Did a little research on financing

[kenziesmamaw]

I wanted to compare the payments by financing through DVC and getting a low rate credit card and transferring the balance. There is an American Express card with a 4.99% rate until the the transferred amount is paid off.

I used the same terms available at DVC and compared the payment through them and the payment with the card. $13300 at DVC for 120 months at 10.75% costs about $181/month. The same thing with the credit card is $141/month. The calculator figures out how much you have to pay to pay off the balance in the amount of time you specify.

I didn't figure the amount of interest paid.....will have to do that for a further comparison...but for those of us who've been discussing it, thought this might be interesting info. The $40/mth savings with the credit card just about covers the monthly MF at SSR. Worth considering....

 

[kenziesmamaw]

The total amounts paid over 10 years when financing the amounts I listed above are:

DVC - $21,759.65
4.99% card - $16,920.26

Of course, you have to be disciplined with the card route, because if you start using it for purchases, everything changes. That's one of those deals where you get the card, transfer the balance and then cut the card up, make the amount needed to pay it off in the number of years desired and then cancel it.

 

[pplasky]

Be careful. Most credit cards charge interest daily, which can significantly change the amounts you came up with. Also be careful because credit cards apply payments to lower rate balances first, so if you continue to use the credit card and the 4.99% is only promotional, you will be paying at the higher rate for a longer period of time. Just some other things to consider, 10 years is a long time.

 

[LIFERBABE]

Also, with 20% down, DVC's interest rate is 9.75% for 10 years.

You could put 10% down and use the $10 credit for the other half of the downpayment. This is applicable regardless of who you finance through, but it will decrease your loan amount financed and interest calculations.

HTH
Lifer

 

[mel&me]

You need to be very discipline when using credit cards for loans.
But it can be beneficial by doing so.
I have a few cards that I use for just balance transfers with low interest.
I also have a couple rewards type cards for purchases. I built a two story garage and charged the whole thing. Transferred balance to other card. Got low interest and reward points.
I did same thing with DVC. Collected rewards from one card transferred balance received low interest. I also pay extra every month. I have a set amount I pay so as to treat it just like a loan. Never minimum. I will pay everything off in no more than 5 years and save thousands in interest.

 

[kenziesmamaw]

Of course, you have to be disciplined with the card route, because if you start using it for purchases, everything changes. That's one of those deals where you get the card, transfer the balance and then cut the card up, make the amount needed to pay it off in the number of years desired and then cancel it.

I am definitely aware of the danger of taking the low interetst route and ending up with a mess. That's why IF we do it that way, we will do what I said above....make the transfer and then destroy the cards....and then treat it as a loan making regular payments.


I don't think DVC is treating ours like a 20% down payment because we are using the $10 per point option and putting 10% down. I may ask for the 9.75 rate...the worst they can say is no.

I don't want to influence anyone to go the credit card route....that's a personal decision for each buyer. What I wanted was to get specific figures to compare. There is a thread where we've talked at length about the different cards and rates out there, but nobody has put any specifics on payments.

Unfortunately, we have to begin with the 10 year payment plan, but have a goal of paying it off sooner. But even though 10 years is a long time, another 40 years of use after that is even longer so I think the value is there in spite of the interest paid.

 

[pplasky]

If you are putting 10% down and taking the $10/pt, disney will treat it like 20% down. The $10/pt goes towards your down payment. That's how we did it.

 

[kenziesmamaw]

Great! I'll be sure to look for that lower rate.

 

[Geyser Gazer]

Keep in mind that if you finace as a mortgage through Disney you can deduct interest paid on a second home come tax time, not so with a credit card.

 

[rsschneck]

If you itimize your yearly taxes the interest from DVC should help with your tax situation a little.

We went with a home equity loan because of the tax benefit and we got a 3.9% interest rate that Disney can't even begin to match!

 

[PrincessDadx2]

Don't forget that for American Express your payment will be 2% of your balance, so $266 per month to start. It will decline every month as your balance declines.

 

[kenziesmamaw]

Thanks for the info PrincessDadx2.....I'll be sure to check that out thoroughly before going for the card. I don't recall seeing anything in the fine print about the payment amount, but that is worth checking on.

Our equity isn't available to us right now or we would definitely go that route. I may run some numbers on TurboTax to see what the tax benefit will be.

 

[Quadman]

I don't think DVC is treating ours like a 20% down payment because we are using the $10 per point option and putting 10% down. I may ask for the 9.75 rate...the worst they can say is no.[/B]

pplasky is right.....thats how we did it to last month....10% cash down and the $10/pt discount/bonus gets you 20% down and 9.75%........

Not a bad deal......

And heck they did throw in a couple of those snazzy DVC bags, a litho and a handful of SSR pins for trading.

So....Best to calculate with 9.75% int if you're putting 10% down with the bonus.

 

[CapeCodFam]

PrincessDadx2 makes a great point. All cards require a minimum payment of 2% of the balance. We did xfer from our line of credit to a fixed 3.9 on a card. The minimum payment is $250. The interest paid (or not paid ) was more important than the monthly requirement. If you're looking for low, fixed payments, a regular loan may be the better option for you.

For us, I liked the fixed rate card and we'll be paid off in 3.5 years.

 

[kenziesmamaw]

Thanks for the info.....the 2% would be too high for us right now, so we'll just stick with the DVC financing til our equity opens up. We have a line of credit so we can move it to that eventually.

This is why I love this site! There is so much good info and helpful people. I can't wait til our points become available and we can head "home" with everyone else.

 

[kimpossible]

FWIW-

I called BankOne today (Disney Visa) to ask questions about my 3.99 % finance checks. They basically told me that due to the interest compounding daily, I would be better off with a fixed home equity (or the like) loan with a slightly higher rate.

Hope this helps-

Kim

 

[kenziesmamaw]

Yes, I talked with American Express a little bit ago and they said that the minimum payment on the 4.99% balance transfer is 2% of the unpaid balance. We're going to stick with the DVC financing until we can get our home equity loc freed up to transfer the balance.

 

[Cruelladeville]

I think going with Disney might actually be the better idea--I had read on this board about using a credit card, and jumped in with financing a full contract. For the first three years everything was fine, then at Christmas the payment became lost in the mail--it somehow ended up being delivered in the spring--and even one late payment will cancel your great interest rate. I went from 2.99% to 19% in one month's time,and now I have another 6 years to pay off my loan. Many cards even add the back interest, in effect charging you the full cost of financing at the high rate. After experiencing "the school of hard knocks" Disney's financing looks a lot more attractive than it did nearly 4 years ago.

 

[kenziesmamaw]

Ouch, that hurts! I'm so glad that I checked things out here and did some reading before jumping in. Hopefully we'll be able to move it to our equity line in a year or two. Disiciplined spending will help.....not our strong point but we want this bad enough to make it happen.

 

[Disney-Kim]

kenziesmamaw....we thought about doing the same thing with another credit card but the payment was 2.5%.
We did Disney financing and its very affordable. We are making extra payments when we can to help pay it off faster.