A couple of questions....

[rance]

First I wanted to thanks everyone on this board. Some great non biased opinions.Lots of time when people make a purchase they just talk about all the positives to make themselves feel better, but I find some great balance from the dvc members on this board which helps before taking the plunge...so thanks.

A couple of questions:

1) why do most consider dvc a poor investment? I would think buying into one of the hotest travel destinations would be a good investment over time.

2) Why are Disney's financing rates so high? With interest rates so low (our mortgage is 3%) why is disney around 12-14%

 

[Jason@dvcstore]

A couple of questions:

1) why do most consider dvc a poor investment? I would think buying into one of the hotest travel destinations would be a good investment over time.

2) Why are Disney's financing rates so high? With interest rates so low (our mortgage is 3%) why is disney around 12-14%

1) I personally don't consider DVC an investment. I try and think of it as a membership. If you come to DVC on a regular basis and would like to stay at places like a 1 bedroom at the Boardwalk than the membership is going to pay for itself over time.

On a smaller scale I would compare it to a gym membership. If you go 7 times a month and pay their $15 daily fee you would save money by joining the gym and paying the $50 per month fee. Of course, one you join you are making a commitment to do so continually over time which is similar to the DVC plan.

2) I don't have an answer or an opinion on your # 2 question.

Jason

 

[CarolMN]

First I wanted to thanks everyone on this board. Some great non biased opinions.Lots of time when people make a purchase they just talk about all the positives to make themselves feel better, but I find some great balance from the dvc members on this board which helps before taking the plunge...so thanks.

A couple of questions:

1) why do most consider dvc a poor investment? I would think buying into one of the hotest travel destinations would be a good investment over time.

I agree with Jason. It's a prepaid vacation plan. It works best for those for go to WDW (or would go to another DVC resort) at least every other year, stay at a deluxe resort when they do, and can plan more than 7 months in advance. It also helps if you can minimize the use of weekend nights, which are more expensive than weekday nights.

DVC isn't for everyone. It includes only lodging, so those who purchase should have enough discretionary income to pay for transportation, tickets, food & souvenirs, etc.

Best value of DVC is using it to stay at a DVC resort. If you buy it for trading or to use the other options, it IS a poor investment, IMO. There are less expensive timeshares that can be used for trading if that is your primary planned usage.

2) Why are Disney's financing rates so high? With interest rates so low (our mortgage is 3%) why is disney around 12-14%

No idea. Perhaps the default rate is so high that the extra risk premium is warranted. Perhaps it's high because that's what the market will bear. Financing a luxury purchase is seldom a good idea, anyway.

 

[rcchello]

They are apparently treating the loan as a Personal Loan. There are apparently very few people willing to offer financing on Timeshares because of the drop in value in most of them (See all the take my timeshare for $1+closing on EBAY).

Even Disney is probably seeing many people walk away from their loans and then Disney has to pay the legal fees to get clear title back on the contracts

It is not like your home or auto where you will try to keep up payments because you don't want to be homeless or can't get to work.

No competition plus the current environment makes for high interest rates.

 

[JimMIA]

1) why do most consider dvc a poor investment? I would think buying into one of the hotest travel destinations would be a good investment over time.

To me, an investment is something I expect to increase in value over time. DVC will not.

For owners who bought in at the very beginning (in the mid-$50's, low $60's) there has been some appreciation. However in the five years we've owned, our DVC has depreciated 20-30%

2) Why are Disney's financing rates so high? With interest rates so low (our mortgage is 3%) why is disney around 12-14%

What the others said -- collateral that is going to depreciate requires a higher interest rate because there is more risk to the lender. If you must finance, you really need to factor in the cost of financing with the purchase price -- and that will change the cost/benefit equation considerably if you do honest math.

By far the best method of financing DVC is to use a home equity loan or line of credit. That will give you a very low rate if you must finance.