106607/