Probably a stupid question

Discussion in 'Purchasing DVC' started by Sparrow624, Sep 21, 2012.

  1. Sparrow624

    Sparrow624 "I believe as many as six impossible things before

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    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.
     
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  3. crisi

    crisi DIS Veteran

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    Some people finance, some people pay cash.

    We used a bonus from work.
     
  4. jthomas1

    jthomas1 Earning My Ears

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    there are no stupid questions.. particularly when I don't have an answer :)
     
  5. Kidanifan08

    Kidanifan08 DIS Veteran

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    If you purchase directly from DVC, they can finance your purchase for 10 years. Unfortunately the finance charge is obscene -- 11-14%. We used DVC financing for our initial purchase, but made an effort to pay it off in 2 years.

    You can save a considerable amount of money buying resale, but with that, you need cash or your own financing. I have seen other posts indicating that there are places that finance timeshare purchases, but I don't know the details of the rates, etc. with those programs. Some will take a home equity loan to purchase DVC, but it may not be wise to leverage your home for a luxury purchase.

    Our last 3 purchases were small resales and we paid cash for each with bonus money.

    You could always consider starting with a small contract so you might be able to pay cash and then just add points when you get another chunk of change.
     
  6. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    If you have been staying at deluxe resorts and you compare to studios, DVC will likely save you money if you cont your current trend. However, there are compromises like no daily housekeeping. You have to be willing to stay at the DVC resorts only to see the savings. DVC doesn't have to be $20K, to get the same sleeping capacity as you've been getting (assuming 1 deluxe room only) for EOY, you'd only need roughly 75 DVC points, FAR less than $20K resale. As for how to get the money together, it depends on your circumstance but in general I would strongly suggest not financing. Since those 8 trips averaged around $2500 per, you could squeeze the money out of that alone with a little effort.
     
  7. Nomad70

    Nomad70 Mouseketeer

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    We just became member's last week and are financing through Disney. Yes, it is a 10 year contract, and yes the interest is high, but we are going to be able to pay it off in about 2 years w/out penalty.
     
  8. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    Add to that list that the price is much higher as well compared to resale.
     
  9. CarolynMink

    CarolynMink Mouseketeer

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    Our first purchase, we financed with Disney over just one year. Back then, the interest for that was only 4%. (I have no idea what is current). After that all add ons whether direct or resale, we waited till we could pay cash. This kept us to small contracts which, I am very happy with.:)
     
  10. CarolynMink

    CarolynMink Mouseketeer

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    I forgot, we did have to put 50% down.:scratchin
     
  11. rcchello

    rcchello DIS Veteran

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    If I were buying in today, I would buy resale and get a secured loan from my Credit Union. Currently secured loans are running under 3%.
     
  12. Sandisw

    Sandisw Moderator Moderator

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    When we bought BLT in 2009, we were going to go through Disney and finance. We went through the numbers and decided that buying and financing was no more than we were currently paying for our room costs for our yearly Disney trips so didn't mind the high finance charges, especially when we knew we would not need the full 10 years. We factored the interest into the equation and still felt owning DVC was a better option than staying cash guests--and we weren't comfortable with renting DVC reservations so that point was moot for us.

    We ended up figuring a way to pay it off in 6 months and ended up using the Disney Visa which gave us 0% for that time period.

    Our last contract, BWV, was purchased resale in 2011, we had saved enough money to pay cash, which saved us a great deal.

    Lots of different options available and lots of different situations that have happened!

    Good luck!
     
  13. bdoleary

    bdoleary Mouseketeer

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    If you have a home equity line or access to low cost loans - 0% credit card offers, etc. that's a much cheaper option than other types of financing. As mentioned before Disney offers financing but the point cost of buying direct from Disney is high and interest rates are high as well - I think the Timeshare Store - also has connections with a lender that offers financing - the good news is the actual purchase cost by buying through the Timeshare Store or another resale broker will be lower than going direct - the bad news is that the interest rate is probably higher than Disney's
     
  14. nolanboys

    nolanboys DIS Veteran

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    We saved up and bought a contract through resale. You should take a look at the resale sites to get an idea of what points cost at the various resorts. Remember everything is negotiable. 3 years ago we purchased 200 SSR points for $4000 less than 160 AKV direct. You might be able to buy a smaller contract for an amount that you could purchase without financing. Take a look and good luck!:goodvibes
     
  15. DannysMom

    DannysMom DIS Veteran

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    Resale will definitely be less upfront costs. This summer I purchased 200 BCV points for about as much as I could have bought 120 AKV points direct when they we running the buy 100 get 20 extra promotion!

    Sent from my iPad using DISBoards App, please excuse any typos.
     
  16. kkmauch

    kkmauch "Kindly do not attempt to cloud the issue with fac

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    Since you are new... REALLY important to remember that buying resale restricts your use of those points to ONLY DVC locations. You cannot use it for DCL or withing the Disney collection. You also cannot trade it out or use at any other affiliated locations.

    May not be a big deal if you only plan to stay at DVC locations, but just keep it in mind as you decide between resale and direct.
     
  17. DannysMom

    DannysMom DIS Veteran

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    Blatantly NOT TRUE. You can still trade out to RCI if you buy resale. You may not want to, but you can.

    Sent from my iPad using DISBoards App, please excuse any typos.
     
  18. princessaloha

    princessaloha Mouseketeer

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    I know this isn't a part of the OP's original question but wanted to mention to keep in mind there are also re-occurring Maintenance Fees. The more points you have, the more Maintenance Fees each year. You definitely want to keep those in mind when running your numbers as these can be more than a thousand dollars per year. It might be better to get a smaller contract at first, pay it off, then add on.

    As far as loans for resale, as a PP said, secured loans through your local credit union are under 4% (ours is offering 1% for the first year and 3.99% after that). Also several banks are offering Home Equity Loans for 0% first year/4.5% base after that based on things like the Libor 3-month, which btw has been under 1% for over 4 years now, meaning that the 4.5% hasn't changed in the past four years.

    Good Luck with your decisions!
     
  19. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    I cringe at thinking some would put their home or cars up for risk for such a purchase even if it's cheaper than other finance methods. I think my bottom line is that if I couldn't save up the money to buy it outright, I wouldn't buy and likely couldn't appropriately afford to go on vacation anyway.

    Legally all any of us really own is a resort and there is a reasonable expectation of being able to use other DVC resorts. Currently one can use non qualified points for RCI and BVTC. I wouldn't be surprised if BVTC were removed from those options but I don't think it's realistic to think RCI would be removed unless it were removed for all DVC members.
     
  20. ELMC

    ELMC DIS Veteran

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    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! :)
     
  21. BeachLove

    BeachLove Mouseketeer

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    Yup, I starting going to Disney in my late teens and bought DVC in my early 20's . Figured I had gone 5 or so times and spent easily 6-8k total on rooms at moderate resorts. I found out about DVC at age 20/21 and finally found resale at 23. Ended up buying 200 points at Boardwalk after saving cash up for about a year and a half. Now at 27 I've been looking for another contract for a while now. The cost wasn't even 20k. Resale can easily be had for 55-70 point for most contracts.

    Look at the additional costs of owning. I went once a year, now I'm going several times a year. Look at travel costs, additional ticket cost, food cost etc. Will I bring my parents and then ticket and food for them. Then you've gotta stop yourself from adding on "Just a few more points, that's all I need. " Yeah, starting looking for 75 points as an add on and now I'm looking for 200.

    Resale makes owning so much easier to afford. I can't believe I was about to buy direct:eek: Pay in cash, just save it up over time. Dvc was a very good decision for me since it allows me to bring family on vacation and give it out as employee extras.
     

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