My wife and I go to Disney every 2 years or so and have figured that over the last 8 years, we have spent at least $20,000 (shocking to think about).
So, we have been considering DVC.
Here is my stupid question: How do people afford the initial $20,000? Is it on some loan plan or something or straight up payment?
Sorry, new to this and just curious.
Great question. First off, you need to research the resale vs. direct issue to determine if you would mind having points that can only be used for DVC resorts and RCI trades. (Personally, I was fine with it as the main reason I bought DVC was to stay as close to the parks as possible in a villa with a kitchen [BLT and BWV]).
Once you have your answer, you can better answer the question you asked above. If you decide to purchase resale, the cost will be a LOT less than $20,000. For example, if you bought a 100 point BWV contract, that would be enough for 6-10 nights a year in a studio (depending on view and season). That contract would cost you in the realm of $6,500. To purchase it direct would be $11,500.
As far as coming up with the money, that's a different question altogether. Some people choose to finance. Some people take the money from savings. Some use a bonus or their fun money. Some people skip a vacation and put that money towards the DVC purchase and others save for years to have the money to buy. Clearly all of these options fall in different places on the spectrum of financial planning decisions. And yes, some are more conservative and some are more frivolous. The people on this board will tell you the risks of each option, often in a blunt manner, and that is a good thing. Only you can decide what is best for you, and you need all the information in order to do so.
Financing is very touchy subject. There are many ways of financing. Some people secure a HELOC at a very low rate, some finance through Disney and pay it off within 6 months or a year. Some finance and take the full 10 years to pay. One thing to consider when financing...finance charges add a significant percentage to your overall purchase price (sometimes upwards of 50%). This can erode a lot of the
financial value that you could gain from purchasing DVC. Some people are not aware of this when they make the decision to finance and it frequently ends up not working out. Many are aware of this and it is not important to them. To these people, there is a
different kind of value that comes from owning DVC and it is one that you cannot place a dollar figure on. Numbers oriented people such as myself have a hard time seeing that, and I would imagine these people couldn't imagine themselves strictly adhering to a spreadsheet like I seem to do. It's all a matter of personal preference. I like to keep my shoes on and walk on the sidewalks, others take their shoes off and run through the wet grass. You need to decide what is best for you, and in order to do that you need to ask as many questions as possible and have as much information as possible. The people who take their shoes off and run through the grass are going to get wet feet. If they knew that beforehand, then they made a conscious decision to get their feet wet and it probably doesn't bother them. But if they didn't know, it could be problematic.
DVC is a luxury purchase and it is a major financial commitment in terms of purchase price, maintenance fees, and actual vacation expenses getting to and once you are at the parks. If you have to stretch to make that purchase, you may be putting yourself in a difficult position should any financial crisis come up in the future. It's something to think about. Sure you've spent $20,000 over the past 8 years, but you've spent a little at a time and you've always had the choice not to spend the money if it wasn't possible for one reason or another. With DVC you don't really have that choice.
Good luck finding the information you are looking for and good luck with your purchasing decision!