CCV Purchase Help - Does my math make sense?

[Joe Butch]

Weighing my options of buying direct vs. DVC rentals. Here's my math, please let me know if I am missing something or calculated this incorrectly.

I'm currently contracted to purchase 150 points at CCV for $27,773 with 20% down at a interest rate of 12% over 10 years. While I fully intend to pay the loan off in 5, I haven't had the best track records of doing so on other purchases in the past, so I'll keep the math at 10.

Monthly loan amount of $312.19 x 12 months x 10 years = $37,462.80 + 20% down payment of $6,144 = a total cost of $43,606.80.

Maintenance is $7.43 per point for 2019 = $1,114.5 x 16 years = $17,832.00 x 1.04 (assuming a 4% overall increase over 16 years) = $18,545.28

$43,606.80 purchase + $18,545.28 maintenance for 16 years = $62,152.08

I choose 16 years because this is my assumption of when I will sell the DVC (e.g., after my kids go to college). Assuming at that point I can sell my 150 points at CCV for $15,000 (big if?), that makes my cost of ownership for 16 years to equal $47,152.08 or

$47,152.08 / (150 points x 16) = $19.65 per point, which is higher than the current price per point making this particular purchase have a negative expected value for me?

 

[Ben E N]

Considering you only plan on having your contract for 16 years, well before the 2042 expiration of some original 14 resorts, I would highly recommend looking at resale.
You can get the pointe for less and will take a smaller comparative loss when you do sell. Also, you can typically find financing for cheaper. I don't reccomend buying with the intention of paying later, though. You would then be locked into extra payments, even when you don't want to make them.

 

[aoconnor]

If you are paying direct pricing and financing you are paying significantly MORE than renting. If I were you I would enjoy the flexibility of renting (essentially 11 month priority at every resort ) and not commit yourself to all those payments.

It's easier to think of it on a per-point basis. You're paying $185 per point and there's 49 years left, so $3.78 per point. Then you have maintenance fees of $7.43, so if you were paying cash your effective cost per point would be $11.21 per point which is cheaper than renting (opportunity cost of the $28k purchase notwithstanding).

The problem comes when you add in the interest expense - $22k at 12% interest is $2,666 per year or $17 per point. Ouch.

 

[Moonlight Graham]

Another thing to consider is you are likely underestimating the total cost of the dues. The 4% needs to be compounded annually, it doesn't quite work to just take the 16 year sum and then multiply by 1.04. I don't have any insight into whether the 4% annual increase is an accurate assumption, because I have no idea what the actual increases will be.

But for the purposes of this discussion, if you assume 4% annual increases, then your total maintenance fees will be around $24,300. (Y1 = $1,114; Y2 = $1,159; Y3 = $1,205; Y4 = $1,253; Y5 = $1,303...)

 

[_auroraborealis_]

I would add... why CCV, versus a more cost effective resort resale? You can buy 150 Saratoga points at ~$100pp, AKV at $108pp, or, since you're talking selling well before 2042 anyway, BRV at $110 or so.

If you absolutely must finance, you can finance resale, and when you're already saving $80pp up front, you also save a lot on finance charges.

 

[Bing Showei]

Many here will advise against financing a luxury purchase. Many will also advise that one should look at a timeshare as a sunk cost given the risks.

Just because their is a thriving resale market despite Disney’s best efforts to cripple it, there is no guarantee that in the future Disney won’t do something to more effectively alter the resale market and make direct buys more favorable. If you are relying on the idea that in 16 years you’ll get out by way of the resale market, buying is probably not advised.

With a timeshare you are committing to going every year to Disney. What if you lose your job, there are sudden medical expenses you incur, you get married, have an oops baby, you get divorced (not necessarily in that order), you have to relocate for work, you have relocate for safety, or you have to flee the country? Life happens.

With renting it’s as easy as, “Honey, we have to flee the country again. You cool if we don’t do the fake castle this year?” With a timeshare (especially a financed one) that conversation can turn awkward.

Renting buys you freedom.

 

[MoreTravels]

If you like CCV, then get BRV resales... it’s the same thing. Same amenities bus stop restaurant and inconvenience of having no monorail.

By the way, taxi cabs hate VWL passengers to call them to go to another resort. Some even complained to me, he lined up 2 hours to get a $5 fares as I was going to Polynesian for dinner and Disney buses and boats would take me more than 30 min with transfer and security check.

The cab driver told me to call Minnie Van next time and not to bother him.

Please keep they in mind if you choose CCV / BRV.

 

[crvetter]

If you like CCV, then get BRV resales... it’s the same thing. Same amenities bus stop restaurant and inconvenience of having no monorail.

By the way, taxi cabs hate VWL passengers to call them to go to another resort. Some even complained to me, he lined up 2 hours to get a $5 fares as I was going to Polynesian for dinner and Disney buses and boats would take me more than 30 min with transfer and security check.

The cab driver told me to call Minnie Van next time and not to bother him.

Please keep they in mind if you choose CCV / BRV.

I think a better view or suggestion would be to take a boat to the Contemporary or my experience was some of the buses (not MK) would stop at the Contemporary immediately after picking up at WL. So I think the transportation options aren't as bad as it seems on surface. I normally have a car so I can't confirm the buses (for recent time) but years ago this is how it worked. Or better yet take the boat to MK (runs every 15 mins roughly) from there super easy to switch to any resort by bus. All in all I don't think the Transportation from VWL is much worse than many of the other resorts. Now if they drop the boat to MK things would be different in my view.

 

[mamaofsix]

It definitely makes more sense to rent if you are having to finance in order to buy. 12% is crazy high interest! Maybe just because I'm from Canada, but I can get a line of credit easily for only about 6% interest. It seems like a really unwise money managing decision to finance through Disney at those rates. Rent until you can afford to pay cash to own yourself, that would be my advice.

 

[Matty B13]

If your heart is set on buying direct or resale, look into financing from other banks that specialize in timeshares, they have much better rates than Disney offers direct buyers.

 

[MoreTravels]

The rule of 72 for compound interest indicates, 72/12=6. At 12% interest, your debt will double in just 6 years. So if you owe $30,000 then you need to pay back $60,000 in 6 years or $120,000 in 12 years.

That is just too much in my opinion.

 

[DougEMG]

Buying carries more risk with the potential for savings if one holds long enough. Renting has much lower risk and gives you more flexibility. Which are you more comfortable with?

 

[KAT4DISNEY]

Once you throw in the costs of financing it starts to make less sense. Renting is likely a better way to go with less risks and more flexibility.

 

[Mikey15]

The rule of 72 for compound interest indicates, 72/12=6. At 12% interest, your debt will double in just 6 years. So if you owe $30,000 then you need to pay back $60,000 in 6 years or $120,000 in 12 years.

That is just too much in my opinion.

Not that I’d advise using double digit financing cost for any timeshare purchase, but you can’t just “rule of 72” an amortized payment schedule. That tells you compounding for a lump sum, not a debt with monthly repayment (or an investment you’re withdrawing from in retirement).

The $22,218 OP’s talking about financing (the ~$27K less the 20% down) at the $312/mo would cost them $16k in interest over the 10 years. It’s steep, but doesn’t double the initial loan amount.

 

[DVC Doctor]

150 points at CCV for $27,773

12% Interest = Monthly loan amount of $312.19 x 12 months x 10 years = $37,462.80 + 20% down payment of $6,144 = a total cost of $43,606.80

$43,607 - $27,773 = $15,834 in INTEREST payments = about $10.56 per point extra every year for 10 years.

With rental rates at $15pp, you are paying more to be a member than if you simply rent

Summary - DVC works best when buying cash and no financing - and if you finance, you need interest rates below 5%

 

[Jelly563]

none of this takes into account.... addonitis

 

[storey13]

If you really want to buy at CCV (not sure if that is a must), definitely buy resale. I recently bought 150 points at CCV for $140/point saving me thousands over direct.

 

[crvetter]

If you really want to buy at CCV (not sure if that is a must), definitely buy resale. I recently bought 150 points at CCV for $140/point saving me thousands over direct.

This actually depends on the points to be purchased, Use Year desired, and incentives offered at the time. I recently purchased CCV direct because resale was actually the same price at the time (when considering incentives), didn't see the Use Year I wanted, and wouldn't have been able to make a reservation for 50-80 days (had the risk of ROFR). I think you should look at the bottom line when purchasing direct for new resorts not just the Price per Point.

By purchasing direct I got the benefits, bought a resort I wanted to purchase into, got the use year I really wanted based on intended travel, and was able to get 2018 points that I banked directly into 2019 without having to pay MF on the 2018 points.

 

[Frederic Civish]

none of this takes into account.... addonitis

Disney seems to be trying to 'cure' Addonitis. Or at least that is the effect of the very greedy moves that they have made recently.

 

[DaveNan]

Disney seems to be trying to 'cure' Addonitis. Or at least that is the effect of the very greedy moves that they have made recently.

Well said....

1. Big jump in MF
2. 2020 point charts (I know they blinked, but the letter states they still believe they have the right, and the war may rage on.....)
3. Legacy 14 vs DVCII and what that does to resale value and benefit of the points

All in all it has been a big ol' dose of antibiotics for my addonitis. Cured until I get some confidence in the direction of the program.

Went from a BUY to a HOLD. Not a SELL yet, but much closer.