Financing DVC through Disney

[pauly's girl]

I was wondering if anyone who has bought direct through Disney can tell me how their financing works. Is it like most timeshare resorts where they in house finance or is it an actual credit application and approval process?? Also I have browsed the boards and I have seen several cases where people were able to buy in at less than the 100 pts. How insistent do you need to be to buy less?? TIA -

 

[NovemberPapa3]

I was wondering if anyone who has bought direct through Disney can tell me how their financing works. Is it like most timeshare resorts where they in house finance or is it an actual credit application and approval process?? Also I have browsed the boards and I have seen several cases where people were able to buy in at less than the 100 pts. How insistent do you need to be to buy less?? TIA -

You don't need to be all that insistent as they do work with you. My wife and I were able to buy in with VB at 50 points to build our credit with DVC up.

 

[pauly's girl]

ok great....if you are building your credit, can I assume it is an approval process??

 

[ELMC]

ok great....if you are building your credit, can I assume it is an approval process??

Almost everybody gets approved, unless you've defaulted on Disney before. It's little risk for Disney because if you default then they'll just foreclose on your contract, keep whatever money you've paid them and then turn around and sell it to the next buyer, often for a higher price. It happens more than you'd like to think. They'll run your credit scores and assign you an interest rate based on that. The worse your credit, the higher the interest rate. If you do decide to go this route, make sure you crunch the numbers including the interest costs. You might be surprised by what you find, and not in a good way. Good luck.

 

[pauly's girl]

Almost everybody gets approved, unless you've defaulted on Disney before. It's little risk for Disney because if you default then they'll just foreclose on your contract, keep whatever money you've paid them and then turn around and sell it to the next buyer, often for a higher price. It happens more than you'd like to think. They'll run your credit scores and assign you an interest rate based on that. The worse your credit, the higher the interest rate. If you do decide to go this route, make sure you crunch the numbers including the interest costs. You might be surprised by what you find, and not in a good way. Good luck.

Awesome thanks for the advice! I would love to buy resale (it seems to be the way to go) but it would take several years of saving to be able to pay cash. We have been going to Disney for 10 years and really could have had it paid for already... Oh well! My kids are getting older and we don't want to miss these last years being kids, trying to save! Besides I would like to have something to give them as they are Disney Maniacs like my hubby and myself!!

 

[ELMC]

Awesome thanks for the advice! I would love to buy resale (it seems to be the way to go) but it would take several years of saving to be able to pay cash. We have been going to Disney for 10 years and really could have had it paid for already... Oh well! My kids are getting older and we don't want to miss these last years being kids, trying to save! Besides I would like to have something to give them as they are Disney Maniacs like my hubby and myself!!

One thing to consider is renting DVC points from a broker or someone here on the DIS. Yes, it's a little less convenient, but it allows you to stay in DVC resorts right now for less cost than rack rates and without having to lay out a big bundle of cash. With regards to the statement in bold, I assume you're referring to an inheritance? While a lovely idea, what you are really giving them is a huge annual bill for maintenance fees. This might not turn out to be the gift that you had intended. Without knowing the specific details of your situation or your intended purchase, I would say that you could safely rent DVC points for the next 15-20 years and still come out ahead against purchasing today and financing. It's definitely worth thinking about.

 

[pauly's girl]

It really is a lot to think about and not an easy decision. We have been talking about it for awhile but are in the beginning steps of deciding. We only want to start with a small contract of 70 to 100 pts. at Animal Kingdom Villas. Pricing it out 10,000 to 14,000 and we will be putting at least the 20 percent down. I'm ok with renting points but IMO I have nothing to show for it at the end of the day. My kids will take over maintenance fees eventually but with what they will pay to stay in Disney down the road I am still leaning towards that being a better deal.... aahh.... I just don't know yet . I really do appreciate the feedback. It gives me another way of looking at it!! Thanks again!!

Kind of off financing for a minute, since you seem to know a lot of DVC we normally travel in Sept if I were to get a renew month of Sept can I still book earlier in the year or do I have to wait until Sept 1st??

 

[taaren]

Kind of off financing for a minute, since you seem to know a lot of DVC we normally travel in Sept if I were to get a renew month of Sept can I still book earlier in the year or do I have to wait until Sept 1st??

Your Use Year date is when your points are available to use, not when you can book. Booking dates are always 7-11 months out, regardless of which points you use from which use year.

E.G. I will be trying to book a November trip at my 7 month window in 2 weeks. My Use Year is June, so technically even though I don't receive the 2013 points until June 1, 2013, I can book any trip that occurs from June 1, 2013-May 31, 2014 right now, and up until May 31, 2014, unless I bank those points and use them next year. For my booking in 2 weeks I will be using all of my 2013 points, and even borrowing a couple from my 2014 UY points which I technically won't get until June 1, 2014. They are preloaded into your account ... maybe that's not the best way of expressing it.

You can also transfer/borrow future year's points.

 

[pauly's girl]

Great!! So for example if I were to buy 70 points and my renew month is Sept I would have 70 for 2012 to use and I could borrow the other 23 from my 2013 points?? Then by Sept 2014 I could use the rest of 2013 and all my 2014....since we may not go in 2015 I could actually use those also and book a great room for my family and my brothers as well....

 

[ELMC]

It really is a lot to think about and not an easy decision. We have been talking about it for awhile but are in the beginning steps of deciding. We only want to start with a small contract of 70 to 100 pts. at Animal Kingdom Villas. Pricing it out 10,000 to 14,000 and we will be putting at least the 20 percent down. I'm ok with renting points but IMO I have nothing to show for it at the end of the day. My kids will take over maintenance fees eventually but with what they will pay to stay in Disney down the road I am still leaning towards that being a better deal.... aahh.... I just don't know yet . I really do appreciate the feedback. It gives me another way of looking at it!! Thanks again!!

Kind of off financing for a minute, since you seem to know a lot of DVC we normally travel in Sept if I were to get a renew month of Sept can I still book earlier in the year or do I have to wait until Sept 1st??

So your Use Year question was answered in the post above, so I'd like to stay on the purchase topic if that's ok with you. Given the information you have provided (thank you) I feel even stronger that you should look at the resale route. I feel very confident that you can get a 100 point AKV contract for $70 per point (inclusive of closing costs and maintenance fees). If you have $2,600 to put down right now, then you are pretty close to owning the contract outright. If you were to forgo one vacation and instead put that money towards the purchase price, you would most likely be all the way there. So that would leave you in 2014, owning your 100 point contract entirely with only maintenance fees going forward. Total purchase cost, $7,000.

Or...you can purchase now direct and finance. You would still have the maintenance fees, that doesn't change, but you would also have monthly payments. Your purchase price for that same 100 point contract would be $13,200 ($145 per point, minus $3pp discount and $1,000 developer's credit...not including closing costs of about $100 because I don't have an exact figure). Assuming 11% interest and 20% down, your monthly payment would be $145.46 and the total of those payments would be $17,455.68. Add to that your down payment and your total purchase cost for the same 100 points would be $20,095.68. That's nearly triple the cost. I know it's so tempting to just go for it because it's only $145 a month, but that's $145 a month that you could spend on anything else if you went the resale route in my first example.

I know it's a difficult decision, but it can also be a very expensive one. You're in a tough spot, but I think you know what I would advise you to do, if you were so inclined to ask.

PS If you were to rent 100 points for the next 10 years assuming a flat rental rate of $15 per point (which for the purpose of this example is intentionally high), your total amount spend would only be $15,000. Compare that to the $20,095.68 spent purchasing direct and another (estimated) $6,719 in maintenance fees. So while you say that you have nothing to show for your money when you rent, I would suggest that you have 10 years of vacations and more than $10,000 in savings to show for it.

 

[pauly's girl]

lol I think so too ...that is a huge difference. We actually have a trip booked and almost paid for in Sept...that's where the down payment would come from. I already have flights paid for so I can't forgo this trip....I will have to have a serious discussion with the hubby!! I really am in a tough spot! We booked on July 27th 2012 I'd be heartbroken if we didn't go...what to do what to do .... Maybe do this trip and buy outright with taxes and savings next year....resale

 

[bumbershoot]

ok great....if you are building your credit, can I assume it is an approval process??

It's not building *credit*, the previous poster said building credit *with Disney*. Disney does not report your good payments to any credit agency, so buying through them and paying the loan through them does absolutely NOTHING to your credit overall. It's important to know that. Of course, if you applied for a loan elsewhere, like a mortgage, you would need to show that you had the loan through Disney, so it counts against you in a situation like that, but it's never going to count FOR you. It's the tradeoff for having an easy loan approval.

There ARE people who aren't approved, or who have to put more down, by the way. Few and far between on the Dis, but they exist. But I have to believe that people who have that happen KNOW that it might happen, because trust me, when DH financed our DVC he did NOT have the best credit out there by a long shot. Just two years before the ONLY lender who would give him a loan for a car gave him an interest rate of 25%...his credit was what they called "neutral", and only the one bank would touch him. 2 years later, easy-breezy process with DVC.

(and then we dramatically realized the razor's edge we were on financially, and everything that led up to it helped us to change and do much better...a layoff immediately after the recision period for the DVC mortgage ended was the scariest thing, but it turned us around! I'm saying that it worked for us, but it was scarier than most things, and if I could go back *several* years I wish we'd gotten a clue earlier and just bought resale by sitting on our hands and not going to Disneyland a few times to save up the money)

While a lovely idea, what you are really giving them is a huge annual bill for maintenance fees. This might not turn out to be the gift that you had intended.

Well...I don't think I feel that way. When FIL died, we realized that DH, his brother, or his sister could now take over his 1000 Trails RV timeshare (so weird). But his dad had NEVER shared with anyone, not even his wife, how much the dues were. FIL died at Thanksgiving, it took a month to get MIL's finances squared away to keep the widow pension and SS coming to her, and then the dues bill showed up. This was the year before we got the car loan I mentioned above, and we were in really bad shape, savings-wise and clue-wise. We were the only ones who wanted the membership (we would ahve used it for the tent camping spots...FIL's RV was broken down AND had a MASSIVE loan on it, so the family certainly couldn't keep the RV), but we could not afford it. We had to basically give it back to 1000 Trails. We are still sad about it.

And yet we don't look at it as FIL giving DH a huge annual bill. He wanted to give DH (or his other son or daughter, though he know it would be DH who wanted it) the RV timeshare. His mistake was in not telling DH about the dues in all the conversations about how the timeshare actually would pass down to the grandchildren's generation and how great it would be, etc etc etc.

It was a lovely thought. WE just couldn't do it.

I would bet the OP will be dealing with finances differently than FIL did (or my mom or especially my dad), so the kids will know about maintenance fees, when the time comes for them to take it over.



All that said...it's good you're thinking about it. Try to not be emotional about it and let your bank accounts be your guide.

 

[pauly's girl]

It's not building *credit*, the previous poster said building credit *with Disney*. Disney does not report your good payments to any credit agency, so buying through them and paying the loan through them does absolutely NOTHING to your credit overall. It's important to know that. Of course, if you applied for a loan elsewhere, like a mortgage, you would need to show that you had the loan through Disney, so it counts against you in a situation like that, but it's never going to count FOR you. It's the tradeoff for having an easy loan approval.

There ARE people who aren't approved, or who have to put more down, by the way. Few and far between on the Dis, but they exist. But I have to believe that people who have that happen KNOW that it might happen, because trust me, when DH financed our DVC he did NOT have the best credit out there by a long shot. Just two years before the ONLY lender who would give him a loan for a car gave him an interest rate of 25%...his credit was what they called "neutral", and only the one bank would touch him. 2 years later, easy-breezy process with DVC.

(and then we dramatically realized the razor's edge we were on financially, and everything that led up to it helped us to change and do much better...a layoff immediately after the recision period for the DVC mortgage ended was the scariest thing, but it turned us around! I'm saying that it worked for us, but it was scarier than most things, and if I could go back *several* years I wish we'd gotten a clue earlier and just bought resale by sitting on our hands and not going to Disneyland a few times to save up the money)



Well...I don't think I feel that way. When FIL died, we realized that DH, his brother, or his sister could now take over his 1000 Trails RV timeshare (so weird). But his dad had NEVER shared with anyone, not even his wife, how much the dues were. FIL died at Thanksgiving, it took a month to get MIL's finances squared away to keep the widow pension and SS coming to her, and then the dues bill showed up. This was the year before we got the car loan I mentioned above, and we were in really bad shape, savings-wise and clue-wise. We were the only ones who wanted the membership (we would ahve used it for the tent camping spots...FIL's RV was broken down AND had a MASSIVE loan on it, so the family certainly couldn't keep the RV), but we could not afford it. We had to basically give it back to 1000 Trails. We are still sad about it.

And yet we don't look at it as FIL giving DH a huge annual bill. He wanted to give DH (or his other son or daughter, though he know it would be DH who wanted it) the RV timeshare. His mistake was in not telling DH about the dues in all the conversations about how the timeshare actually would pass down to the grandchildren's generation and how great it would be, etc etc etc.

It was a lovely thought. WE just couldn't do it.

I would bet the OP will be dealing with finances differently than FIL did (or my mom or especially my dad), so the kids will know about maintenance fees, when the time comes for them to take it over.



All that said...it's good you're thinking about it. Try to not be emotional about it and let your bank accounts be your guide.

Thanks so much for your input! We have been wanting to do this for some time but it wasn't the right time. DH was in a really bad car accident several years ago. He was laid off for 2 years thus where our credit problems started. We are in a much better place now with him back to work for a great company. The negative debt is gone and we only are left with our current bills!! It's taken so long to get here but we've just about made it! We kind of feel with the kids getting older it's now or never. Although financially we are in a better spot, we still don't have 7000 to 10,000 to put out all at once....believe my decision would be so much easier if we did!!! I am putting out 3,000 to take our trip in Sept so my options are to cancel and put that down on a direct buy or to wait and use tax money and savings to buy in a year.... I'm so torn because I feel like I am wasting this years money when it could be going towards paying the membership....

 

[Minniesgal]

I would think long and hard about financing a luxury purchase especially at Disney rates. I understand about it being something you really want it took us about 14 years after we first wanted to buy to be in a secure financial position to do it. I'm glad we waited as our DVC points are a joy not a burden.

As we come from the UK I wasn't comfortable with taking the leap resale so we bought our initial points through Disney. We had the cash to buy outright but we financed as our savings account needs notice to take funds out. We had got used to the feeling of having saving so I found I couldn't quite face paying it all off at once and have instead overpaid every month as much as we can. We have owned since August 2012 and already our 10 year loan is down to 5 years and hopefully will be paid off this year. Even then the interest that I have paid will not be insignificant. Now we have found our feet we have added on once and ROFR allowing we are trying a second and hopefully final add on. The resale points we own outright and it is so much nicer to look at our account and see what we actually own.

Much as you want the points I would make sure you are sure sure sure you can actually afford them before you push that button. Otherwise they will become a burden not a joy.

 

[Dean]

I would save up and buy resale for half what you're looking at, even if it took skipping a trip or 2. Personally I wouldn't buy such a luxury purchase if I had other debt's outside my personal residence. Adding such a debt will increase your risks across the board.

 

[DisneyDiana]

We have rented points, stayed at values, etc. and saved to buy our resale points with cash. It is well worth the small sacrifices to us. You can still go on your vacation just spend wisely and save for your points. It really does not take long if you are determined. Good luck!

 

[Sandisw]

We were in the same position back in 2009..continue to pay cash prices or buy...at the time, we decided to buy a small resale contract we had the cash for and then just add on through Disney for a smaller contract.

At the time, the difference in resale vs direct was reasonable and made the decision to go through Disney easier. Even with financing, we realized we could own DVC for no more than we were currently paying to stay at the CR with a 30% discount. So we bought...we did end up not needing to finance because we used our Disney visa to get 6 months, no interest on the repurchase....

Now, with direct prices being so much higher than resale, I do think it makes this strategy a lot more costly, but we had decided then that giving up trips was not an option and as long as our yearly expenses werent more for DVC then those cash stays, then in the long run, it'd be worth it.

Good luck!

 

[Lynne M]

So your Use Year question was answered in the post above, so I'd like to stay on the purchase topic if that's ok with you. Given the information you have provided (thank you) I feel even stronger that you should look at the resale route. I feel very confident that you can get a 100 point AKV contract for $70 per point (inclusive of closing costs and maintenance fees). If you have $2,600 to put down right now, then you are pretty close to owning the contract outright. If you were to forgo one vacation and instead put that money towards the purchase price, you would most likely be all the way there. So that would leave you in 2014, owning your 100 point contract entirely with only maintenance fees going forward. Total purchase cost, $7,000.

Or...you can purchase now direct and finance. You would still have the maintenance fees, that doesn't change, but you would also have monthly payments. Your purchase price for that same 100 point contract would be $13,200 ($145 per point, minus $3pp discount and $1,000 developer's credit...not including closing costs of about $100 because I don't have an exact figure). Assuming 11% interest and 20% down, your monthly payment would be $145.46 and the total of those payments would be $17,455.68. Add to that your down payment and your total purchase cost for the same 100 points would be $20,095.68. That's nearly triple the cost. I know it's so tempting to just go for it because it's only $145 a month, but that's $145 a month that you could spend on anything else if you went the resale route in my first example.

I know it's a difficult decision, but it can also be a very expensive one. You're in a tough spot, but I think you know what I would advise you to do, if you were so inclined to ask.

PS If you were to rent 100 points for the next 10 years assuming a flat rental rate of $15 per point (which for the purpose of this example is intentionally high), your total amount spend would only be $15,000. Compare that to the $20,095.68 spent purchasing direct and another (estimated) $6,719 in maintenance fees. So while you say that you have nothing to show for your money when you rent, I would suggest that you have 10 years of vacations and more than $10,000 in savings to show for it.

OMG, this is so important it should be made into a sticky (the bolding is mine)

OP, is it really so critical that you own DVC right now that you're willing to pay something like $13K extra just to have it immediately?

I assume you're buying DVC because you want to save money on stays in villas. Are you sure you're still saving money when you add in the direct purchase costs and the high interest costs? Run the numbers and find out.

If the only way I could own was to buy direct and finance it....I wouldn't own. I'd rent. You get exactly the same vacation experience as a renter.

Since it's important to you to leave DVC to your kids, you may be thinking that that makes the $13,000 worthwhile. That's a lot of money to spend on a 'maybe'. Maybe DVC won't be the same in 20 years. Maybe WDW won't be the same. Maybe your kids won't be able to handle thousands of dollars in maintenance fees per year - remember, maintenance fees go up ever year. In 20 years, they're going to be WAY higher than they are now. Way.

 

[pauly's girl]

Thanks everyone for your input and comments...I have posted on another board and the majority seems to be split on what I should do. I agree I could rent for 10 years but paying 1500 to 2000 a year each year I could also have a direct contract paid for. We are sure that we can afford it starting small and adding points if needed later. Hubby and I talked and are leaning towards feeling more comfortable with a direct purchase. PP you state we don't know how it will be in 20 years but that is a risk with anything we buy. So why not have the flexibility of points in case.... My friend owns a timeshare in Aruba that she paid 17,000 for and it is a set week she must deposit in order to exchange elsewhere for 185$ each time.....I'd much rather have Disney for that !!! We haven't made our minds up and won't until we really sit down and review everything. If the payments are around or under 150. a month we actually could pay double that and save a ton on interest....so we feel confident and comfortable making monthly payments. I appreciate those who are commenting about saving money as I am usually very thrifty when I can be. Under normal circumstances I would be right there with all of you....I'm just not sure I'm comfortable in this situation. Thanks again to everyone and I will be considering all of the replies in our final decision!!

 

[ELMC]

Thanks everyone for your input and comments...I have posted on another board and the majority seems to be split on what I should do. I agree I could rent for 10 years but paying 1500 to 2000 a year each year I could also have a direct contract paid for. We are sure that we can afford it starting small and adding points if needed later. Hubby and I talked and are leaning towards feeling more comfortable with a direct purchase. PP you state we don't know how it will be in 20 years but that is a risk with anything we buy. So why not have the flexibility of points in case.... My friend owns a timeshare in Aruba that she paid 17,000 for and it is a set week she must deposit in order to exchange elsewhere for 185$ each time.....I'd much rather have Disney for that !!! We haven't made our minds up and won't until we really sit down and review everything. If the payments are around or under 150. a month we actually could pay double that and save a ton on interest....so we feel confident and comfortable making monthly payments. I appreciate those who are commenting about saving money as I am usually very thrifty when I can be. Under normal circumstances I would be right there with all of you....I'm just not sure I'm comfortable in this situation. Thanks again to everyone and I will be considering all of the replies in our final decision!!

From reading your thoughtful replies it has become clear that you came on here asking for advice and you were actually receptive to advice that contradicted your planned course of action. That's very refreshing and happens less than you think, so thank you.

One last point of clarification about something you said above...

I agree I could rent for 10 years but paying 1500 to 2000 a year each year I could also have a direct contract paid for.

Your numbers here are a bit off, and they are definitely skewed to make the case for direct. You are looking at purchasing 100 points, so it is important to compare that to the rental of 100 points. So you can rent 100 points this year for $1,300. That is your out of pocket cost. If you were to purchase that contract and finance, it would cost you $2,567 this year ($2,000 principal and interest and $567 in maintenance fees). So the difference in cost is an extra $1267 this year if you purchase.

So the real question becomes how many years would it take for renting 100 points to become more expensive than purchasing 100 points. I think it's in your best interests to do the analysis yourself so that you gain a true understanding of the numbers and how they work. But I'll give you a hint, renting has a positive outcome for the first 16-20 years depending on how fast rental rates and maintenance fees increase.

The one thing we haven't talked about is joy of ownership, which seems to mean a lot to people. Just know that if you do go ahead with the direct/financed purchase, that's where you're going to get your value, because it certainly isn't in the numbers. Good luck with whatever you decide.