Buy this year, or next?

[lemonsours]

On our DW trip at the end of Sept, we did the DVC presentation and decided to buy 100 points at AKL with an October UY. We didn't sign, had the paperwork shipped home. Since being home, we have looked into the discussions on resale/direct and decided for us, buying direct makes sense (so please no discussions on that here. ) The only question now is whether to buy this year or next. I need some double checking of my math below (have I missed something?) But it seems to hinge on what are the chances of an AKL point increase in the next 12 months? From the history sticky, it looks like one is probably due.

So the story is this: If we buy this year, we need to finance, and we got the higher (15%) rate. BUT, we can pay it off entirely next year. Or, we can just buy next year without financing. (Even if we buy this year, though, we will not be able to travel until November 2013, thus forfeiting this year's points unless we were to rent them.)

The incentive we were offered was $600 toward our down payment, so we put in $1200, they take off $1800 total, which makes our Financed amount 12,000-1800=10,200. 10y loan=120 payments
10,200/120=$85 capital/per payment. Total monthly payment=$170
Monthly Interest= 170-85=$85 $85x12=$1020 interest for one year.
So that would mean as long as any hike is less than $10 per point, we would
would be better off buying next year, or if there is a chance it would be more, we should buy now.

Is my logic flawed?

 

[JimMIA]

Is my logic flawed?

IMHO, yes it is.

I want to respect your request that direct/resale not be discussed, but that's just not possible in this situation.

If you buy this year, you need to finance...therefore you need to buy direct -- understood.

However, you say you can pay cash (100 pts @ $114 pp = $11,400) next year if the price doesn't go up.

If you can pay $11,400 cash next year, you can pay $7,000 (100 pts X $70 pp). AKV is selling and clearing ROFR at $70 NOW. It will be lower next year. Why would you pay $4,400 (63% ) MORE to buy direct?

Expressed another way, why would you pay $11,400 for 100 points when you could pay the same for 160???

I think you need to re-think.

 

[Deb & Bill]

IMHO, yes it is.

I want to respect your request that direct/resale not be discussed, but that's just not possible in this situation.

If you buy this year, you need to finance...therefore you need to buy direct -- understood.

However, you say you can pay cash (100 pts @ $114 pp = $11,400) next year if the price doesn't go up.

If you can pay $11,400 cash next year, you can pay $7,000 (100 pts X $70 pp). AKV is selling and clearing ROFR at $70 NOW. It will be lower next year. Why would you pay $4,400 (63% ) MORE to buy direct?

Expressed another way, why would you pay $11,400 for 100 points when you could pay the same for 160???

I think you need to re-think.

What Jim says. Plus whatever DVC is saying now about resale points, they could say about all points next year or next month. Nothing is guaranteed except being able to book at your home resort. All that other stuff is just perks and perks don't last.

You could almost pay for a DCL cruise with the savings you have on buying resale.

 

[G'sMaman]

So that would mean as long as any hike is less than $10 per point, we would be better off buying next year, or if there is a chance it would be more, we should buy now.

Is my logic flawed?

I won't try to talk you out of buying resale since I own both direct and resale myself for a number of reason that make sense for our family. My only question is if you have included the mf you will need to pay if you buy now. You will need to add that $500 to the money you'll be spending to buy now. True you don't have to pay it all in January, buy it's still money you will need to put aside.

 

[tomandrobin]

Buy it next year, but don't finance the loan at a high rate.

----or----

Are those interest free checks still being offered?

Anyway, if you were able to get an interest free loan or financing under 5%, you could buy this year. Then rent the points via Daddio's service, pocket use that money towards paying off your loan.

PS - I know you ruled out resale, but for AKV......it is what I really would recommend.

 

[Mtnman44]

If paying $40 more per point to buy direct isn't a problem, why worry about whether or not next year's price will be a few dollars more or not?

 

[backyardponder]

It's your own personal business why you don't want to discuss resale. If you are crunching numbers so much, you really need to consider it. I have a feeling a DVC salesperson gave you a song and dance about how great RCI is and if you by resale you won't be able to trade out. I've got a lot more than 100 points and have never been able to trade out to something I want, although to be honest, I was always looking for a Florida 1BR Gulf side in January or February.

 

[lemonsours]

If you buy this year, you need to finance...therefore you need to buy direct -- understood.

Actually, that is not what I said. I do not need to buy direct just to finance, but since I want to buy direct, financing through Disney seemed the easiest way to go.

I think I need to clarify my position here. We as a family are not joining DVC because it is the least expensive route to take our Disney vacations. That would be foolish. I am looking at it this way: The purchase price is our "down payment" on a lifetime of Disney joy. The maintenance fees (which our guide told us could be billed monthly, please let me know if that is incorrect) are an enforced monthly vacation savings. DVC is allowing us to try deluxe resorts and larger accomodations that I would otherwise balk at paying cash for. (I am a cheapskate at heart! ) Our decision to not consider resale is based on not being able to trade within the Disney collection (for example, at the Polynesian or Grand Floridian),or for DCL, or through the Concierge collection or RCI. If you can do these things with resale points, please let me know, as I would seriously consider it (Especially the DCL and other Disney collection hotels, not so much RCI).
Even though they are not the best use of points, nor are they guaranteed in the future, I want to have the ability to use the points that way if we decide not to travel to Disney one year. (And in the case of the Polynesian, if we decide to take a shorter trip due to time constraints, we would love to be able to use up our points staying there.)

However, you say you can pay cash (100 pts @ $114 pp = $11,400) next year if the price doesn't go up.

Also not what I said. What I said, is that I can pay cash next year whether the price goes up or not, I was simply wondering if the interest I might pay over 12 months of financed payments before I pay off the loan would be less than paying the price increase next year on 100 points.

I won't try to talk you out of buying resale since I own both direct and resale myself for a number of reason that make sense for our family. My only question is if you have included the mf you will need to pay if you buy now. You will need to add that $500 to the money you'll be spending to buy now. True you don't have to pay it all in January, buy it's still money you will need to put aside.

I purposely left the monthly maintenance fees out of the equation since if we do buy this year and rent out the points that would otherwise be forfeited, it would seem (based on my observation of rental values) that at the very least I would be guaranteed to get back that amount from a rental.

If paying $40 more per point to buy direct isn't a problem, why worry about whether or not next year's price will be a few dollars more or not?

Very true. I suppose since I decided to pay the premium buying DVC, I'm just trying to save money any way I can.

 

[Deb & Bill]

For resale points bought after 3/20/11, you can still use those points for RCI . You cannot use them for DCL or any Disney Resorts. Or Adventures by Disney or the Concierge Collection.

 

[JimMIA]

Actually, that is not what I said. I do not need to buy direct just to finance, but since I want to buy direct, financing through Disney seemed the easiest way to go.

You're going to pay $44 per point too much in order to finance at 15% interest.

If that's the easy way to you, nothing we say matters.

I am looking at it this way: The purchase price is our "down payment" on a lifetime of Disney joy.

Ooops! Sorry...gagged on the koolaid for just a second there!

The maintenance fees (which our guide told us could be billed monthly, please let me know if that is incorrect)

True, as far as it goes. You can either pay the dues annually, or have them auto-charged to your bank/credit card account.

...are an enforced monthly vacation savings.

Ooooooops! Did it again. Darn koolaid allergy thing is driving me nuts!

It's NOT a savings of any kind...although I have to tip my hat to the slickness of your DVC timeshare salesman!

It's paying your 30-50 year annual dues committment monthly.

DVC is allowing us to try deluxe resorts and larger accomodations that I would otherwise balk at paying cash for.

No, they're not allowing you anything. They're selling you very nice accommodations which you will probably learn to appreciate. DVC is a really nice place to stay. But they're not "giving" you anything except a line...

(I am a cheapskate at heart! )

No you're not.

Our decision to not consider resale is based on not being able to trade within the Disney collection (for example, at the Polynesian or Grand Floridian),or for DCL, or through the Concierge collection .

That's a judgement call. My personal opinion is those exchanges are very poor value.

or RCI[ If you can do these things with resale points, please let me know, as I would seriously consider it (Especially the DCL and other Disney collection hotels, not so much RCI).

Bad info on RCI. You can still use RCI (less bad value, sometimes okay value) with resale.

If a guide told you that (as opposed to you assuming that), they were lying...and they knew better.

Also not what I said. What I said, is that I can pay cash next year whether the price goes up or not, I was simply wondering if the interest I might pay over 12 months of financed payments before I pay off the loan would be less than paying the price increase next year on 100 points.

Again, the math is not complicated.

Your plan so far: Pay $114 per point PLUS 15% interest per year.

Wait a year and buy direct: Pay $114 per point...hopefully, no interest

Buy resale now or in one year: Pay $70 per point ($44 per point cheaper), no interest.

Your call.

Very true. I suppose since I decided to pay the premium buying DVC, I'm just trying to save money any way I can.

No, you're not.

You're trying to justify buying direct so you can finance a price that's WAY too high...at 15% interest.

Those who disagree with you (everyone who has responded) are trying to protect you from that.

 

[dimndgal1]

I totally understand your decision to buy direct. We have been back and forth and - honestly - it will depend on finances and other mitigating factors when we go to buy next year how we approach it. I don't need anyone to sell me one way or the other -- it's based on personal factors that don't need to be defended, as it is with you.

That said, we decided to wait until next year to buy so that we can do more up-front and (honestly) because things still look 'eh' for the luxury expense aspect of the economy and we sort of want to see how it plays out. I have seen Disney's DVC promotions adapt with the economy (along with Hilton GVC and Marriot VC). We figure it's worth the risk of points perhaps going up a hair and having more up front and (perhaps) a more interesting offer.

Also, if you wait, and the points go up dramatically (doubtful), you can always reassess the direct v. resale (though, as you said, it shouldn't be a major issue) and I would think that the money you will be able to pay out of pocket will more than balance out any interest you would accrue over the year.

Also, have you looked into using the Disney Visa card to finance the purchase? They have 0 APR on DVC for 6 months and you'd get some GREAT dollars for that first trip Just saying -- I'm sure other cards will offer a decent financing rate, but if you have the cash, it might be a way to add to the mix

 

[pascagoulabeach]

Just wait until next year to buy. It will give you more time to think about it.

Even if direct point prices from Disney increase I still think that the price difference will not exceed the interest that you will have to pay.

Just my $0.02.


PS: I would also do some more reading about buying a resale vs. direct, as well as value of using points for anything other than DVC villas (i.e. DCL).

 

[ToddyLu]

The problem also is that one night using points in an exchange is soemtimes 75 points for a 3 days cruise it is around 120 I think....So even with saving your points for the 3 years allowed isn't going to help you because you will only ever have 300 points---not enough to do much of an exchange anywhere.

We purchased direct in 2009--210 points at AKV, paying $93 pp. We got preferred financing for 10 years also. Our monthly payments are around $237 and MFs are an extra $80 per month. We will have had the use of 7 studios (6 SV and 1 standard) by 11/4. This would have been big bucks paying out of pocket. If I had known better we would have tried to buy resale but no one was making loans for a second mortgage the summer of 2009.

Everyone just wants to save you the heartache of thinking RCI/DCL is an easy trade when it isn't. Even with my 210 points when my MIL and I went to Biltmore--it was 75 points a night to stay at the Inn in Asheville you could book with points. We stayed at the Biltmore Inn instead--just too expensive points wise--and not realistic even with me having the double amount of points you are talking about getting.

That being said we swim in the Koolaid and love holding our breath.

 

[PrincessDadx2]

Our decision to not consider resale is based on not being able to trade within the Disney collection (for example, at the Polynesian or Grand Floridian),or for DCL, or through the Concierge collection or RCI.

I think you are missing part of the equation. For 100 points I am pretty sure that you can't get a cruise for one person, forget a family, and last time I looked you could not even get 1 night at the Polynesian. I am sure someone can fill in the details.

It is not like you can trade for a complete vacation. You can trade 3 years of points for less than a weeks vacation or you can use the accomodation as designed. AKL value studios will let you stretch those points.

If you get the total value equation then you will probably think different about resale.

 

[KAT4DISNEY]

I also was going to point out that 100 points is not going to get very much for exchanges anyway. If you can't get anything with it then having that ability doesn't matter. You'd be better off paying less up front and having the cash saved both on the buy in and the maintenance fees to use towards other vacations.

And if you purchase resale you have the possibility of purchasing even less points - like 50 if you think that you won't want to stay at DVC resorts all the time. That's more cash saved to use towards non-DVC.

 

[amypetecar]

quick math using points to get a room at the Poly.

It takes rougly 350 points for a week, plus the $95 fee for 6 nights, 7 days.

Cash reservation at $450 a night = $2700
You could rent 350 (assuming you bought enough points) points to someone for $10 a point = $3500

plus you avoid the fee. Point is. for the 1 or 2 times in your life you'd trade your points out, just rent them, use the cash for reservation. (plus save the $95 fee)

Go Resale!

 

[HannaBelle]

Okay, lots of y'all are being very snarky! OP, everyone has an opinion and they obviously are sharing them freely!


I would encourage you to seriously consider buying the points on the resale market. It is very easy to rent your points with David for the times you want to stay at the Poly or take a cruise. Cash is king and it is much more flexible than points.

Obviously, it is your money and you can buy whatever you want for whatever reason and you do not have to justify it to anyone.

RCI is a *NOT* permanent perk and I would not let that factor into your decision.


I will also piggy back on what amypetecar said....if you do cash ressies at the Poly, you can get free dining if you travel during those times. DVC members who book on points are not eligible.

 

[Brian Noble]

OP: I would wait until you can pay cash. The last increase at AKV was from $112 to $120 in July '10. I think the odds of a more-than-$10 increase in base price is unlikely between now and a year from now.

The other advantage of waiting is it gives you more time to think about this purchase, what it is for, and how to structure it to your best advantage. Here's why: There are two reasons to buy a timeshare. One is to save money on the vacations you'd take anyway. The other is to use it as a way of taking vacations you wouldn't otherwise take.

The DVC market has evolved to the point that there is essentially no way to save money with a developer purchase, compared to the equivalent resale purchase used for the same vacations. In most cases, for most people's expected vacation habits, the developer purchase will be significantly more expensive.

However, depending on your precise mix of vacations, a developer purchase might turn out to be slightly more convenient. But, the cost has diverged so far that very very few people will find that convenience to be a good value when viewed as the cost of time saved vs. what you could otherwise earn with that time. If you are someone with a very very high hourly earning potential, and are constantly turning away work that you don't have time to take on, then it might be cheaper to just buy developer in the end. Otherwise, for most people, it's a luxury, not a savings. That doesn't mean you can't do it, but you have to accept the fact that it will cost you more in the end for the very same vacations---and in most cases, a lot more. What's more, the "convenience" of internal exchange is a little bit overblown. Go back and look at all the people who find that cruising on points is not possible on some particular cruise, but plenty of cash staterooms remain. Read up on some of the difficulties people have with Reservation Status points when they find they have to change plans.

On the other hand, except for cost and some modest (and debatable) differences in convenience, there are no differences between a developer purchase and one made on the secondary market. In other words, a 100 point AKV contract is the same "commitment to vacation" either way.

Ultimately, of course, it is up to you. If you'd be happier with a developer purchase, it is your money to spend as you will. But, if you take the very same vacations with a resale purchase (and you spend a little bit of time spent renting out your points for cash once in a while) you will have more of that money left at the end of it all to use for other things.

 

[montrealdisneylovers]

Okay, lots of y'all are being very snarky! OP, everyone has an opinion and they obviously are sharing them freely!


[B]I would encourage you to seriously consider buying the points on the resale market. It is very easy to rent your points with David for the times you want to stay at the Poly or take a cruise. Cash is king and it is much more flexible than points.[/B]

Obviously, it is your money and you can buy whatever you want for whatever reason and you do not have to justify it to anyone.

RCI is a permanent perk and I would not let that factor into your decision.


Being a newbie to DVC I am curious if one does not take a risk by renting out points either on the rent/trade board or through David. If the renter charges purchases to the room and leaves without paying or if they cause a lot of damage to the room, are we as owners not held liable? Is there a way to be protected? I would be very hesitant to rent and use points for cash.

 

[Brian Noble]

Yes, you are on the hook for a rental. You are not for a transfer.

As for protecting oneself: you can have something in your rental agreement that covers such things, but if someone is going to stiff Disney for a tab and/or do enough damage to a room to generate charges, they aren't going to care much about signing an agreement on which they later renege. You could still pursue it through the legal system, but it is probably more trouble than it is worth.

However, the vast majority of these arrangements go without a hitch. In my opinion, the real risk of a rental going bad is low from the landlord's perspective.