Don’t let bad credit stand in the way of your ability to pay diamond and purchase an engagement ring for your soulmate. Loans are available for bad credit customers wanting to buy and engagement ring and take the leap into the world of marriage.
How you manage to make your engagement ring payments will be forgotten quickly, but the beauty and love it is will symbolize will stay forever. Having a bad credit score should not end your chances of getting an engagement ring of your choice. But you should know the process of how to go about it.
Choose Financing Judiciously
Engagement rings are personal choices and the first step to buying the perfect ring is to set a budget. The “three month rule” where a person is supposed to spend at least three months’ salary on an engagement ring is an outdated rule. The jewelry industry came up with that ridiculous idea!
In this day and age, it is impractical to imagine an average person having that kind of money stashed away to spend that type of money on something that does not have anything to do with surviving. Most Americans do not save beyond $1,000 in their savings account! And even if you have three months’ salary somewhere, it’s probably an emergency fund.
You should not liquidate your emergency fund to buy jewelry, because an unforeseen event such as a surgery, or a major car or home repair may strike at any time. Think of everything you can do with that kind of money, like going on a beautiful honeymoon, or making a down payment on the house of your dreams.
If you spend all your money on the ring, will you have to borrow money to pay for the wedding, the honeymoon? One key to a happy marriage and happy life is spending responsibly.
Similarly, you could choose to pay diamond with credit and get it 100 percent financed, but that comes with its own stressors as well.
It is important to understand that your financial situation is entirely dependent on your credit score. For instance, you may not be able to get an auto loan or a mortgage easily. Even if you get one, it will probably come with a heftier interest rate.
Your future spouse is likely to throw a huge fit about the price tag on the ring. If you are the one asking, then you have probably heard of expectations and you may be spending a considerable amount of time stressing about it.
However, if your future life partner is not ready to understand your current financial situation, you may want to reconsider tying your life to theirs.
If not, you could think of purchasing something affordable now and saving up for buying a flashier ring at a later date. You could also find a ring that has a buy now pay later no credit check type of financial arrangement, but that’s dependent on if you think you can handle the later payments.
It is realistic to balance your partner’s expectations and your financial abilities. Here is where financing comes in helpful.
Financing a ring when you have a bad credit score can have some serious benefits. This means you can get a decent ring which somewhat matches your partner’s expectations while helping repair your credit score. An 100 percent financed ring is an option, and that means that you will pay no money down, but instead pay for your ring through a series of monthly payments with interest.
This also means that you can propose immediately and not have to wait around by achieving a more manageable payment strategy.
Financing Options for Engagement Rings
Here are some preferable engagement ring payments when you have a bad credit score.
Jewelry Store Financing
There are a number of jewelry stores, particularly the ones carrying engagement rings, which offer in-store financing options. Some of these come with a 0% rate, even for people with bad credit scores. However, the zero-percent APR and 100 percent financed ring comes with a catch.
Your credit utilization score will skyrocket because the amount you will be charging to the card is likely to be towards the upper end of your available credit limit. This will significantly influence your score and bring it further down, at least until you pay off the balance.
Additionally, jewelry stores are known to charge interest in full from the date of purchase, when the no-interest period is up and the purchase amount is not paid off. This sort of defeats the purpose of a 0% APR and can leave you with a mountain of debt. This could also worsen your already poor credit history.
If you are considering taking out a 0% store credit card, then make sure you understand the extent of promotional period and the interest rate after that. You should also inquire about interest calculations and how it shall be assessed.
Some jewelry stores are known to revoke the promotional interest rate as soon as a payment is missed. It is best to look beyond the shine of an engagement ring to understand all the financial aspects in order to avoid hot financial waters.
0% APR Credit Card
Many cash-strapped Americans turn towards credit cards to pay diamond ring. However, this approach can be as tricky as opting for jewelry store cards, especially when you decide to charge your existing cards.
Even if your card has a limit that exceeds the three-month threshold, using it to pay for a pricey ring can cause serious financial issues in the long run. The interest alone shall make the whole endeavor unaffordable. On top of it, any missed card payments will only further affect your bad credit score.
The solution – take out a new credit card with an introductory 0% APR promotional period. Typically, these promotional periods can last anywhere from six, twelve, to eighteen months.
Shop around for the longest promotional period, during which you won’t be charged interest on your credit card balance. All you need to do is make sure you manage to pay off the credit card balance before the promotional period ends.
This option is still better than getting a store card since the interest, even when the promotional period ends, is charged from the date interest becomes applicable and not from the date of purchase.
The only problem with this option is that not everyone with a bad credit score has access to the same level of credit. These 0% APR cards are often offered only to people with good credit scores.
However, you could call your existing credit card company, if you have a good history with them, and inquire whether they have any promotional offers for you.
Again, it is important to pay off the credit card balance before the promotional period ends to keep things affordable. It might cause a lot of financial troubles if you decide to let the promotional period lapse with a huge balance remaining on the card.
While personal loans will give you the kind of money you need to buy a ring, it is important that you weigh in all the pros and cons of this option.
You should re-evaluate your financial condition before you take out a personal loan to finance a piece of jewelry. This should be your go-to option only when you get rejected for a credit card and find no stores willing to offer credit.
On top of this, this option might prove to be more expensive because the worse your credit score the higher your interest rate will be. It is important that you deal with only reputable lenders offering installment loans. These will have fixed monthly payments and the terms of loan and rate will not change over time.
It is best to steer clear of predatory lenders hawking sketchy no credit check loans, such as payday loans or cash advances. These will have you in a cycle of revolving debt in no time, even though they might give you cash quickly.
As per a report by the Center for Responsible Lending, 76% payday loans are taken up to pay off existing payday loans. This statistic should be enough to keep you away from them.
Make sure you get a loan that does not drag you down when you take up a bad credit loan to fund an engagement ring. You should ensure that your lender offers long-repayment options that bring down your monthly costs and gives you an easy-to-understand summary of your loan terms.
Personal (installment) loans come with a singular benefit of improving your credit score as long as you keep up with the monthly payments. Most reputable lenders are required to report on-time payments to the credit bureaus. This can help you repair your bad credit score while getting a ring your partner will love.
Skip the Diamonds
Diamonds are pretty and it’s easy to understand why they have become a real symbol of everlasting love. However, diamonds are not the go-to stones for engagements, even if they are sparkly, clear and look like melted ice. In fact, there are a number of other options to consider, such as:
This crystal-clear stone is half the price of diamonds and is as tough, clear, and sparkly as them. Also, it is naturally found in meteorites which make it a perfect gift for the star of your life.
Colored Gem Stones
You could make the engagement ring special and personalized by getting the stone in your sweetheart’s favorite color. You could always have the ring in a cluster, where the center stone is a colored gem stone, surrounded by smaller diamonds.
This will again come out to be way cheaper than buying a huge diamond rock. Ruby, topaz, and emerald are the go-to precious stones for an engagement ring.
These are priced 15 to 20 percent less than their earth-grown counterparts and are similar in all features. Humankind can make a car and a satellite, why not a diamond that goes on a finger?
It is important to remain realistic about the price tag and do take out more than you can afford.
Factor in other costs, like living expenses, additional groceries, any unpaid time off work, engagement costs, marriage costs, travel expenses when drawing up a budget of your monthly repayments.
This will let you know what you can responsibly afford when it comes to getting the right ring for your perfect person.