Did you take out a loan or pay cash?

[Misty89]

we have a max amount that we can commit to, we would be buying via TSS @ SSR or BLT if it's on resale when we are ready, commiting to 50 - 75 points.
but i wonder if it would be smarter to wait and pay cash?
not sure i could wait 5 years to go back to Disney LOL
Taking a small loan ( $3-4k, would have about $2,500 as a down payment this time next year ) that would be a 3 year or less term, which would get us in sooner, but is that the smartest choice?

I do not want to offend anyone, but if you feel comfortable, can you tell me if you took out a loan or if you saved up and paid cash? and why you did what you did?

thank you

Tina

 

[lapeter]

We just bought BWV in Oct. 2008 and Jan 2009. This is a non-essential luxury item. We paid cash. If somebody has great cash flow, then financing might work, but I feel paying cash is the safest way especially in this economy. This should not be an impulse purchase as this is a expensive commitment.

 

[rigsby25]

I will tell you. We used a home-equity loan. We are almost done paying for the house anyway and we are in our early 50's. The interest rate on that home equity loan is currently 2.4% or lower last time I checked, and I can deduct the interest off of our income tax. When we first used the loan the rate was 4.83. We bought 210 OKW points resale, and I think we payed a little over 15K. I can't remember exactly - but I know we offered lower than they were asking and our offer was accepted and we passed ROFR. I think they asked 72.00/pt. and we offered 70.00/pt. We have since added 100 AKV points that we first put on a credit card that returns 2% on travel, and then paid the credit card with a home equity check.

 

[Misty89]

We just bought BWV in Oct. 2008 and Jan 2009. This is a non-essential luxury item. We paid cash. If somebody has great cash flow, then financing might work, but I feel paying cash is the safest way especially in this economy. This should not be an impulse purchase as this is a expensive commitment.

I understand it is a luxury item, but would'nt all disney trips be? - not just DVC?

sorry i edited my post, i tend to get a little testy

 

[Misty89]

I will tell you. We used a home-equity loan. We are almost done paying for the house anyway and we are in our early 50's. The interest rate on that home equity loan is currently 2.4% or lower last time I checked, and I can deduct the interest off of our income tax. When we first used the loan the rate was 4.83. We bought 210 OKW points resale, and I think we payed a little over 15K. I can't remember exactly - but I know we offered lower than they were asking and our offer was accepted and we passed ROFR. I think they asked 72.00/pt. and we offered 70.00/pt. We have since added 100 AKV points that we first put on a credit card that returns 2% on travel, and then paid the credit card with a home equity check.

That is an option i have never thought of exploring...that would make alot more sense than paying 10.75% or more.
Like i said we have a entire year to decide, but i want to get my ducks in a row.

 

[mom of princessx2]

We did home equity as well. When we took it out in Oct rate was 3.99% which is alot better than any other option we had thought of. We did pay 1/3 in cash and the rest on HELOC which we plan to have paid off in 3 years. I do understand that it is a luxury item which is exactly why we were okay with taking out a loan. As long as you are comfortable with your monthly payment you should be fine. Good luck with your decision

 

[Sandisw]

I did both. I bought a small resale contract (50 pts) and was able to pay for that in cash.

I then added on at BLT, within a week, and am financing it through Disney temporarily. I am in the process of getting other financing in place that is at a much lower rate then 10.75% by Disney. But it was easy to just get the loan for the few months I need it.

When I decided to delve into this, I really looked at whether or not it would fit into my budget. I agree that when you finance, it adds to the "cost" of DVC and it takes longer to recoup your initial investment in it.

But we have gone to Disney for years on vacation and always stay deluxe. While there have been a few times we got great deals (4/3), most times we only got the 15% AAA discount. After running all the numbers, I realized that my yearly costs to WDW, as a DVC member even with the loan, will be less than I currently pay to book and take a trip through CRO.

So, for me, even with the interest I will end up paying, I will 'save' money. Once the loan is paid off (in 18 months), then I will be paying a lot less each year. Of course, the money I am using is earmarked for "vacation" so it was easy for me to justify since I had been waiting and hoping for BLT!

Good luck!!!

 

[WeLoveAriel0505]

We paid cash as we don't want to be in debt except for the house............there are some websites out there that analyze the benefits of cash versus a loan for DVC. My personal opinion is similar to what was noted above........it's a extraordinary luxury for us to be in DVC and we saved up to pay cash for it. Just my thoughts

 

[quentina]

You only live once.....we financed (10 years), many years ago when we did not have cash flow.

Looking back, I do not regret it one bit.

My children have gotten to do and see things that we never would of been able to do if not for DVC.

Too me, if was worth it.

As long as you can afford the payments, I would go for it.

 

[lapeter]

Certainly all Disney trips are a luxury item. In these economic times, many people need to evaluate luxury items vs. necessities.

I understand it is a luxury item, but would'nt all disney trips be? - not just DVC?

sorry i edited my post, i tend to get a little testy

 

[alice99]

We took the Disney Financing (10.75% ) and when I looked at the payments online they were broken down separating principle and interest. Principle paid was $140. .... interest paid was $260.

I could go on vacation on the interest ALONE, without the investment of DVC.
I am a FIRM believer that this is a purchase that should NOT be financed. Any savings is rendered null and void by the ridiculous interest rates. In addition this may be the case with a home equity @ 6% also. You are paying closing costs (for a second time after paying Disney closing costs) and the interest.

Figure the FULL amount you are going to pay at the end of the loan and THAT is the true cost. My loan started as $32,000.00, and the full cost after 10 years of payments was coming out over $50,000.00.

And- I haven't paid a penny of maintenance fees yet in this equation.

My point is , if you have financed this purchase you are most definitely saving nothing on your vacations.

PS - My loan is going to be paid off by the end of April,so I will be paying interest for only 3 months. Yes, it seems that I am caught in this financing disaster, but not really the case.

 

[Pakey]

We paid cash for all 3 of our contracts. The reason: I'm an accountant; it does not make any financial sense to me to pay interest. Getting a tax deduction which equates to +/- 30% of the interest paid (depending on tax bracket) still means 70% in interest that is OOP. I could not do that for a non-necessity; I'm too conservative.

 

[Inkmahm]

We paid cash for all 3 of our contracts. The reason: I'm an accountant; it does not make any financial sense to me to pay interest. Getting a tax deduction which equates to +/- 30% of the interest paid (depending on tax bracket) still means 70% in interest that is OOP. I could not do that for a non-necessity; I'm too conservative.

Same here. Exactly.

 

[logan115]

We paid cash for all 3 of our contracts. The reason: I'm an accountant; it does not make any financial sense to me to pay interest. Getting a tax deduction which equates to +/- 30% of the interest paid (depending on tax bracket) still means 70% in interest that is OOP. I could not do that for a non-necessity; I'm too conservative.

Financing is bad, unless you have a better use for the money at this point in time.

Paying 10% interest is silly, unless you're making 20% on the money. Or if you sleep better at night having that extra cash sitting in your bank account.

Just my .02

Chris

 

[SamSam]

We paid cash for all of our contracts. We would like to add on again, but are waiting till we feel more secure in our finances.
It's really a personal decison, we have just always believed in saving up for major purchases and then paying cash rather than taking out a loan.
Big exceptions being our home and vehicles.

 

[jlewisinsyr]

My point is , if you have financed this purchase you are most definitely saving nothing on your vacations.

Completely untrue. I'm a financial analyst by trade and I ran the numbers over and over, using varying degrees of interest rates, dues increasing, and room rates increasing and found that over the life of the contract we save around $200,000 on our vacations if you financed it for 10 years at 11% with typical inflation, if inflation spikes, the number even becomes more attractive.

Sure the ROI is much longer on a financed purchase, but the savings are still very relevant.

Unfortunately, I'm also a little bit negative on what people think are investments and what are good/bad purchases financed or paid for in cash. It only takes on person opening up a newspaper in this day and age and see all the "great" appreciation one saw in their home has been washed away, and are now sitting on a depreciating asset, a financed depreciating asset that could also be seen as a luxury purchase (everyone needs a place to live, but not everyone needs a 2,000 square foot home for a married couple with 1.5 kids).

 

[ottboy3]

When we first started looking at DVC we were going to finance about half of it. When a resale came about that we liked we were able to save enough that we just paid for it in cash. I agree with most people that its all about comfort. If you can afford the monthly payments on the financing then go for it. It will cost you a bit more in the long run but if thats the only way you are able to do it then so be it.

 

[Spacemonkaay]

...

 

[nunzia]

We paid cash for our OKW resale, and will do a combo of a large down and financing for VGC. I'll focus on paying it off quickly and should be able to so in a year of so. Now, of course I'd rather just pay cash and not finance, but I'd rather pay cash for a house too. Since I will be vacationing at Disney anyway, I'll just use that money to pay off the DVC quicker. Kind of like renting a house. Why would I do that when I can buy?
A huge deciding factor, however, is that VGC points just won't be available for purchase if I waited and saved up all I need. I'm sure they'll sell out quickly and any resales that show up will probably be at high rates. I do think they'll build other DVCs at DLR but not at the Grand.
I say if you have confidence in your income and can pay off quickly, then go for it.

 

[kdepot]

We financed our 160 SSR purchased but, let me explain. Our DS is a seasonal CM and at the time we bought SSR was a $10 discount and CM discount was 25%. So with almost 35% off the price and we put 50% cash down payment we are financing the balance for 10 yrs. We are puting part of our fed income tax return on the principal so our plan is to pay it off in 5 yrs or less.