Current DVC Interest Rates?

[dumbo71]

But you're selectively picking the time periods to best suit your argument. Most of the time we both know that prices inevitably go up. Last year they were running the "Friends and Family" for $83 per point. Today it's $86 plus closing costs AND you get one less year to enjoy the points. Three months ago it was $91 per point plus closing.

When considering the big picture, sitting there waiting for "the next great promotion" is more likely result in a higher price than it will a lower price.

And even if the prices didn't appreciate substantially over the time period you noted, what value would you attach to the 3 years' worth of vacations you experienced from 2004 to present?

I just don't see this as a black and white issue--it isn't a situation where you can either comfortably write a check for 15K or are one step from the poorhouse.

Personally, I think a greater injustice would be to see a family spending $3000+ cash year-after-year for a trip that includes accommodations at the Beach Club or AKL rather than buying into DVC. And if that family should fall into hard times in 5 or 10 years, liquidating the DVC contract could give them the resources to retain other more important assets.

You yourself said that you draw the line at financing a house. Well, by your implied definition, a house isn't a "need" either. There are more economic housing alternatives like apartments, condominiums, mobile homes, etc. The primary reason to buy a house rather than renting is becuase you build equity in the asset over time. The same can be said for a DVC contract--probably not with the same appreciation as a home, but it's better than giving Disney those dollars each year and having nothing to show for it.

Now, I'll stop short of putting one's house and DVC on equal footing. But in my mind it's clear there are situations where families who regularly vacation at Walt Disney World are much better off in the long run financing part of their DVC purchase rather than paying Disney's cash rates for the same accommodations over an extended period. Yes it may cost them thousands of dollars of Interest which others have been able to avoid. But they stand to save tens-of-thousands in the long run.

To issue a blanket condemnation of anyone who finances a DVC purchase is, in my opinion, irresponsible.

Tkraz,

I'll never believe in financing luxury items. It is just the way I live my life.

Your post is very sensible and probably one of the best written posts I've seen here. With that, I concede financing still remains an option for many. There are no one option answers for anything.

I'm not the financing police. As we speak someone is financing a DVC purchase right now. I'm not trying to condemn anyone, just be the other side to the story. Many finance without a problem and feel it was a great decision.

Best of luck to the OP on the decision.

 

[Newcastle]

This is one of the healthiest discussions I have seen on these boards. I appreciate people respectfully sharing their opposing views and I can certainly see merit on both sides. I think that you ultimately have to decide what's right for you based on your own individual circumstances. I agree that waiting until you have the cash in hand is not necessarily an option for everyone and yet I think that you have to be very careful that you're not overextending yourself finanically in an effort to have a piece of the proverbial pie!

 

[veenstra56]

dumbo 71: glad that you clarified that you are, indeed, NOT the financing police. From every other reply you made, I would have sworn that you were. I don't believe in financing DVC either, but I'm certainly not going to imply that those who do are "...poor living paycheck to paycheck... one lost job away from bankruptcy".

The fact is lots of people finance. This certainly doesn't automatically make them irresponsible people on the verge of bankruptcy.

Best of luck to the OP, whatever you decide.

 

[Eeyore's Pride]

Financing is not the enemy. The enemy is lack of financial discipline and planning. I agree with those who say they could pay cash, but choose to finance to free up the cash for an emergency need. We have a 15 year home mortgage which we will probably wind up paying off in 7. We could have "not wasted" all that unneccesary interest and financed it for 7 to begin with.....but life doesn't always go by our script, and we now have to option to pay at the 15 year amount if we had to.

Yes, DVC is a luxury. But it is a luxury that continues to build cherished memories for our family.

 

[sagwanamu]

It all depends on one's situation to finance or pay it cash.

If you can take 20k out of your saving and don't see much of change on your balance, you are one of the lucky one.

But in my case, finance worked just fine, thanks to increasing interest rate.

Do some number crunching:

9.75% (or 10.75%) Interest - Tax deduction - earning of interest by keeping it at the saving's account. And I still have that 20K in my saving's account.

I financed my DVC at 9.75% (+/-) and I take a tax deduction. The net effect of financing is less than 2-3%. I am more than willing to pay 2% interest on any financing....

I only discourage people buying DVC for those who don't save for their retirement and their children's education, and still buy DVC.

But who cares? It's your money ....

 

[Lisa F]

We financed DVC 7-1/2 years ago and I'm glad we did. Yes, we've paid more over the long run than if we paid cash but we didn't have the cash for it at the time (I don't count things like retirement and emergency savings account as "cash for luxury purchases"). When we bought we paid $55/point with the magical beginnings program they had going.

With dues we pay $358/month, which is about what our car payment was when we had a car payment. We bought our car in 2001 for about $20k (plus interest) and could sell it for about $9k now. We bought our DVC for around the same $20k in 1999 and could sell it for around $28k now. The interest on our car payments was not tax deductable, the interest on our DVC is. We bought a honda accord and hope to get a good 15 years out of it, at the time we still had 43 years left on the contract.

For the same money that we used to spend on a couple of weeks per year in an AP discounted deluxe room, we can spend the same amount of time in a 1 bedroom at BWV, which of course, is hardly a comparison... a better comparison would be a studio, where we could easily spend 4 weeks on our points. In a short 2.5 years when our loan is paid off, we will be able to spend 2 weeks in a 1 bedroom at BWV for less than the cost of 1 week in an AP discount deluxe room, basically a 75% discount if you compare a studio to a regular room... plus we've had more wonderful vacations than we can count, including several during christmas/new years eve (when we could NEVER justify the full price holiday rates of $4,000 just for the week, we do love our deluxe resorts), a NYE cruise that was actually LESS costly using points even valuing points at the rental rate because the cash rates were so high and a two week panama canal cruise that we paid for by renting just about one year's worth of points.

Yup, we were pretty darn stupid to finance. I see what you're saying.

 

[VLee]

why not run it thru a CC for points/rewards?

does Chase Visa still have a 6 month interest free promo for DVC?

not sure if we'll stick to our cash only strategy once AK/CR is announced though.

From my experience, just know what you are doing when you use the Chase VISA from Disney for the 6-month "interest-free" promo.

This strategy works great if you don't carry a balance and have no other
balance currently on the card at a lower interest rate.


In my case, I did have a balance of several thousand on this card, but at a FIXED 2.99% rate for the life of the balance.

When I did my add-on, I wanted to put the 20% on this card (to get the points), but asked to make sure that when the six month period expired that my balance at 2.99 would not be affected and that I could pay off the deposit so that the 0% promo would not increase to double digits.

I was assured at that time that it could be done and I verified this with more than one person at Chase. Then before paying the deposit off, I AGAIN called them to make sure that the amount I was paying would pay off the deposit and I would only be left with the previous balance at 2.99%.

Well, that was not the case. When I got the statement, they had applied my extra payment of $2,000 to the balance that I carried at 2.99% and the DVC deposit (which originally had 0% for 6mo) had increased to 15.14%!

I again called and was told that it looked as though I had indeed paid the monthly payment, along with all of the deposit and that they would research it.

Well, I get a letter from Chase about 10 days later...saying that payments are posted first to the lowest interest balance (2.99) and next to a higher interest balance (if there is one), and LAST to any promo balance at 0%.
So in other words, ALL of the payments, as well as the large lump sum payment, were applied to my 2.99% balance and NOT to the promo of 0%. So at the end of 6 mo, the promo balance jumps to 15.14%.

In my case, (maybe they had a record of my calling), that they were going to grant me a one-time favor and would apply my payment to the 0% promo, which would leave the balance staying fixed at 2.99%.

As I said, it works great is you have nothing on your card to start with and you know your payments are going to be applied to the 0% balance. But if you have a balance, be careful, you could get stuck!

 

[salmoneous]

Financing a luxury purchase is not a wise financial decision.

Why not? I know it sounds good, but is there any logical reason why somebody shouldn't finance something just because it is a luxury?

Assume somebody is going to go on Disney vacations every year for the next 15 years, and they currently have no savings outside of an emergency fund. What are the options...

Well, let's assume they run the numbers, and see that Disney hotel rooms will cost them $1500 this year, $1550 the next, $1600 the next ... through $2200 in the 15th year.

Or, they figure they can buy DVC on financing and pay $1800 a year for 15 years.

After running the numbers, the family decides that financing DVC is the better deal financially. Why shouldn't they do it?

To me, financing is only a problem if it puts people in debt. But when buying an asset like DVC that can be sold at any time to pay off the financing, I just don't see a problem. (It might be a problem to use a particular form of financing that is too expensive, but I don't see a problem with the concept of financing.)