Personal Loans

Can You Use a Personal Loans to Buy an Engagement Ring?

Learn everything you need to know about using personal loans to buy an engagement ring. Get expert advice, tips, and considerations. Compare best rates options.
A man shops for an engagement ring in a jewelry store
Written by:
Rob Sabo
Edited by:
Kristin Marino verified

Engagement rings have been used from ancient history to modern times to symbolize the promise of marriage and lifelong devotion to a chosen partner.

There are many different things consumers must consider when purchasing a wedding ring, especially if they opt for a diamond engagement ring.

A diamond’s cut, color, clarity, and carat weight all influence the appearance and cost of the ring. These essential traits aren’t the only things to contemplate, though. Paying for an engagement ring brings its own set of challenges.

This guide to buying an engagement ring will help you better understand all the different ways you can pay for an engagement ring for your significant other.

Use the costs and data we’ve compiled below to determine which method of paying for an engagement ring works best for you, and don’t forget that taking out a personal loan may prove to be the most cost-effective solution.

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How Much Is an Engagement Ring?

Diamonds may remain the gold standard for engagement rings, but the choice of what to buy and how much to spend is a personal decision. You should take into account your current financial situation, income, debts, and savings prior to settling on an engagement ring. Choosing a super-expensive ring and saddling yourself with unserviceable debt could lead to financial problems in your pending marriage.

Here are some rough cost guidelines:

  • Diamond engagement rings totaling one carat typically cost about $5,000.
  • Historically, spending between one and three months’ wages on an engagement ring was the rule; today, Americans spend about two weeks’ worth of wages on engagement rings.
  • In 2022, the average spending on engagement rings was $5,225; however, 20% of engagement ring purchases were less than $1,000.

Shades of gold remain the most popular choice for engagement and wedding bands.

Alternative metal options include platinum, palladium, sterling silver, titanium, and tungsten.

Many couples prefer to see engagement rings in person before purchasing, making independent and chain retail diamond stores the preferred place to shop for engagement rings.

Online engagement ring retailers are growing in popularity, however.

The main thing to consider when shopping for an engagement ring is to buy what you can afford today.

You can always upgrade later if your salary increases, or you can have a jeweler modify an existing engagement ring with some additional bling to make it more luxurious.

Discover personal loans for engagement rings and more, compare rates, and find the best personal loan for you.

Are There Personal Loans for Engagement Rings?

Creditworthy borrowers may find that taking out a personal loan is the fast and most cost-effective way to purchase an engagement ring.

Banks, credit unions, online lenders, and even credit card companies offer personal loans, and you can apply online in a matter of a few minutes.

Lenders use different criteria to qualify borrowers, but the two most important factors are your credit score and a stable income history.

Financial institutions also offer a wide range of loan terms, so it pays to shop around when searching for a personal loan to buy an engagement ring in order to get the lowest interest rate.

Engagement Rings With Personal Loans Pros & Cons

Should You Use a Credit Card for an Engagement Ring?

A simple swipe of your credit card could quickly fund your engagement ring, but you should think hard before pursuing this path.

Rising federal interest rates pushed average credit card interest rates to around 20% in 2023, though borrowers with good to excellent credit may enjoy interest rates a few points lower. Regardless, high interest rates are costly. The table below demonstrates how much a $5,000 engagement ring will actually cost at 20% interest.

Engagement Rings With Credit Cards Pros & Cons

Store Credit for an Engagement Ring

Jewelry stores offer a variety of ways to pay for engagement rings.

Some offer store-branded credit cards, but these cards are usually backed by a national bank.

After filling out an application and being approved, consumers can choose payment plans ranging from six to 36 months, with promotional, deferred, or even zero interest due during the promotional period.

It’s important to note that borrowers who use deferred-interest store credit cards but don’t pay off their purchases before the promotional period ends will have to pay interest from the date of purchase.

Interest rates for these cards could range from a respectable 10% for highly qualified buyers to an untenable 30% for borrowers with bad credit ratings.

Engagement Rings With Store Credit Pros & Cons

Buy Now, Pay Later

Buy now, pay later (BNPL) basically works like an installment loan. You pay a certain amount at checkout, and then your credit or debit card is billed at regular intervals until you pay the purchase in full.

In order to buy an engagement ring using BNPL, you’ll have to fill out an application at the time of purchase and provide a payment method.

Approval largely depends on your credit score.

Many BNPL plans offer repayment in four installments with no interest.

You’ll own the ring if you make all payments on time.

Missed or delayed payments, however, bring late fees and can negatively impact your credit score.

Engagement Rings With Buy Now, Pay Later Pros & Cons

Other Ways to Finance

We’ve covered many traditional methods for financing the purchase of an engagement ring; however, there are other options you may want to consider. These include the following.

Using personal savings

For many people, amassing a personal savings account of $5,000 or $10,000 takes some time and is a significant achievement.

It may be painful to drain your personal savings to buy an engagement ring, but it may make more financial sense than taking on additional debt.

Borrowing from family

It might be best to consider this option as a last resort since borrowing from family can bring about many unintended and unfavorable consequences.

If you are able to borrow from a family member, both sides should treat the loan as a business transaction between two parties.

That means clear repayment terms, any applicable interest, and penalties for repayment.

Loan terms should be in writing to provide legal recourse for the lender in the event of borrower default.

Get a side hustle

Consider earning extra cash by driving for a food delivery on-demand service, renting out one of the rooms in your home, tutoring online, or doing side hustles that could help you save the money needed to buy an engagement ring without incurring debt.

What Not to Do When Buying an Engagement Ring

It can be extremely hard to settle on a smaller diamond engagement ring when your beloved fiance’s eyes wander back to that one-carat princess-cut beauty.

Sure, some rings are more appealing than others, but the cost may simply be out of your financial reach.

Here’s our top-5 list of things not to do when buying an engagement ring:

Don’t Fail to Set a Budget

Diamonds may be a girl’s best friend, but they aren’t very wallet-friendly. Set a budget, and stay within that range. Remember, you can always upgrade later.

Don’t Make an Impulse Buy

Don’t buy the first ring you find. Shop around to see what’s out there in your price range to find the best deal.

Don’t Fail to Look Online

Online retailers can greatly increase your purchasing options and may have more engagement ring options in your price range.

Don’t Fail to Find Out What Type of Setting Your Partner Needs

Choosing the wrong style of engagement ring may result in daily frustrations.

Large solitaire diamonds are costly, and they have a high profile that may not be the best choice if your partner is very active and works with his or her hands all day.

Don’t Forget to Do Your Research

This is a big purchase, especially if you are buying a diamond engagement ring.

Know a bit about carat weight, clarity, cut, and certificates before you begin your shopping.

How to Bring Down the Cost of an Engagement Ring

These tips may help you maximize your purchasing power.

  • Buy a loose diamond and have a jeweler create a custom setting
  • Buy fractionally sized diamonds that fall just under one- or two-carat weights
  • Focus on the cut of the diamond rather than its carat weight or clarity
  • Stay away from any purchase that has a high interest rate
  • Set a purchase limit
  • Consider lab-grown diamonds
  • Shop second-hand stores and pawnshops
  • Get a modest starter ring

Engagement Ring/Personal Loans FAQs

Here are five commonly asked questions about using personal loans to buy an engagement ring:

What credit score is needed to qualify for a personal loan?

FICO scores range from 300 to 850. Scores between 670 and 739 are considered “good” credit. Scores between 580 and 669 are “fair” credit. You may qualify for a personal loan with fair or even poor credit (300-579), but interest rates and loan terms will be significantly less favorable than offers to more-qualified borrowers.

How much can I borrow?

One good thing about personal loans is you typically can borrow larger amounts – $20,000 or much more, provided you have strong credit. The catch is that you could significantly increase your overall debt by borrowing large sums. Borrow only what you need to buy an engagement ring.

Can I get a personal loan if I don’t have a W2?

Gig workers and independent contractors can qualify for personal loans. You’ll have to have excellent credit and will probably have to show proof of income in order to secure the best loan terms.

If I take out a personal loan, can I pay it off early?

Many lenders don’t impose prepayment penalties, but some do. Before signing anything, carefully read through the loan terms to see if there’s any penalty for early repayment.

What are the interest rates on personal loans?

Interest rates are largely determined by your credit score. Borrowers with excellent credit may receive loan offers that are far superior to credit card interest rates. Conversely, borrowers with poor credit may find that interest rates are too high for the loan to make good financial sense.