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Ways to finance an engagement ring

Woman proposing to a man on a park bench
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Proposing marriage with an engagement ring is a generations-old practice, but the cost of an engagement ring can be high. Although it’s financially savvy to set savings aside in advance for this hefty purchase, that might not be feasible for your situation.

Instead, you can choose to borrow money to buy an engagement ring. There are a handful of ways to do so, such as with jeweler financing or taking out an engagement ring loan.

Costs of an engagement ring

There’s no rule that enforces you to get an engagement ring of a particular size, shape or setting. However, you might’ve heard the outdated rule of thumb that an engagement ring should be worth approximately three months of salary. Diamond jeweler De Beers popularized the antiquated idea of tying a ring’s price to your monthly earnings in its 1930s marketing campaign. Yet, couples still spend a significant amount of money on an engagement ring.

The Knot’s 2021 Jewelry & Engagement Study found that the average engagement ring price that consumers paid increased to $6,000, compared to $5,900 in 2019. Of the respondents, almost 30% said they went over their engagement ring budget.

Multiple factors go into the price of an engagement ring. The same study found that the precious stone that’s used in a ring’s design is a notable factor for price:

  • Clear diamond ring: $6,800
  • Gemstone: $2,500

Other price factors include the ring setting, metal type, diamond or gemstone details like rating and size, and the region you live in.

Once you’ve determined your ring budget and have found the perfect one to pop the question with, you’ll need to decide how to pay for it if you don’t have cash on hand.

Jewelry store financing

Many major jewelry retailers offer in-house financing to help their customers pay for an engagement ring. This financing option is conveniently done in-store or through the jeweler’s online platform. It’s an installment loan wherein you get to walk out of the store, ring in hand, and make incremental monthly payments toward the loan balance, plus interest.

Generally, jewelry financing offers more flexible credit requirements compared to borrowing a loan from a traditional bank. Some retailers might have financing requirements, like a minimum purchase amount, and offer various repayment terms.

Best for: Buyers who want a convenient financing source and those who might not have strong credit.

Credit card

Using a credit card to finance an engagement ring can be a strategic option for responsible borrowers.

For example, let’s say you have strong credit and qualify for a promotional 18-month 0% APR rewards credit card. In this scenario, you’re confident that you can repay the full cost of the ring within the short-term promo period. Choosing a rewards credit card at a zero-interest rate to pay off your engagement ring can result in paying no interest during your repayment while also earning rewards points or miles.

If your credit doesn’t qualify for a promotional rate offer, be aware that credit card interest can be steep. When using a credit card without a no-interest promotion, calculate whether you have the budget to pay off the ring within the next billing cycle.

Best for: Individuals who have strong credit or can repay the ring purchase in full by the next billing statement.

Personal loan

Another conventional option is taking out an engagement ring loan. Some lenders market this lending product specifically as an engagement ring or wedding loan. Similarly, some lenders simply refer to it as a personal loan in which you can use the loan funds toward any purchase, including an engagement ring.

Like jeweler financing, a personal loan is another type of installment loan. You’ll pay back the loan in smaller monthly installment payments over a set period, plus interest charges and fees. However, unlike jeweler financing, since the lender is a third party, you’ll have to get approved for the loan before shopping for your ideal ring.

Eligibility for an unsecured personal loan varies between lenders, which includes credit requirements for approval. The advantage of third-party loans for engagement ring purchases, however, is that you get to compare rates from multiple lenders to find the lowest option.

Best for: Buyers who have good credit and want to shop around for a competitive interest rate.

Buy now, pay later loan

Buy now, pay later (BNPL) loans, also called “point-of-sale financing”, have gained popularity in recent years. BNPL services, like Affirm, Klarna and Afterpay, are integrated into the online checkout process when buying an engagement ring online.

Generally, you’re required to pay a percentage (e.g. 25%) of the total purchase upfront. Then, you’re required to make equal payments over a short period to repay the remaining balance. Depending on the repayment term you choose or your credit, you might be offered a BNPL loan at no interest.

Best for: Online ring shoppers who want a seamless financing experience and the potential to pay no interest for a short repayment term.

Home equity loan

A home equity loan, also called a “second mortgage”, is the only type of engagement ring loan on the list that is a secured loan. It lets you borrow a loan at a fixed amount which is borrowed against the equity you’ve amassed on your home. Lenders have their own equity loan limits in terms of how much you can borrow; generally, it’s limited to 85 percent of your home equity.

It typically offers low fixed interest rates, and like a personal loan, you’ll repay it in equal payments each month. Since it uses your home as collateral, a home equity loan is considered low-risk financing for lenders. As such, it might be easier to secure this type of engagement ring financing than a third-party personal loan.

However, the biggest caveat is that if you’re unable to make your loan payments, and default on the loan, the bank can foreclose on your home.

Best for: Those who’ve built equity in their home and who are looking for competitive interest rates.

Bottom line

Whenever possible, it’s best to avoid borrowing money to finance an engagement ring, and instead, plan ahead for this milestone purchase. Overall, engagements and weddings can be expensive, so it helps to have a strong plan of how you will pay for them.

However, if you need to finance your engagement ring incrementally, consider your personal situation to decide the best path forward. This includes setting a realistic ring budget, accessing your finances and the ability to reasonably repay the engagement ring loan while also finding a ring that your partner will love.

Written by
Jennifer Calonia
Contributing writer
Jennifer Calonia is an L.A.-based writer and editor. She's covered topics like debt, saving money and credit cards. You can find her work on Business Insider, Forbes and more.
Edited by
Loans Editor, Former Insurance Editor