10-15 year DVC Financing - "Its a trap!" - Admiral Ackbar

[WeIcomeHome]

You can do whatever you want with your money. With that said, financing for more than 3 years on a luxury purchase is a poor decision from a purely math perspective. The opportunity cost of that decision has big impacts on your future.

The longer terms from Disney is simply a way to make more people think they can afford it because they can pay the monthly payment. This is the same trick car salesmen use to push you towards that new Tahoe instead of a used minivan you wanted. Car loans now up to 8 years and DVC up to 15 years is an indication that they are pricing their products out of reach for a decent percentage of the market.

Look at the true cost of 150 poly points. For new buyers, rates start at 12% (or higher if you don't have decent credit).15 years of payments brings 150 poly points all in to $67,000 not including the 10% down-payment. The total payment if paid within 60 days would otherwise be $31,000 paying cash. That is over 50% of your money going towards the finance cost. Brutal.

My recommendation for someone in that boat is to hold off for 2 to 3 years if forgoing trips and saving dues money and park ticket money (or 3 to 4 years if still making disney trips), save the down-payment money and $400+ monthly payments and buy 150 poly points via resale with cash. Even financing resale poly today would be a better option and you could have it paid in full in under 4 years by paying direct financing level payments towards your resale loan.

I'm not trying to shame anyone. Just wanted to point out how the math works out against the long terms and high rates.

 

[atthebeachclub]

I think there are many ways to do DVC...

One thing we always talk about in our family is we never want anything we purchase to become a burden. Whether that is a house, a car, a DVC purchase, etc. we don't want it to be burdensome or limiting to own it. We want it to be something we truly enjoy.

That attitude has kept our addonitis at bay. DVC is extraordinarily expensive, by the time you factor in all the costs that go into it. And, even resale, it costs way more than most other timeshare procedures. And that doesn't include having to pay Disney prices. It also limits that portion not only of your vacation budget but your vacation TIME (which is far more valuable) to Disney...

We love our DVC stays, and our kids are at an age we plan to keep going and being FL based, DVC gives us lots of flexibility.

All that said, it IS a lot of money.... Dues costs thousands every year, the initial cost is staggering (can buy a car for that amount of money), and the tickets, meals, and everything keep going up. I could imagine us deciding to sell at any point when it becomes more stressful than fun... Personally that's why we didn't want to consider financing, we wanted the flexibility to get out easily without too much of a haircut at any time. It is the same reason why I won't buy RIV or a restricted resort direct.

A lot of this is probably controversial to many on this board, but it is how we made our decisions.

You and I think alike on this. I have a very similar philosophy for my money.

 

[bakerworld]

We looked into the Vacation Club many times between the 90's and when we joined in '08. Many factors went into holding off other than financial. When I finally managed to get DH into a discussion with a DVC guide he refused to use cash to purchase. The positive of the high interest DVC loan was he had no trouble with me paying it early. DH doesn't do day-to-day. He married an professional assistant and he takes full advantage. LOL. I am not a book learner so I came to these forums to learn. Boy, did I take a beating on many forums so I have a touch of finance PTSD.

 

[maui22]

 

[glamdring269]

I won't even finance a car much less a DVC contract.

 

[disneydad7281231]

I think it depend on how you are going to finance. If you are doing 10-15 years and plan to just make normal payments until the end that could be a tough one to swallow but on the other hand 20% down on a 0% APR credit card for 12 months and $350 a month might be doable of some people that will simply never be able to swing $35K cash and in 10 years you will be down to just dues.

You can rent points and save for a few years but then the thousands you are spending on renting points (in my eyes) is let renting a house... you're paying for something you will never own. I just pulled the week I normal go (January Poly) 158pts for the week or about $3950 to rent points to get that week (David's Vacation Rentals). So if I "save" for 3 years but rent points to still go to and rent that's $11,850 over 3 years PLUS the amount you are setting aside saving.

To me that $12K is just like interest and if you are going to be smart and make some additional payments to cut down the interest over the course of the loan... you might as well finance and start getting the discounts and perks of Direct DVC ownership.

If you go resale you're looking at 12.99% with 20% down on 150 PVB at $160/pt over 10 years which is about $15k in interest so again if you plan to pay it down like extra $50 a month ($286/month to $336/month) you cut your total interest to just under $11k OVER 10 YEARS which is what you would pay renting points over 3 years. Throw some tax return money or bonuses at that loan and it will be even less.

Obviously if you are in a situation that you can buy cash or can have enough money within a couple years it would be worth waiting for the thousands you will save in interest BUT if you are going to be going to Disney and it is going to take years to save up then financing might not be a bad option.

Just my opinion! Take it with a grain of salt.

 

[Mouseforward]

Three years ago when interest rates were low I used a personal loan at 5.5% for three years. To me it was just a car payment and since I’ve already paid off my truck it was no issue. Now many people think that’s foolish..


However , I got RIV during the great summer of discounts for around 165 ish a point direct. I paid a hell of a lot less in interest ($ 3800) compared to what the price has risen to for direct @ 205 with current discounts ( 10k more).

In addition I got 750 points worth of vacations during that time . With the way DVC structured we forget that waiting three years means that there’s three years fewer points on the contract.


I would not however, take a 15 year at 10% that just won’t math.

 

[sethschroeder]

Three years ago when interest rates were low I used a personal loan at 5.5% for three years. To me it was just a car payment and since I’ve already paid off my truck it was no issue. Now many people think that’s foolish..


However , I got RIV during the great summer of discounts for around 165 ish a point direct. I paid a hell of a lot less in interest ($ 3800) compared to what the price has risen to for direct @ 205 with current discounts ( 10k more).

In addition I got 750 points worth of vacations during that time . With the way DVC structured we forget that waiting three years means that there’s three years fewer points on the contract.


I would not however, take a 15 year at 10% that just won’t math.

The one benefit of loan through Disney is it seems the worst that happens is that they take back the contract and you move on. A personal loan would leave you open to them trying to reclaim the total amount not the asset itself.

You made out great though. As someone else put it sometime waiting actually end up having you pay a lot more. No one knows what will happen but I also cashed in on those direct prices even though I was still up in the air because it just didn't seem it would ever get better (300 points at $155/point).

 

[Mouseforward]

The one benefit of loan through Disney is it seems the worst that happens is that they take back the contract and you move on. A personal loan would leave you open to them trying to reclaim the total amount not the asset itself.

You made out great though. As someone else put it sometime waiting actually end up having you pay a lot more. No one knows what will happen but I also cashed in on those direct prices even though I was still up in the air because it just didn't seem it would ever get better (300 points at $155/point).

With the personal loan - there’s no attachment to the asset as you stated. However, that also means that you can sell the asset at a loss even without bringing cash to the table in an emergency.

So it’s kind of mixed. Wouldn’t your credit score get screwed anyway if Disney took back your timeshare?

 

[disneylandtour]

Three years ago when interest rates were low I used a personal loan at 5.5% for three years. To me it was just a car payment and since I’ve already paid off my truck it was no issue. Now many people think that’s foolish..

To me, this seems reasonable. But there's a HUGE different between 3 years at 5.5% and 15 years at 11%, which is was DVD is pushing now.

 

[Cfabar1]

I have no intention of doing so, but I wonder if DVD is still offering the 5 year loans, and if so what the rates are...

Also, it appears that Monera offers 12 years as the longest term of the loans... I wonder if they will start offering 15 or 20 year loan terms to compete with Disney...

 

[disneylandtour]

I have no intention of doing so, but I wonder if DVD is still offering the 5 year loans, and if so what the rates are...

Also, it appears that Monera offers 12 years as the longest term of the loans... I wonder if they will start offering 15 or 20 year loan terms to compete with Disney...

Not an expert here, but on the public facing site, it looks like it's only 10 and 15 years from DVC direct. Maybe there are other options if you ask.

 

[Disneydad14]

Could be slightly off on the pricing but this would be 150 points direct:
2013 - VGF - $145
2015 - POLY - $160
2017 - CCV - $170
2019 - RIV - $180 (bought in 2020 for $155 personally for 300 points)
2022 - VGF - $198
2024 - POLY - $215
2024 - FW - $191

If someone has different prices they can comment this is what I could really find with normal incentives and the direct price taken in to account. I believe POLY had extra discounting people go do with welcome home points and such to further lower the cost.

The upfront cost of DVC is a portion of the total costs you are going to incur over the following decades regarding MFs, Tickets, Food.

As you said though it can make sense to finance though in certain circumstances to lock in pricing now especially if its the specific resort you want and a price that is going to be dwarfed in the future.

I don’t think the math works or makes sense if you take into account the opportunity cost of the down payment plus the interest your paying

 

[Disneydad14]

The challenge with these threads is that they often come across as condescending and "preachy" with the generalized assumption that other adults considering financing for a DVC purchase either don't understand how credit works or that there are cheaper alternatives to vacationing at WDW.

I am willing to bet that a significant percentage of DVC buyers finance in some way, shape, or form.

I’m not trying to be mean , condescending or preach but at the end of the day does it make sense to fiancé a non necessity in general unless you’re getting a good rate like basically under 3 percent ? Something like this you got to look at your job security , your retirement accounts and your other savings and then make the jump. I think in the end people would enjoy it more .

 

[Disneydad14]

I think there are many ways to do DVC...

One thing we always talk about in our family is we never want anything we purchase to become a burden. Whether that is a house, a car, a DVC purchase, etc. we don't want it to be burdensome or limiting to own it. We want it to be something we truly enjoy.

That attitude has kept our addonitis at bay. DVC is extraordinarily expensive, by the time you factor in all the costs that go into it. And, even resale, it costs way more than most other timeshare procedures. And that doesn't include having to pay Disney prices. It also limits that portion not only of your vacation budget but your vacation TIME (which is far more valuable) to Disney...

We love our DVC stays, and our kids are at an age we plan to keep going and being FL based, DVC gives us lots of flexibility.

All that said, it IS a lot of money.... Dues costs thousands every year, the initial cost is staggering (can buy a car for that amount of money), and the tickets, meals, and everything keep going up. I could imagine us deciding to sell at any point when it becomes more stressful than fun... Personally that's why we didn't want to consider financing, we wanted the flexibility to get out easily without too much of a haircut at any time. It is the same reason why I won't buy RIV or a restricted resort direct.

A lot of this is probably controversial to many on this board, but it is how we made our decisions.

This is actually why I bought BLT and copper creek. I was probably a better fit for Saratoga or OKW but I felt the ease of renting and getting out was either with those resorts despite the higher upfront costs . I also didn’t mind having some options guaranteed that were harder to get but it wasn’t the main driver

 

[Sandisw]

I’m not trying to be mean , condescending or preach but at the end of the day does it make sense to fiancé a non necessity in general unless you’re getting a good rate like basically under 3 percent ? Something like this you got to look at your job security , your retirement accounts and your other savings and then make the jump. I think in the end people would enjoy it more .

I agree that those considering need to weigh all those things.

The problem with these threads is sometimes it turns into that if you decide to do it, it means you don’t understand it’s not a good idea and shouldn’t do it.

So, as long as people share the things one should consider, then it’s indivual choice.

To me, financing is neither bad or good. A lower rate is better than a higher rate. If you pay cash, you haven’t spent as much as someone who finances.

Unfortunately, sometimes the message is that if you finance, you can’t afford it, you don’t understand how money works, you need to consider this, etc etc.

As long as it stays in the realm of be sure you think of X Y Z, then it’s helpful.

 

[Disneydad14]

I think it depend on how you are going to finance. If you are doing 10-15 years and plan to just make normal payments until the end that could be a tough one to swallow but on the other hand 20% down on a 0% APR credit card for 12 months and $350 a month might be doable of some people that will simply never be able to swing $35K cash and in 10 years you will be down to just dues.

You can rent points and save for a few years but then the thousands you are spending on renting points (in my eyes) is let renting a house... you're paying for something you will never own. I just pulled the week I normal go (January Poly) 158pts for the week or about $3950 to rent points to get that week (David's Vacation Rentals). So if I "save" for 3 years but rent points to still go to and rent that's $11,850 over 3 years PLUS the amount you are setting aside saving.

To me that $12K is just like interest and if you are going to be smart and make some additional payments to cut down the interest over the course of the loan... you might as well finance and start getting the discounts and perks of Direct DVC ownership.

If you go resale you're looking at 12.99% with 20% down on 150 PVB at $160/pt over 10 years which is about $15k in interest so again if you plan to pay it down like extra $50 a month ($286/month to $336/month) you cut your total interest to just under $11k OVER 10 YEARS which is what you would pay renting points over 3 years. Throw some tax return money or bonuses at that loan and it will be even less.

Obviously if you are in a situation that you can buy cash or can have enough money within a couple years it would be worth waiting for the thousands you will save in interest BUT if you are going to be going to Disney and it is going to take years to save up then financing might not be a bad option.

Just my opinion! Take it with a grain of salt.

How Many people upside down on a high interest loan thought they’d pay it off early ? I get what you’re saying but life doesn’t work that way. Also if that 0 percent credit card blows up on you you’re talking about a financial disaster .

 

[Cfabar1]

How Many people upside down on a high interest loan thought they’d pay it off early ? I get what you’re saying but life doesn’t work that way. Also if that 0 percent credit card blows up on you you’re talking about a financial disaster .

Dave Ramsey would certainly agree with you.

I would argue there's a big difference between 12 month 0% financing and a 15 year loan at 18%. Sure something could happen, but a lot of life is about what is acceptable risk to the individual.

To me, the 15 year loan at 18% isn't an acceptable risk, no way am I doing that...

The 12 month 0% financing, depending on the context, the need, etc. yeah it does make sense to me.

 

[Girlstar30]

I have no intention of doing so, but I wonder if DVD is still offering the 5 year loans, and if so what the rates are...

Also, it appears that Monera offers 12 years as the longest term of the loans... I wonder if they will start offering 15 or 20 year loan terms to compete with Disney...

I can only imagine how cheap the monthly payment would be if Monera offered 15 or 20 year loans... $100 or less a month

 

[UrsulaWantsYourSoul]

I’m not trying to be mean , condescending or preach but at the end of the day does it make sense to fiancé a non necessity in general unless you’re getting a good rate like basically under 3 percent ?

Tee hee. How would your fiancé feel about that?