cash or financing?

[KGD]

Check out a home equity line of credit. We were about to do that but just paid cash instead. The line of credit was prime plus 1-1.75 points (depending on the bank), so around 4.5 - 5.25%, MUCH less than the timeshare financers.

Also, I agree - do what is right for you and your family. Only YOU can decide that. I spent a lot of time on these boards while we were deciding what to do, what to offer, resale or direct, etc., and finally we did what was right for our family.

These boards are AWESOME! I have learned so much about the DVC operations and experiences. I feel like I learn something new everyday. Something that a 2-3 hour tour at DVC could never give you.....real life experiences, the good and the not so good. Keep checking and asking questions. It certainly helped me and made our decision very easy.

 

[zebsterama]

Are you buying with cash or did you finance? You can finance a resale, right? How does this work? We filled out an application online (timehsare store gave us the web address) and since we h avent yet chosen a specific location put undetermined. We also didnt have an exact loan amount but put $15,000 but in the notes added that it was undetermined at this time. They sent us an email telling us we needed to have the resort name and exact amount we needed, so we pick a resale first and then try for financing? I assumed you needed to be prequalified before making bids? We have excellent credit and can easily pay the down payment but didnt want to strip our savings and are willing to pay a little in interest to have that cushion.

So what is the deal?

And I know 3 questions in 2 days is alot buit its just so exciting.

I'm not a financial analyst but if you can pay cash - then I suggest you pay cash.

Paying out interest is always a bad thing.

If you need a cushion later and you have great credit then get your $15,000.00 cushion later - should you need it.

Just my 2 cents.

Good luck with your choice!

Cheers,
Zebsterama

 

[WDWFERN]

We have also financed a direct purchase through DVC. I know it probably makes more financial sense to save up the money and then buy without financing, but for our family, looking at the whole picture, it made sense for us to do it this way. We have many wonderful memories from trips with our family as well as friends and extended family and have put these vacations "toward" our membership instead of that money just being gone at the end of the trip. We have chosen to live simply in almost all other areas while we are paying off our loan, but our Disney trips are our one special treat for our family. I feel very grateful that this was an option for us, and so far it has worked well. Good luck with your decision.

 

[Pakey]

I have 3 contracts, first at 160, second at 150 and third at 225. I paid cash for all 3 of them. I bought each one 2-3 years apart.

For us, we would not have purchased if financing was the only option. I have a debt phobia.

 

[s830632]

there are smart ways to finance. And Suzie Orman is not all that.

Your kids are only young once and these early trips will be with them forever. my 5 year old has been to dland twice and the world 4 or 5 times (and we live in OH).

If you wait until you save cash, the kids will be older.

Would also suggest HHI, we purchased resale points there recently as it is drivable (12 hours) for us and a great resort. We also own at SSR and have been there, BWV(liked), BCV(Not a big fan) OKW(really liked)and BLT (not a fan, too much like a hotel for my tastes)

We bought direct before we knew about resale. We could have saved alot going resale, so that's my only regret. Good Luck with your decision.

Thank you for saying that! All of the people who say you shouldn't finance, although their advice is sound, aren't considering the fact that many of us have small children and want to have this experience now, not in the future after we've had the chance to save up for this. I can't speak for anyone else, but the fact that I didn't have the money for this was simply because I never thought of doing something like this because I didn't know something like this existed.

I'm going to finance my DVC (assuming I pass ROFR), but I did so via a signature loan through my bank. You might try looking in to that, you could possibly get a better interest rate than the timeshare lenders, although you may be able to write off the interest if you do it through a timeshare lender, not too sure about that.

 

[Sandisw]

We started small and bought resale (50 points) in 2009 that we could pay cash for. We then added on at BLT (5 days after closing on the resale) and originally planned to just finance through Disney

I heard that Disney's financing was easier to get (not that we don't have excellent credit but it was so easy) and figured I could always search for cheaper rates. Well, I then worked things in such a way that I was able to have the cash to pay it off fairly quickly and I just ended up putting it on my Disney Visa--that gave me 6 months, 0% interest.

I spread out the add ons--bought one in April, and one in June. I just added on a 3rd time in August and just paid off the balanced last week!

Good luck!

 

[SSR]

Thank you for saying that! All of the people who say you shouldn't finance, although their advice is sound, aren't considering the fact that many of us have small children and want to have this experience now, not in the future after we've had the chance to save up for this. I can't speak for anyone else, but the fact that I didn't have the money for this was simply because I never thought of doing something like this because I didn't know something like this existed.

This is a good post and a good reason to finance for some people.

I tend to refrain from posting on "cash vs. finance?" threads because people come at the question from different perspectives.

On the one hand, from a scientific/empirical perspective, no one can/should really argue with the point that it's "better" to pay cash than finance a timeshare given the high interest rates.

On the other hand, it is certainly OK to finance rather than pay cash due to your intangible feelings, familial timing, and desires.

I've discovered that, often, people get heated on these threads because they fail to see these distinctions and try to convince people using the empirical/scientific reality without taking into account a myriad of other completely subjective factors that go into these decisions. (i.e. saving for 5 years to pay cash while missing the window of opportunity when your kids will enjoy it the most.)

 

[ssawka]

Paying interest is not always the most expensive path. Let me re-iterate my story. We purchased a moderately large number of points at BLT in June 2009 after the first webcast. The price we paid was $92 per point. We financed everything except the downpayment at Disney's "prefered" rate of 10.75%. It took us aproximately 12 months to pay the loan off. During that year the price of BLT shot up about 22%. Had we waited to pay cash, we would have actually spent much more than we spent with a tax deductible interest rate of 10.75%. Now would it have been better to not pay the interest at all and pay cash in 2009? Absolutely! But unfortunately that was not an option. Now I'm not saying that this is the path that others should take, and hindsight is 20/20, but it just illustrates that sometimes it is cheaper to pay interest than to wait.

 

[Buckeye Fan]

I looked at it this way. I was a math major, and people are giving good, sound financial advice. I completely get the throwing away money to interest thing and financial responsibility. In my own personal finances, I have been blessed, and have been able to be pretty conservative with my spending. With that being said, my options were to dump $4k in vacations each year, not take them and save up, or buy resale and put the money I would have spent on vacations toward a loan. I decided to go the loan route and did a home equity as well. At the time, we got a super low rate, and we knew we could pay it off as quickly as we chose to.

In all honesty, I don't see this much different from buying a car. Both are cash out the window, and people finance cars all the time. I at least can travel with one for the next 30 - 40 years! Personally, I would't drain my savings either. That is cushion money you can ALWAYS use to pay off the loan if you have to. You never know what life will throw your way, but you can't live life in fear of what may happen either. JMHO! Best of luck with your decision!

P.S., Don't pay out of the low $60s for a SSR contract. We just sold a 120 and 270 point that went for $62 and $61 respectively. That's right around fair market value since we didn't have points coming until this Aug. There are tons of contracts for SSR, and you'll be able to get a good price if you look around.

 

[SSR]

Paying interest is not always the most expensive path. Let me re-iterate my story. We purchased a moderately large number of points at BLT in June 2009 after the first webcast. The price we paid was $92 per point. We financed everything except the downpayment at Disney's "prefered" rate of 10.75%. It took us aproximately 12 months to pay the loan off. During that year the price of BLT shot up about 22%. Had we waited to pay cash, we would have actually spent much more than we spent with a tax deductible interest rate of 10.75%. Now would it have been better to not pay the interest at all and pay cash in 2009? Absolutely! But unfortunately that was not an option. Now I'm not saying that this is the path that others should take, and hindsight is 20/20, but it just illustrates that sometimes it is cheaper to pay interest than to wait.

You were able to deduct the interest?

 

[chalee94]

You were able to deduct the interest?

http://www.irs.gov/publications/p936/ar02.html

 

[SSR]

Paying interest is not always the most expensive path. Let me re-iterate my story. We purchased a moderately large number of points at BLT in June 2009 after the first webcast. The price we paid was $92 per point. We financed everything except the downpayment at Disney's "prefered" rate of 10.75%. It took us aproximately 12 months to pay the loan off. During that year the price of BLT shot up about 22%. Had we waited to pay cash, we would have actually spent much more than we spent with a tax deductible interest rate of 10.75%. Now would it have been better to not pay the interest at all and pay cash in 2009? Absolutely! But unfortunately that was not an option. Now I'm not saying that this is the path that others should take, and hindsight is 20/20, but it just illustrates that sometimes it is cheaper to pay interest than to wait.

http://www.irs.gov/publications/p936/ar02.html

Wow. That's very interesting - learn something new every day. Had no idea timeshare interest was deductible...thanks for the link/info...

 

[crisi]

Wow. That's very interesting - learn something new every day. Had no idea timeshare interest was deductible...thanks for the link/info...

Note the caveats - it has to be secured and it has to be qualified. If you get your loan through Disney it will be secured. If you get a loan through a timeshare company, it probably won't be secured. If you use your home equity line of credit - secured. Credit card debt - not secure.

Also, qualifying.

Make sure to read the rules or talk to a tax adviser. Timeshare interest is OFTEN but NOT ALWAYS deductable

 

[s830632]

In order to deduct the interest though, doesn't the loan have to be tied back to your timeshare though? In other words, doesn't the loan have to be secured by your timeshare, rather than using a different source, such as a credit card, home equity loan, or signature loan?

 

[s830632]

Note the caveats - it has to be secured and it has to be qualified. If you get your loan through Disney it will be secured. If you get a loan through a timeshare company, it probably won't be secured. If you use your home equity line of credit - secured. Credit card debt - not secure.

Also, qualifying.

Make sure to read the rules or talk to a tax adviser. Timeshare interest is OFTEN but NOT ALWAYS deductable

, you answered my question while I was asking it

 

[ssawka]

You were able to deduct the interest?

Yes, if you buy direct from Disney then it is a mortgage and is deductible as a second home, but YMMV. Check with a tax professional.

[Edit]

Sorry, didn't read the whole thread. chalee94's link explains it much better than I did.

 

[mikron]

We were lucky enough to buy cash. Started with 900 SSR points in 2004 and added 500 more on a resale at OKW.

 

[Buckeye Fan]

We were lucky enough to buy cash. Started with 900 SSR points in 2004 and added 500 more on a resale at OKW.

In my dreams!!!