Probably a stupid question

[JimMIA]

Originally Posted by BestDadEver

I know what hes saying, but the only other real life , option to finance a purchase like this , unless you want to put your home up for collateral , is a personal loan . Then its on par .

No offense, but you're really missing the mark here, Dad. Seriously.

Disney's rates for a mortgage secured by real property are 11+% (which few get) and 14.75% (which is the REAL number). 14.75% for a mortgage (when other mortgages go for <4%) is truly "obscene," as someone perfectly described it earlier in this thread.

AND...not for nothin'...it's an obscene interest rate on top of paying a hugely inflated purchase price!

Comparing interest rates on a real estate mortgage to a personal loan is just plain silly -- and more important, it's UNhelpful to prospective buyers trying to analyze a complex transaction.

[BestDadEver]

Originally Posted by JimMIA

No offense, but you're really missing the mark here, Dad. Seriously.

Disney's rates for a mortgage secured by real property are 11+% (which few get) and 14.75% (which is the REAL number). 14.75% for a mortgage (when other mortgages go for <4%) is truly "obscene," as someone perfectly described it earlier in this thread.

AND...not for nothin'...it's an obscene interest rate on top of paying a hugely inflated purchase price!

Comparing interest rates on a real estate mortgage to a personal loan is just plain silly -- and more important, it's UNhelpful to prospective buyers trying to analyze a complex transaction.

If you can go to any bank and get a morgage to pay for your timeshare . Your statement would make sence . But you can't ! I am taking real life options , not this made up crap that dosen't exist .

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

I got the lowest rate . Its not that difficult if you have good credit . I would assume someone in position to buy a ts would have good credit .

[ELMC]

Originally Posted by BestDadEver

If you can go to any bank and get a morgage to pay for your timeshare . Your statement would make sence . But you can't ! I am taking real life options , not this made up crap that dosen't exist .

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

I got the lowest rate . Its not that difficult if you have good credit . I would assume someone in position to buy a ts would have good credit .

There is another option that you are forgetting....don't finance. Timeshare financing is a rigged game. But just like a lot of casino games with RIDICULOUS house advantages, people throw their money at it willingly. If it makes you happy, great. If it helps you get into DVC when you otherwise wouldn't have been able to, great. I'm not here to tell anybody how to live their lives. But I will say honestly that I wouldn't do it and I certainly wouldn't recommend that others do it as well. If you financed and it is making you happy then that's a wonderful thing. But I have a hard time buying the justifications that financing (over the full term) is a good deal simply because of a lack of viable options.

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest. So how to they justify the extra 7%? Timeshare loans have all the features of a secured loan but it charges unsecured loan prices. I'm glad that you got the best rate, but what was that...10.99%?

[JimMIA]

Originally Posted by ELMC

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest.

I would argue that the real math is as follows:

House purchased at market price, financed @ 4% interest

vs.

Timeshare purchased at 2X market price because the purchaser could not pay cash, financed @ 14.75% interest for most buyers.

(And even 11% is nuts.)

Obviously, this is only my opinion -- YMMV.

[Dean]

Originally Posted by BestDadEver

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

You did, you mentioned 2 of several, but as I and others have stated, the first question and the best option for most is to not finance. Not only does financing cost you money, also if it pushes you to buy retail, it forces you to pay significantly more up front thus compounding your costs and your risk. All for an option that currently, and almost certainly in the future, gives you no additional benefits that are of value over buying less points and paying the difference. There are a few options where buying retail makes sense but very few. Mostly smaller contracts and brand new resorts but certainly not for the option to finance nor for the cash type exchange options.

[ELMC]

Originally Posted by Dean

You did, you mentioned 2 of several, but as I and others have stated, the first question and the best option for most is to not finance. Not only does financing cost you money, also if it pushes you to buy retail, it forces you to pay significantly more up front thus compounding your costs and your risk. All for an option that currently, and almost certainly in the future, gives you no additional benefits that are of value over buying less points and paying the difference. There are a few options where buying retail makes sense but very few. Mostly smaller contracts and brand new resorts but certainly not for the option to finance nor for the cash type exchange options.

I agree, but would also suggest that the "value" that could be had by buying an initial offering at a resort is most likely a thing of the past. We'll see if I'm right when VGF announces its pricing.

[BestDadEver]

Originally Posted by ELMC

There is another option that you are forgetting....don't finance. Timeshare financing is a rigged game. But just like a lot of casino games with RIDICULOUS house advantages, people throw their money at it willingly. If it makes you happy, great. If it helps you get into DVC when you otherwise wouldn't have been able to, great. I'm not here to tell anybody how to live their lives. But I will say honestly that I wouldn't do it and I certainly wouldn't recommend that others do it as well. If you financed and it is making you happy then that's a wonderful thing. But I have a hard time buying the justifications that financing (over the full term) is a good deal simply because of a lack of viable options.

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest. So how to they justify the extra 7%? Timeshare loans have all the features of a secured loan but it charges unsecured loan prices. I'm glad that you got the best rate, but what was that...10.99%?

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I am guessing none if you ever bought a brand new car either.

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

[Dean]

Originally Posted by BestDadEver

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I am guessing none if you ever bought a brand new car either.

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

I haven't had a car payment in 24 years, I practice what I preach and I would make the same points about buying cars and especially leasing them or trading every few years. buying a new car doesn't necessarily require financing either but the rates there are MUCH lower than we're discussing for most people The reality is that there ARE ways to get a lower interest rate for many people, esp if they have good credit. They're still not reasonable choices but they are choices. I'd agree they charge what they charge and that many people will be led like sheep to the slaughter directly to their financing. That only makes it good for DVD and the finance company.

[ELMC]

Originally Posted by BestDadEver

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I agree and disagree. I agree that there are no directly comparable options for securing a loan specifically to purchase a timeshare. But there is the option to use a HELOC at around 3% and there is the option to not purchase using financing. But Disney's (and other timeshare companies) willingness to charge such a ridiculous rate is not just about opportunity. Timeshare financing is a risky proposition with a high rate of default (recently as high as 10%). And when you think about it, it makes sense. It's an emotional purchase made on the spot with little to no research and a long term (or even lifetime) commitment. Not everyone is willing or able to honor that commitment.

Originally Posted by BestDadEver

I am guessing none if you ever bought a brand new car either.

I have. And the rate was 7.9%, which I thought was a ripoff. So I agreed to the financing in order to receive a special incentive available only to people who financed, and then I paid it off in the second month (with no penalty). This is a very serious problem in this country that spans real estate, auto purchases, timeshares, etc. Unless you are leveraging debt to your advantage, paying interest is a financial back breaker and more often than not prevents people from achieving financial independence.

Originally Posted by BestDadEver

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

And that's what Disney is counting on. But I have to say that whether I agree with it or not, I respect the fact that you state this as your reason for financing. I don't have all the answers, I don't know the secret to happiness and I don't know the meaning of life. So if you're doing something that works for you, then it's not my place to judge. I'm thrilled that you are happy with your purchase and that you are getting good use out of it. I really, truly am. And I don't mean to make you feel badly by disagreeing with your decision. But the fact of the matter is that if you compare a resale purchase with a financed direct purchase, you are spending up to three times as much on the financed direct purchase. You choose to rationalize that purchase by saying that you live in the here and now, and I respect that. But personally, I just can't see any way to justify that. I think that this is just an agree to disagree type of conversation. But hopefully people who are considering direct financed purchases can read both sides of this debate and make an informed choice about their purchasing decision.

[BestDadEver]

Originally Posted by ELMC

I agree and disagree. I agree that there are no directly comparable options for securing a loan specifically to purchase a timeshare. But there is the option to use a HELOC at around 3% and there is the option to not purchase using financing. But Disney's (and other timeshare companies) willingness to charge such a ridiculous rate is not just about opportunity. Timeshare financing is a risky proposition with a high rate of default (recently as high as 10%). And when you think about it, it makes sense. It's an emotional purchase made on the spot with little to no research and a long term (or even lifetime) commitment. Not everyone is willing or able to honor that commitment.





I have. And the rate was 7.9%, which I thought was a ripoff. So I agreed to the financing in order to receive a special incentive available only to people who financed, and then I paid it off in the second month (with no penalty). This is a very serious problem in this country that spans real estate, auto purchases, timeshares, etc. Unless you are leveraging debt to your advantage, paying interest is a financial back breaker and more often than not prevents people from achieving financial independence.



And that's what Disney is counting on. But I have to say that whether I agree with it or not, I respect the fact that you state this as your reason for financing. I don't have all the answers, I don't know the secret to happiness and I don't know the meaning of life. So if you're doing something that works for you, then it's not my place to judge. I'm thrilled that you are happy with your purchase and that you are getting good use out of it. I really, truly am. And I don't mean to make you feel badly by disagreeing with your decision. But the fact of the matter is that if you compare a resale purchase with a financed direct purchase, you are spending up to three times as much on the financed direct purchase. You choose to rationalize that purchase by saying that you live in the here and now, and I respect that. But personally, I just can't see any way to justify that. I think that this is just an agree to disagree type of conversation. But hopefully people who are considering direct financed purchases can read both sides of this debate and make an informed choice about their purchasing decision.

I accualy finance everything . I never intend on going term , and never have . A good example was when I bought my house I got 100% financing . I didnt have 20%, and the money I had would only make a very small dent in the payment so I keept it to use for furnishing ect . Had I waited for the 20% I still wouldn't have a house and ilkely only have 10% . I am so glad I did it . I was not willing to wait ten years . Its just the way I think . I dont think that other ways are wrong .

[Sparrow624]

All,

Thank you for the opinions. We are not sure what we are going to do yet, but probably will not buy in unless we can pay for it straight up. Thanks for the "heads up" on resale.

[Msmithmd]

Sparrow, this is what I consider a "good thread.". When you get people having a spirited debate on both sides of a concept, that's when the Disboards can teach you something. I for one really like the "no pixie dust" zone. Obviously all of us here are big Disney fans or we wouldn't be here, but it's definitely a good thing to make these kind of purchase decisions with multiple inputs, not motivated by someone trying to sell you something.

I think there are valid points above on both sides of the argument. I'm currently buying resale because I'm frugal and not in a rush to use the membership in the next couple months. But I applaud several of the posters who have wanted it "right now.". There's still a savings to be had buying retail, so long as you don't add usurious interest charges to it.

I'd never deeply considered what Dean aptly points out, that without the retail market being a cash cow for the developer, the whole discount resale concept couldn't exist. I just guess those of us buying in now on the secondary market are lucky that so many of those retail buyers have had to reconsider- or else the cost spread between retail and resale would be much narrower. That's how a free market works, after all.

So it isn't the end of the world to buy retail, not by a long shot. It isn't the end of the world to buy a "hot" new car for $2000 over sticker price and to pay the dealer $800 for "scotch gard on the seats" either, I guess- but in both circumstances money could clearly be saved. It's just a matter of how much effort you are willing to put in relative to the cost.

For me, buying 300 points on the secondary market saved $15,000 over current direct prices. That, for me, was worth a whole lot of effort and time. Looks now like the effort was making three offers before one was accepted, and then waiting a couple months for paperwork. While in my professional career I am compensated very well, I certainly haven't gotten this kind of money just for passively waiting a couple months before, and likely won't ever again.

I get that a similar effort/delay wouldn't be such a consideration for 20 or 40 points. So be happy with what you buy, but do consider all your options with eyes wide open before you spend this kind of money. Please.

[Dean]

Originally Posted by BestDadEver

I accualy finance everything . I never intend on going term , and never have . A good example was when I bought my house I got 100% financing . I didnt have 20%, and the money I had would only make a very small dent in the payment so I keept it to use for furnishing ect . Had I waited for the 20% I still wouldn't have a house and ilkely only have 10% . I am so glad I did it . I was not willing to wait ten years . Its just the way I think . I dont think that other ways are wrong .

We are totally opposite and to be honest, I think a lot of people doing the same type of things are a large part of the current financial crisis. My thoughts are that any financing is bad and risky other than possibly a mortgage using Dave Ramsey's definitions (max 80%, 15 yr fixed and no more than 25% of take home). I doubt we'll agree on much and we're both willing to share our views so I'd suspect we'll be each sharing our views on similar such threads for a while.

[BestDadEver]

Originally Posted by Dean

We are totally opposite and to be honest, I think a lot of people doing the same type of things are a large part of the current financial crisis. My thoughts are that any financing is bad and risky other than possibly a mortgage using Dave Ramsey's definitions (max 80%, 15 yr fixed and no more than 25% of take home). I doubt we'll agree on much and we're both willing to share our views so I'd suspect we'll be each sharing our views on similar such threads for a while.

Well I would agree that is a part of the crisis , but only the ones taking advantage of it in my opinion .

When I heard that people just walk away from there homes cause they put no money down makes no sense to me . What about the money they already paid monthly , most have been paying for years . If people would pay there debts it wouldn't contribute to the problem . But there are so many taking advantage of the system

[Dean]

Originally Posted by BestDadEver

Well I would agree that is a part of the crisis , but only the ones taking advantage of it in my opinion .

When I heard that people just walk away from there homes cause they put no money down makes no sense to me . What about the money they already paid monthly , most have been paying for years . If people would pay there debts it wouldn't contribute to the problem . But there are so many taking advantage of the system

IMO, anyone financing 100% of a house is taking advantage but with great risk. I believe it's inappropriate for both the buyer to accept the choice and financial institutions to allow it. You haven't been here that long but if you go back and read my post over the years you'll see I'm a big believer in personal responsibility. Mostly the thread's you see me participate in will be those of technical issues, buying, DVC usage (esp rules and legalities), exchanging and where philosophy comes into play including honesty. For example, I see going over occupancy without getting permission from DVC as dishonest. I'm sure most people who had debt issues didn't expect to or could "afford it" at some point. Life happens. My guess is you have a fairly substantial income and that you can weather making choices that increase your risk and cost as long as you have that income. Heaven forbid life happens in such a way that you don't have that income anymore.