Can someone explain to me how outside financing works?

[TeresaNJ]

Now that we've sold our two DVCs, , I'm hoping to buy a resale sometime in the spring. We had purchased VWL in 2001, and BCV in 2002. Had a total of 550 points. Took a LOT of family vacations. Decided to sell this past year, as we were buying a house with land so hubby could begin his dream of having an organic hobby farm, so wanted the cash to get started with equipment, etc.

If we were to purchase resale, we'd probably finance, rather than put out the large sum of cash that we just acquired for the farm. How exactly does it work when financing through an outside financing company, such as the ones recommended by TSS? Are the payments somewhat comparable as to what you'd pay if financing through Disney? Disney lets you pay over ten years. What about the others?

Thanks for any help you can give me!

 

[Dean]

Now that we've sold our two DVCs, , I'm hoping to buy a resale sometime in the spring. We had purchased VWL in 2001, and BCV in 2002. Had a total of 550 points. Took a LOT of family vacations. Decided to sell this past year, as we were buying a house with land so hubby could begin his dream of having an organic hobby farm, so wanted the cash to get started with equipment, etc.

If we were to purchase resale, we'd probably finance, rather than put out the large sum of cash that we just acquired for the farm. How exactly does it work when financing through an outside financing company, such as the ones recommended by TSS? Are the payments somewhat comparable as to what you'd pay if financing through Disney? Disney lets you pay over ten years. What about the others?

Thanks for any help you can give me!

For the one I looked at you're looking at 9-15% depending on length and down payment. Min $5K for 5 & 10 yrs and $15K for 15 yrs with a higher interest rate for longer term. My view is if you can't pay for it you can't afford it but you'll have to make your own decisions. Good luck.

 

[weswife]

I sent you a PM.

 

[ncurley]

Now that we've sold our two DVCs, , I'm hoping to buy a resale sometime in the spring. We had purchased VWL in 2001, and BCV in 2002. Had a total of 550 points. Took a LOT of family vacations. Decided to sell this past year, as we were buying a house with land so hubby could begin his dream of having an organic hobby farm, so wanted the cash to get started with equipment, etc.

If we were to purchase resale, we'd probably finance, rather than put out the large sum of cash that we just acquired for the farm. How exactly does it work when financing through an outside financing company, such as the ones recommended by TSS? Are the payments somewhat comparable as to what you'd pay if financing through Disney? Disney lets you pay over ten years. What about the others?

Thanks for any help you can give me!

Check out Monera. They have a calculator that is helpful to figure out the monthly payment amounts if you do finance. It is easy to calculate the cost of financing if you take the monthly payment amount times the # months financed and compare to the cost if you were to pay cash. I think you can pay off the loan early without penalties, but only after a year. If you think paying it off early is a possibility perhaps it could be worth financing but your "return on investment" will be much longer than if you paid cash.

 

[TeresaNJ]

Thank you all for the replies. Now that they two we had are gone, and had been paid off for a few years when we sold them, the thought of another payment has me thinking twice about financing. I just don't see where we'd have that chunk of change at one time, in the next year or so, to pay cash.

Maybe we could buy in smaller increments, paying cash for those. Maybe we can make a plan to finance, with paying it off in a few years. I know that with financing, it takes much longer to get a return on your investment, but I look at it more as a payment plan to stay at the deluxes for the same cash it would cost to stay at a moderate.

Maybe I should just rent points, LOL.

 

[Dean]

Maybe we could buy in smaller increments, paying cash for those. Maybe we can make a plan to finance, with paying it off in a few years. I know that with financing, it takes much longer to get a return on your investment, but I look at it more as a payment plan to stay at the deluxes for the same cash it would cost to stay at a moderate.

Maybe I should just rent points, LOL.

On a per trip basis, there's not a lot of difference between renting points and owning and if you are able to rent short notice and possibly get cheaper points, it can be cheaper than owning for a given trip. I'm sure you know adding on bits at a time will also add cost, possibly more than financing and much more than renting for a year or 2 to save up.

 

[TeresaNJ]

On a per trip basis, there's not a lot of difference between renting points and owning and if you are able to rent short notice and possibly get cheaper points, it can be cheaper than owning for a given trip. I'm sure you know adding on bits at a time will also add cost, possibly more than financing and much more than renting for a year or 2 to save up.

Thank you! No, I wasn't stopping to think that adding on a little at a time would possibly end up costing more. I'm just freaking out a little not having our DVC! We have a big, Disney loving family! We're now up to five grandsons, although the majority are 3 and under, lol. My DIL mentioned trying out the Art of Animation suites next year. She has two boys, 2 and 3 1/2 months right now. They would love that resort. Yea, no. I just checked the prices, and it's $400/night for those rooms without a discount. We'll just go take a ride over and visit there, while we rent points at a DVC resort.

Talked to my husband about it yesterday, and he said let's give it a year, rent points in the meantime, see how the economy is, see how his work bonuses go, and then we'll make a decision.

Thank you all for your great advice!

 

[poohj80]

We used our HELOC to finance our DVC add-on. Benefits were low interest rates and monthly payments (if needed) and you can write-off interest paid on taxes.

 

[HarvardAce]

If you have other assets that you can use as collateral for a loan (e.g. home equity loan, etc.), you'd be better off doing that and then paying cash for the DVC. You'll probably end up with a considerably lower interest rate (the rates I've seen for DVC are higher than some credit card APRs!) and the interest may be tax deductible.

 

[mjillard]

Yeah, they are charging so much for art of animation, it's ridiculous! No way would I pay those prices for something that looks like it's made entirely of plasterboard. People told me I overpaid for blt, and I probably did, but when I look at the prices for other alternatives, I feel better about it. I think renting is a very good idea, especially if you can get points at 12 or below.

 

[DizBub]

My DIL mentioned trying out the Art of Animation suites next year. She has two boys, 2 and 3 1/2 months right now. They would love that resort. Yea, no. I just checked the prices, and it's $400/night for those rooms without a discount. We'll just go take a ride over and visit there, while we rent points at a DVC resort.

Not trying to knock Art of Animation since I have never personally stayed there so I'm just reporting. My daughter and her 4 kids spent 3 nights there after staying at SSR for 8 nights in a 1 bedroom. Said they had much more room in the 1 bedroom. They all much preferred SSR. Kids still talk about it and that was 2 years ago.

We stayed at OKW in June and they still talk about SSR though.

 

[Dean]

Thank you! No, I wasn't stopping to think that adding on a little at a time would possibly end up costing more. I'm just freaking out a little not having our DVC! We have a big, Disney loving family! We're now up to five grandsons, although the majority are 3 and under, lol. My DIL mentioned trying out the Art of Animation suites next year. She has two boys, 2 and 3 1/2 months right now. They would love that resort. Yea, no. I just checked the prices, and it's $400/night for those rooms without a discount. We'll just go take a ride over and visit there, while we rent points at a DVC resort.

Talked to my husband about it yesterday, and he said let's give it a year, rent points in the meantime, see how the economy is, see how his work bonuses go, and then we'll make a decision.

Thank you all for your great advice!

You're welcome, that's the goal, to make you think about the options and get past the hype. Obviously there are many variables and varying options. I'm a big believer that delaying buying in until one can truly afford a luxury purchase such as DVC leads to better purchase decisions and more focus of the finances involved. If it's truly important say it takes a year to save to pay in full where if one does a HELOC (or other financing) it'll end up being 5 yrs for many before they know it (as an example). Historically there used to be some reasonable exceptions for specific situations when the difference between retail and resale was 15-20% but I can't think of any reasonable exception for financing currently. BTW, the cost difference can easily be $10 per point difference or more buying multiple small contracts vs one larger one all other variables being the same.