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Engagement ring loans – Pay for that sparkler the smart way
Of course, cash is king, but if you can’t cover the full outright cost of an engagement ring, financing can be a gem. If a simple Google search is to be believed, the average engagement ring in Australia is parked between $5,000 and $6,000. So you may need some help when buying the perfect ring for your partner.
Let’s throw light on the finance options available to you, including personal loans and interest-free finance.
What are the different ways of financing an engagement ring?
When love can’t or won’t wait, the following financial products can help pay for your heart’s desire:
- Interest-free finance. Zip and Afterpay are some providers with interest-free loan offers, and they work with many jewellery stores and retailers. You pay off any amount you borrow in smaller instalments that are less financially taxing.
- Unsecured personal loans. Lenders offer between $2,000 and $50,000 for unsecured personal loans if your credit score is in good shape. Loan terms range from 1 to 7 years for both secured and unsecured options.
- Secured personal loans. Secured personal loans open the door to more borrowing with amounts of up to $100,000 depending on the form of collateral used. Cars, homes, and even the engagement ring you’re buying can all work as a guarantee for your debt. While this bags you a lower rate, you also take on the risk of losing your high-value asset if repayments stall.
- Credit cards. The famous rule for using credit cards applies here: Go for a 0% purchase rate credit card. This option allows you to buy anything interest-free for a period of up to 12 months, sometimes more. But once the deal is off the table, any outstanding debt is charged interest. So be sure to wipe out what you owe in time to avoid eye-watering bills.
- Jewellery store financing. Various Australian jewellers offer in-store financing, which is convenient since you only make one stop. Like personal loans, the arrangement may have fees, rates, and terms and conditions that apply. Get familiar with these before signing up.
Fun fact: Valentine’s Day proposals vs Christmas Day proposals
Popping the question on Valentine’s Day might be predictable, but many still can’t resist. But contrary to popular belief, February 14 isn’t where the proposal stampede happens. According to an Easy Wedding’s Annual Wedding Survey conducted in recent years, Christmas Day vies for the top spot and could easily be the winner.
It seems all that mistletoe creates the perfect setting for the joyous couple. After all, what’s better than sealing a happy engagement with a snow-themed kiss? But holly-decked Christmas Eve engagements and red-themed Valentine’s Day proposals are not the only way to go.
According to an Easy Wedding 2019 Survey, New year’s Eve and February 29 are also popular dates for getting down on one knee with a rock in hand.
How to compare engagement ring loans in Australia
Here’s a quick list of features to review so you can efficiently narrow down options when shopping for an engagement ring loan:
- Interest rates. Personal loan rates can be fixed or variable. Compare available options in the comparison table above and find the most favourable rate that’s accompanied by suitable features. For interest-free finance, check for how long and under what conditions the promotional rate applies. Also find out what the regular interest rate will be when the promotional rate knocks off.
- Fees. Fees and charges can pile up, resulting in less affordable debt even when you have the cheapest rates. Keep an eye out for application fees, establishment fees, plus monthly fees, and late payment fees. Figure out how much they contribute to the total cost of your loan.
- Loan amounts. As mentioned earlier, Aussies spend between $5,000 and $6,000 on average per engagement ring. You may be planning to go for a modestly priced ring or a dazzling rock with an equally stunning price tag. Whatever the amount you’re spending, make sure the lender has offers in that range.
- Loan terms. Personal loan terms start from a year and go up to seven years. Credit cards and interest-free finance have promotional periods that generally apply for between 3 months and 15 months. The loan term, however, usually continues after that at a higher rate. Repayment plans for in-store finance vary between jewellers, so check to make sure you can afford to repay the full amount in the specified time.
- Monthly repayments. What does your monthly household budget look like? Make sure your repayments fit in comfortably with other expenses and bills you have. Our engagement ring calculator at the top of this page will help you with your estimations.
There are no hard and fast rules for how much to spend
Jewellers like Micheal Hill and Tiffany regularly feature engagement rings worth a whopping $40,000 or more. But there are also engagement rings for $500 and much less, and some won’t even turn your finger green.
Finding a ring that matches your financial situation and preferences shouldn’t be a hassle with such a wide range. Forget about diamonds being a women’s best friend and the two-months-salary rule for how much you should spend on an engagement ring.
While De Beers might have successfully conditioned buyers in the past, it seems many millennials are just as happy with modestly-priced rings, especially if no-one can tell the difference by merely looking. So when taking out an engagement ring loan, remember, it’s all about what you can afford and what makes you and your partner happy. If you’re shopping together, you may even split the bill to accommodate a more expensive taste.
Checking for a return policy is always a safe bet
Thinking about it is a mood killer, but there’s always a chance your marriage proposal gets turned down. If you’re paying for the ring with borrowed funds, checking for the jeweller’s or retailer’s return policy might save you more heartache. But keep in mind that some lenders charge early repayment and early exit fees if you repay your loan in full ahead of time.
Engagement ring loans FAQs
How do I apply for a personal loan to buy an engagement ring?
Compare our personal loans in the product table above, then click “Go to Site” to apply online for your preferred option.
Are interest-free offers too good to be true?
The catch is that the interest-free period doesn’t always last. Once it’s over, high rates and fees often apply. To make a profit, most providers rely on borrowers who don’t clear their debt in time.
Can I use the funds to also pay for my wedding?
An engagement ring is generally a precursor to more romantic vibes in the form of weddings. If you’re using a personal loan, it’s possible to borrow enough to cover nuptial costs. Read our wedding loan guide to find out more.
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