Everything You Need To Know About Engagement Ring Financing

Aug 30th 2021

Everything You Need To Know About Engagement Ring Financing

Why Should You Finance an Engagement Ring?

You start shopping and realize that the ring you wanted may cost more than you have saved up. Or maybe you want to ensure that you have a cushion for any other wedding expenditures that could pop up. Regardless, you now have an option that offers you the best of both worlds: Engagement Ring Financing.

Gone is the traditional expectation that a buyer should spend three months’ salary on an engagement ring. FYI – this "guideline" began as a marketing initiative used to enhance sales around the start of World War II. Nonetheless, an engagement ring still remains a serious investment. According to The Knot 2020 Jewelry and Engagement Study, the average cost of an engagement ring is currently $5,500.

For customers with limited credit options, financing such a large purchase can be daunting. Luckily, there are plenty of financing choices for borrowers with less-than-stellar credit. Financing your engagement ring can help to reduce the financial burden of buying an engagement ring.

5 Things to Avoid When Financing Your Engagement Ring

As you hunt for the best engagement ring financing option, make sure you understand the benefits and potential hang-ups of each financing model. At the end of the day, finance companies exist to make money, so here are some things to avoid if you don’t want to spend more than you have to.

1. 0% APR Introductory Rates

Some credit card companies offer the first 6- or 12-months interest-free when you open a new card. Zero-percent interest sounds pretty great. So, what’s the issue with zero-percent promotional rates?

Two words: deferred interest.

This type of interest is especially sneaky, because it’s accruing in the background during your zero-interest period. If you end the promotional period with a balance – even one dollar – you have to pay interest on your entire original balance.

Zero-percent offers aren’t a setup – for some shoppers, they work well. If you have ample savings and good money management skills, you can plan your payments to ensure you pay off your balance in time. However, if an unexpected expense like a car repair or trip to the doctor would throw off your payment plan, this type of financing becomes risky.

2. Low-Interest Credit Cards

In addition to an introductory zero-interest offer, many jewelry stores offer a low-interest credit card option. These cards have interest rates well below the national average credit card rate of 17 percent – usually around 8 to 10 percent. They also have a much longer promotional period – 24 to 60 months.

These cards come with pitfalls, however. If you make a late payment or fail to pay off your entire balance within the promotional period, your interest rate will jump to 28 to 30 percent.

Another potential problem is minimum payments. Each billing cycle, your credit card company will set a minimum required payment – usually one or two percent of your total balance. Making the minimum payment saves money in the short term, but it could also get you stuck into a perpetual debt cycle. The longer you take to pay off your balance, the more interest accrues. Eventually, your monthly interest can become larger than your monthly minimum payment, so even though you’re paying monthly, your balance actually increases.

3. No Credit Check “Financing”

Any company advertising “no credit check” financing (as opposed to “no credit needed”) is more than likely a lease-to-own business.

These companies lease your engagement ring to you and give you the option to purchase the ring within 90 days at the original price or pay a huge markup over twelve months by charging you leasing fees. These leasing fees are equivalent to about 200% APR, which is illegal in most states. Because of that, lease-to-own operations cannot legally refer to their setup as “financing.” They can, however, draw in customers with their no credit check promise, since their sky-high fees make up for any risk, they take on by leasing to poor credit customers.

Additionally, lease-to-own companies have come under fire for widespread shady practices, like hiding the real terms of the lease, misrepresenting the number of monthly payments and continuing to charge for purchases that have been returned or paid off.

4. Fees

Fees are a headache, especially if your financing partner doesn’t have a transparent policy. Here are some common fees to look out for:

Late Fees - No matter what financing option you choose, carefully plan all your payments before you sign on the dotted line. Will you have the extra money to make this payment each month? Will your other billing schedules get in the way? Creating a “payment calendar” in advance helps avoid late fees. Be especially diligent with no-interest or low-interest credit cards. If you make a late payment, your interest rate could skyrocket.

Returned Payment Fees - If your payment doesn’t go through due to insufficient funds, you’ll likely get hit with a returned payment fee. If your payment is debited from a checking account, you may get penalized by both the finance company and your bank.

Origination Fees - Some lease-to-own companies and personal loan companies charge an origination fee to establish and process your lease or loan, like a $50 fee up front that doesn’t apply towards your balance.

5. Aggressive Collection Policies

Unfortunately, some finance companies resort to harassment and intimidation when a customer falls behind on payments. Perhaps the worst offenders are lease-to-own companies. Customers filed thousands of federal and state complaints against Rent-A-Center, the nation’s largest rent-to-own merchandise company, for unethical collection practices like breaking into renters’ homes, calling renters at work and threatening legal action.

Credit cards companies are not unknown to use aggressive collection practices, as well. Synchrony Bank, one of the largest providers of deferred interest credit cards, has come under fire from the Consumer Financial Protection Bureau for ”heavy-handed collection tactics” like calling cardholders at work, calling up to 20 times a day, and threatening to arrest cardholders.

Wondering whether your finance company would resort to harassment? Online reviews can give you a good idea of a company’s collection practices and transparency. If you see a pattern of negative reviews, find a more reputable company to finance your ring. Consumer Affairs is a great place to start.

A lot of places (including ourselves) advertise “No Credit Needed” financing. While some might think that sounds too good to be true, there are a handful of legitimate No Credit Needed engagement ring financing options out there.

What are No Credit Needed Finance Companies Looking For?

When evaluating applicants, No Credit Needed financing companies are looking at factors other than traditional credit scores. To put it simply, they are looking to see if applicants have the ability to pay back the loan. Some of the major questions that a No Credit Needed finance company will be looking to answer are:

Does the applicant have a steady stream of income? Typically, finance companies will require at least 3 to 6 months of employment history

Does the applicant spend responsibly? Finance companies will want to see checking accounts with positive balances without excessive overdrafts (excessive generally means more than 4 overdrafts in a 30-day period)

Has the applicant been making payments on their obligations recently? Finance companies will look at any recent bankruptcy filings as that is a clear indication that applicants aren’t meeting their obligations

In addition to verifying the applicant's ability to make payments, finance companies might also enhance credit by requiring a down payment or by directly debiting the customer’s checking account on their pay dates (this ensures the customer has the funds to make the payments)

The Difference at Gage Diamonds

Buy now and pay later with Gage Diamonds. We offer financing at 4.95% for 12 or 24 months on everything from engagement rings and diamonds, to fine jewelry and wedding rings. We have an exclusive in-house financing partner, LendFirm, and we make our “interest” by buying products at wholesale prices and selling them at a competitive retail price. This allows us to provide a straightforward financing option for shoppers with low credit scores.

We use a holistic approach to determine if a customer is a good candidate for financing. We know that your financial health is made up of far more than your credit score, so we look to see if you have a steady source of income (at least three months of employment or income history) and can spend responsibly (having a checking account in good standing with few overdrafts and negative balances).

How Easy is it to Get Financing through Gage Diamonds?

At Gage Diamonds, we don’t turn away customers simply because they have less-than-stellar credit. All we ask is that you have the following three things:

  1. A valid driver’s license or State ID
  2. Direct deposit from your primary employer or benefit provider into a checking account with at least 3 months of history
  3. Checking account in good standing (no excessive NSFs, overdrafts and negative balances)

It’s that simple. As long as we can verify your information, then you’ll have a good chance of getting approved regardless of your credit history. The best part is that you can get approved in less than 24 hours and start shopping at Gage Diamonds for that special engagement ring.

We link directly to your checking account and automatically debit payments on the same day you get paid so that you’ll never have to worry about making payments. Plus, it reassures us that you’ll have the funds to make your payments (we like to get paid too!). By automatically syncing the payments to your pay dates, we are able to offer feeless financing as low as 4.95% APR for up to 24 months to our customers.

How Does Gage Diamonds Stack Up Against Competitors?

  • Gage Diamonds
    • 100% financing up to $12,000
    • Financing as low as 4.95% APR for up to 24 months
    • No hidden fees, penalties, tricks or gimmicks. What you see at checkout is what you pay.
  • James Allen
    • Deferred interest if you pay in full within a 6-month promotional period (minimum $1,000 purchase).
    • 9.90% APR on 24 monthly payments (minimum $2,000 purchase, offer subject to credit approval)
  • Blue Nile
    • No interest if paid in full within the promotional period (6 months for purchases $500 – $1,499, 12 months for $1,500 and up, 18 months for Astor by Blue Nile purchases $2,000 and up)
    • 9.99% APR if paid in full in 24, 36, 48 or 60 months (depending on purchase price). Standard variable Purchase APR of 29.99% if not paid in time
    • No special terms with a 25-day grace period for new purchases
  • Tiffany & Co.
    • 7.99% APR for a 24-month promotional period (8-21%, depending on your state, after this period if the total amount is not paid in full or if you make a late payment).
    • No interest for a 12-month promotional period (same rules as above if not paid in full).

Have a question? We can help!

Gage Diamonds is Chicago's premier jewelry showroom and online retailer of engagement rings, wedding bands, and fine jewelry. We offer a selection of dazzling handpicked diamonds in a variety of shapes, including oval, pear, marquise, emerald and princess.

We’re committed to helping you find the ring of your dreams. For inspiration, browse our website or set up an appointment with a member of our trusted staff at our in-person showroom.

We offer no-credit-needed financing – feel free to apply and get your approval within 24 hours!

Pay over time, because love shouldn’t wait.