As soon as the loan cashes out, you can use any payment method, from a card to cash, or even a check to buy what you need. You will then be held liable for paying back the amount that was granted to you, normally on a monthly repayment basis.
Loans can be advantageous, as they generally have a low interest rate, and offer greater flexibility. They don’t affect credit reports either, which can be good bad, depending on what you need to your credit record to reflect for future credit.
The problem with loans comes in when you are unable to honour your payments, which could place strain on how your lender treats you in future.
A personal loan is often a good option, as several lenders compete for business. Loans that are issued by banks, credit unions and online lenders are not fixed, and your rate will be determined by your credit score and the state of our personal finances.
Option 2: Private in-store finance
Several larger retailers are offering branded finance plans in-house, many with little or even no interest. These can be beneficial, but watch out for committing to a promotional amount, as the terms and conditions of a promo deal can be very strict.
Most of the larger chains of jewellers can help with finance plans, with a 0% interest deal, although this is mostly for a limited time, as a drawcard.
Option 3: Credit cards
Credit cards with low or zero interest period will often allow you to pay off your debt sooner, but would require you to open a new credit card account. Just remember that the new account could affect your overall credit score, particularly if the line of credit is not noticeably more than what you charge. The reason for this is that your debt usage ratio is calculated by comparing your available credit to your balances. If your balances come to more than 20 to 25 percent of the value of what you have available on your credit card (or all of them, if you have more than one), you credit score will be under pressure.
The golden rule is to remember that deals that seem to be too good to be true, are exactly just that. And finance is an area where this holds particularly true.
Saving can be difficult, time-consuming, and inconvenient while it’s underway, but the greatest benefit is that once you’re done, you’re done, and you walk away not owing anyone anything. Sacrificing on luxuries in the pursuit of a long-term goal always pays in the long run.
Whether you apply for a new credit card or use an existing one, a credit card is a feasible solution to paying for an engagement ring. There are a few different ways you can use a credit card to pay for an engagement ring. For instance, you could use a credit card you already have or you could apply for a new card.
Some jewellers offer their own, branded credit card. If you only intend to use the card for buying the ring, this can be a good option, as introductory rates are often part of the offering to sweeten the deal.
Several credit card options include the feature of no down payment, in addition to offering 0% interest. This is a great solution if you are sure that you can pay the amount off within the promotional period.