You spend months finding the perfect diamond engagement ring for your lovely fiancee.
You can’t wait to give it to her.
But there’s one huge hurdle you must attend to…
Or more accurately: paying for it!
The F word…
It’s a shame that most people don’t have lucrative bank accounts that allow them to pay $6,000 cash for a diamond ring.
What can we do about it?
Most people have to turn to alternative methods, like the “F” word; Financing!
Just about every jeweler and jewelry store offers some sort of finance plan. This is where your purchase gets scary…
Are you going to read that contract?
The applications for finance plans have actually gotten better over the years.
Most companies just simply require a few details and a signature. But the contracts themselves are a different story. Have you seen them? It’s like buying a home. It’s a 50 page booklet.
Who’s going to read all that?
It would take 3 hours and a magnifying glass just to sort through all that lawyer mumble-jumble. This is why most people don’t read them. Many don’t even look at them. Just a couple of people actually skim it (acting like they understand it), and then sign at the bottom line.
What choice do we have?
That tiny print is killer on the eyes.
But listen to this…
Financing at the jewelry store is NOT the only way to go. You can always go to your own personal bank and get a better loan. It’s really not a bad Idea (people do it with cars).
Here’s why it’s better…
There is a lot of small print in those jewelry store finance scams (err, plans). Lots of fun little loopholes. Most financing plans available for jewelry stores charge anywhere from 18% to 25% interest or higher.
And just about all plans charge huge fees for late charges or bounced checks. These add up rather quickly. Your $6,000 initial diamond purchase ends up being more like $9,000 by the time you’re done paying for it (in 15 years).
That doesn’t sound like such a good deal anymore, does it?
That’s why I advise other financing:
One of the biggest things to watch out for are those special “same-as-cash deals”.
12 months same-as-cash sounds wonderful, but proceed with caution.
If you miss one single payment, or are late by even one day… Your account can change.
It can instantly change from that great interest-free account that you had, to a high interest paying account instead. Just one late payment is all it takes… One time blows the whole deal.
And chances are good, that all the interest that you would have had to pay since the beginning of the contract, will be added back to the account… Plus some huge charges, penalties, fees and an arm and a leg.
One goof up is all it takes.
It’s sad, but it’s reality.
Pay cash or just borrow the money from someone you know. Or like I said before, go to your own personal banking institute and get a loan. Chances are you’ll get a much better plan and end up paying far less for your diamond ring all together.
Lay it away:
Not to mention the fact, that you can always put the ring in a free layaway account. That’s a good way to go. With layaways, you just pay on it once a month, it’s interest-free, and I highly recommend this if you don’t need to get the ring today.
It’s your money, you can do what you want with it, but if you just spent 2 months finding the perfect ring (and you can save tons of money buying from James Allen) for the perfect price, it seems silly to me to then pay double for it.
So beware of financing plans.
You don’t want to get ripped off.
Last note: Here’s a good trick that I tell everyone, and it always seems to work well.
Most jewelers offer a 90 days same-as-cash plan. If you pay it off in 90 days, you pay no interest (some 90 day plans make you pay per month. Others allow you to pay it off before the 90 days are up. See your jeweler for exact details and obligations).
Take advantage of these 90 days…
At the end of the 90 days financing, pay if off with either your credit card that has a lower interest rate, or use your bank loan to pay it off (Anything is better than 25% interest). But at least this way, the first 90 days are interest-free, and that you can’t beat.
90 days without interest is not a lot, but in these times of huge fees and charges, every little bit helps.
Get a BETTER deal:
Also note, that if you can skip the financing plans and pay cash, you’ll probably end up getting a better deal for your diamond ring to begin with.
When jewelers have to finance it, they lose part of the profits to the finance companies. So if they don’t have to finance it, a lot of times you can bargain for a lower price on the ring.
Check it out…
Be up front about it and ASK. Cash allows you to wheel and deal more often. It gives the jewelers a little bit more leeway.
Read the contract:
And if you do finance it, please read the contract. Don’t just sign away. Take it home if you have to. Read the details before you dive in and get scammed.
Make sure you understand how much more money your ring’s going to cost you.
Larger down payments:
And keep in mind, the larger the down-payment, the better. You won’t have to charge as much, and the interest payments will be lower.
And if you can, go with layaway. If you don’t need the ring NOW, then why take it?
Put it in layaway and pay on it interest free until it’s at least half paid off. Then convert it over to a charge account (like 90 days) and all the payments and interest will be less.
You see, every little bit does help.
Plans or scams?
It’s all in how you pay…
Hopefully, you’ll pay smart!
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