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View Full Version : Down payment change regards to $5.00 incentive


manning
03-24-2002, 12:41 AM
Just got back from WDW and while making our purchase at BCV we were told that although the $5.00 incentive was still available, at the beginning of April it will not be possible to apply it to your down payment. In other words, all down payments will have to be in cash or credit card. Supposedly this is the result of the fallout of ENRON.

Happy Birthday Cat
03-24-2002, 09:28 AM
I guess I am missing something here. What does ENRON have to do with the $5.00 incentive?

DebbieB
03-24-2002, 09:46 AM
They want more cash out of your pocket upfront. I guess the lesson of Enron is to get more money upfront in case you lose it all?????

Example -

You buy 150 points. $75 x 150 = $11,250. 20% down would be 2,250. The discount would be $5 x 150 = $750. Out of pocket = $1,500.

If they changed it to $70 x 150 = $10,500. 20% down would be $2,100 out of pocket.

Dumbo
03-24-2002, 11:14 AM
When I bought at Boardwalk Villas in 1999, it cost me $500 out of pocket expense. I put that on my charge card. This was added to the $1500 Magical Beginnings I got for a total down payment of $2000.


Dumbo

chris1gill
03-24-2002, 12:37 PM
Dumbo, that's exactly what we did, but I think it was '98 or could have been '99 can't remember anymore!

Richyams
03-24-2002, 01:26 PM
It was policy to get at least a $500 cash payment from a new member to qualify for the credit. ENRON has forced banks to tighten up on credit. Something as risky and worthless as a timeshare certainly does not qualify as collatoral for a 3-4% or less downpayment.

The thing that surprises me is that this is DVD holding the paper. They know the value and have a good amount of control over the property. I am kind of puzzled by this....and only because they are actually holding the paper themselves.

I suspect that this move may possibly be to give their books a better rating. If they are claiming a certain amount due and that amount is only collatoralized by 2-4% downpayments, that doesn't count as much towards their own credit worthiness.

Dumbo
03-24-2002, 03:25 PM
Rich,

My $2000 down payment was more than 20% of the total cost for 150 points at $65 a point.


Dumbo

Richyams
03-24-2002, 05:12 PM
No, you have only put up less than 5%. Your "Magical beginings" is simply a price reduction. Credit theory is very precise in reguard to where funds come from. If you get gifts from relatives for a downpayment, these actually lower your credit score, getting a price reduction from Disney lowers your worthiness even more.

It has to do with how much money you are able to take out of your pocket.

Do you have another reason for this move?

I feel pretty confident that I am close to the reason for the change.

Happy Birthday Cat
03-24-2002, 05:30 PM
Lets face it, they can say anything they want about ENRON but it still comes back to having more cash on hand, which this change will accomplish. As long as the BCV's are selling so well, I'm sure they figure why not require more cash up front? This will improve the books for this year, which otherwise is starting off as a difficult one. No MB and no $5.00 discount counted toward the downpayment will add cash to the Disney books.

Dumbo
03-24-2002, 06:49 PM
>>No MB and no $5.00 discount counted toward the downpayment will add cash to the Disney books.<<


HBC,

When I sold back my 150 points under Magical Beginings, Disney gave the 150 points to CRO to rent out for cash reservations. DVC received the cash from these rentals. And I would think they got more than $1500 for it.


Dumbo

Richyams
03-24-2002, 06:49 PM
That is a good reason also. I think that upgrading their debt with higher downpayments fits into the current skiddishness with ENRON.

Probably a combunation of these reasons, but I tend to think upgrading their debt is pretty strong.

Dumbo
03-24-2002, 07:08 PM
Rich,

I think the bottom line is that DVC is going to make it as easily as possible for people to buy into DVC. DVC is spending a lot of marketing money with all those kiosks around all the WDW resorts and parks. Even on their cruise ships.

When me and my wife bought in 1999, we were in the middle of a $3000 one week stay at the Contemporary Resort. Putting $500 on my credit card wasn't too big of an additional outlay to buy into DVC. If DVC would have required a $2000 out of pocket expense, I would have never been able to do it. In fact, I still would not be a DVC member.

Many people visiting WDW are in the same situation. DVC is heavily marketing to people at WDW who have just spent thousands of dollars to get there.

I wouldn't be surprised that when the price goes up to $80 per point on June 2 that DVC comes out with another MB program to make it easier for people to buy in.

Dumbo

Dumbo
03-24-2002, 07:52 PM
By the way, there is still a $10 per point buyback Magical Beginnings program for Hilton Head and Vero Beach. I suspect it to be extended to Beach Club Villas after the price increase.


Dumbo

Dumbo
03-24-2002, 08:08 PM
Rich,

How are they gonna sell Vero Beach for $80 a point? ;)


Dumbo

Happy Birthday Cat
03-24-2002, 09:33 PM
Dumbo,

But it still works out that they get the 5.00 now as opposed to the rental income in the future. If the point is to increase profits now, which this has the looks of, it will help profits and cash flow now, not ones in the future. Rental income over the long haul averages out across fiscal years. While someone renting a room next December can be counted as anticipated revenue, cash on hand and a better debt structure looks very good to everyone. This move will give them both. That's why on the surface this makes such good fiscal sense for them.

Dumbo
03-24-2002, 10:08 PM
Cat,

It may be good fiscal sense, but they will sell a lot more points with only a $500 out of pocket expense compared to a $2000 one.

The only reason they can't do Magical Beginnings with BCV is because DVC can't sell the points to CRO until after all the closeings in June. After June expect to see MB at BCV.

By the way, why dosen't this same good fiscal sense apply to sells of Hilton Head and Vero Beach? Or add-ons of the Villas at Wilderness Lodge?


Dumbo

Happy Birthday Cat
03-24-2002, 10:29 PM
Dumbo,

I agree with what you are saying for all but the BCV. I think that they realize they can squeeze a few more dollars out of potential BCV owners because it is the BCV's they are selling. Lets face it, the BCV's are hot right now. Why shouldn't they bring in as much cash as possible from it. In doing so, they increase cash flow and have a slightly better debt structure. They probably did an analysis of sales and realized they could do it at the BCV's.

It would make sense fiscally if they could do it at the other resorts but they probably know they can't and in those cases would take a hit on sales.

Watch what happens now, this will probably never happen and they will just switch to the 80.00 price tag and the MB. This is probably a big rumor. But we know that never happens here!

Dumbo
03-24-2002, 11:30 PM
Cat,

I agree. Beach Club Villas is "hot" right now. What I don't understand is why DVC is giving away a free 5 nights stay in a deluxe resort for buying 150 BCV points. That gotta be costing DVC some money. Probably more than $750. And DVC has no points to give to CRO to recoup there investment.

Seems to me that selling BCV is more costly for DVC than selling Vero Beach or Hilton Head.


Dumbo