Direct Purchase Financing

[scoobdoo]

Blows my mind that they convince people to finance these timeshare purchases at those rates. Unreal

Are they though? My advisor simply asked 'cash or finance', there was no attempt to convince otherwise.

 

[RoseGold]

Also this mindset is essentially saying “if you can’t afford to pay for your next 50 years of vacations in cash now, than you can’t afford to vacation.

That isn't all what is being said here, actually the opposite. Unlike most timeshare systems, DVC has really high dues. The upfront purchase is relatively cheap compared to the dues cost. You think buy in is high? You haven't even gotten to dues. Just because you can't afford a luxury timeshare, doesn't mean you can't afford a vacation, just not this one.

If you can't afford to pay cash, then you shouldn't be doing this IMO, because it flips the math. Don't pay 10% on this for even a year plus the costs to finance. Just do it next year! DVC is not going anywhere. It's not like there are any shortages of nice hotel rooms or other timeshares in Orlando. Sure, maybe you can pay for it in a few months or need to sell your boat or whatever, sure. Then sell the boat. But a huge number of these are foreclosed, and that isn't something I could live with myself for encouraging.

 

[db24]

Not always true... We bought OKW direct before the increase, and my guide was very resistant on this. They wanted full payment a couple weeks after downpayment. I ended up getting him to split it into two payments over a month because I didn't have quite enough room on the card.

If you get a guide that doesn't want to let you do 90 day payments get a new guide. I have come to learn that it is luck of the draw if you get a guide that knows what they are doing or one that doesn't know anything. I had a guide tell me I can't buy 25 points cash AKV add on and I can't do 90 days on any size contract. Called and got a new guide and everything was extremely smooth. I have now used my sales guide twice and just recently added on and did the 90 days payment.

 

[EYL]

I see this a lot, and while I don’t completely disagree the idea of it, there‘s much more to the equation than just paying cash. For example, we financed our resale through Lightstream because most of our discretionary cash was tied up in stock during a downturn in the market, I’d rather pay some interest than sell off stocks at a loss just so I could say I paid cash for a luxury item. And we ended up paying it off in about 5 months.

Also this mindset is essentially saying “if you can’t afford to pay for your next 50 years of vacations in cash now, than you can’t afford to vacation.” Sure, if you are retired and don’t have earnings coming in other than your retirement investments, I’d agree, you can’t afford to pay interest for a luxury item. But someone who is still working, earning money, might not have a lump sum of 30 grand in their account they can afford to just lay down for future vacations, but they surely can afford a reasonable interest rate that still will save them money over the long haul. Another example, were you to buy 150 points at RIV direct today, you’d get the $2250 incentive discount. On a Lightstream loan for 3 years at 5.99%, paid off in just over 2 years you’d pay a similar amount in interest to the incentive. If you saved for 2 years then bought, will the incentive be there? Mostly likely not. Will the current prices remain the same for those 2 years? Absolutely not. My point is, there are situations and math that can support that financing isn’t the bad deal everyone plays it up to be. If all things were equal, sure, pay cash, but they aren’t, so sometimes reasonable financing makes sense.

Two caveats, Disney financing is not reasonable, nor is paying it off over 10 years.

I‘ll add another vote for looking into Lightstream, super easy, they’ll send you the money the same day at reasonable rates. Also, remember, Disney will let you split up your direct payments over 90 days.

Agree with this. My credo is "finance responsibly" - know what you're getting into and know the other options. Paying cash is the best thing to do, obviously. But in the time that it might take for you to save the money, incentives might expire, price/point could increase, your favorite resort might sell out, and the minimum could increase again. All that would set you back to saving again. Also, the immediate memories that you can create with your family could be priceless.

I used Lightstream in early-2019 when I purchased and returned it well within 9 months. Because of that, we were able to reserve a trip with my parents to their dream resort - PVB. Good thing we made those memories, because the pandemic came a few months after and we don't foresee travelling with them for awhile.

 

[princesscinderella]

Although I’ll just pay cash if I buy more points, I’m always curious when I read the recommendations to use your Chase Visa w/ 6 months free interest to buy DVC - if you want the minimum blue card 150 points at Riviera that’s $30,000 - do most folks have that amount of credit on their Chase Visa?

We put our entire RIV purchase on our Disney visa and have a high credit limit but not 40k like our purchase price. We had them spread the charges over a few weeks so I’d send 10k payment to the so there would be credit available to charge the next portion. That way we were able to get the Disney rewards dollars to help pay our dues. We left the last 10k to be paid over the 6 month time frame at 0%.

 

[npatellye]

Although I’ll just pay cash if I buy more points, I’m always curious when I read the recommendations to use your Chase Visa w/ 6 months free interest to buy DVC - if you want the minimum blue card 150 points at Riviera that’s $30,000 - do most folks have that amount of credit on their Chase Visa?

I had my most recent purchase (150 point add on) split into three charges on three separate weeks. I paid the first two charges off before the third one hit. The third one was the bulk of the cost. So most of my purchase is now at 0% for 6 months. I don’t like to raid my savings account for things that are frills. The 6 months at 0% allows me to feel better about not touching the savings.

 

[Stargazer65]

I don’t like to raid my savings account for things that are frills.

Me neither. Although I broke that policy, and felt guilty until I built my emergency savings back up.
Oh, the mental tap dancing I used to justify it as a a "Disney vacation emergency".

 

[DisneyOutsider]

Are they though? My advisor simply asked 'cash or finance', there was no attempt to convince otherwise.

Are they what? I don't understand the question.

 

[Jwaire]

The biggest advantage to financing from Disney is it's a mortgage, but they hold the note. For some people, that mortgage interest is tax deductible. They also don't report to the credit bureaus other than the initial credit pull. Rates vary based on credit score. My direct finance from Disney was 8.99% with 20% down. I wanted to preserve my excellent credit score and knew I would pay it off much sooner than 10 years anyway so the ~2-3% interest I would have saved with a personal loan or HELOC didn't matter as much to me.

They also let you pay your loan with a credit card, which is unusual. So, you can potentially rack up credit card points and get another 24-30 days to make that monthly payment if you game it right.

I've also wondered if you use your Disney Visa to make a DVC loan payment, do you get 6 months no-interest financing on that payment? But, I've never tried it. You could potentially game that by making larger principal only payments to the loan and then paying them off over 6 months until you have the mortgage paid off.

For my resale contract, I used Monera, but recently paid it off. They were also easy to deal with and offered similar rates to Disney. In that situation, I saved quite a bit per point ($15 or more) by going ahead and purchasing resale at that time versus waiting until I had all the cash.

 

[AaronEuth]

The biggest advantage to financing from Disney is it's a mortgage, but they hold the note. For some people, that mortgage interest is tax deductible. They also don't report to the credit bureaus other than the initial credit pull. Rates vary based on credit score. My direct finance from Disney was 8.99% with 20% down. I wanted to preserve my excellent credit score and knew I would pay it off much sooner than 10 years anyway so the ~2-3% interest I would have saved with a personal loan or HELOC didn't matter as much to me.

They also let you pay your loan with a credit card, which is unusual. So, you can potentially rack up credit card points and get another 24-30 days to make that monthly payment if you game it right.

I've also wondered if you use your Disney Visa to make a DVC loan payment, do you get 6 months no-interest financing on that payment? But, I've never tried it. You could potentially game that by making larger principal only payments to the loan and then paying them off over 6 months until you have the mortgage paid off.

For my resale contract, I used Monera, but recently paid it off. They were also easy to deal with and offered similar rates to Disney. In that situation, I saved quite a bit per point ($15 or more) by going ahead and purchasing resale at that time versus waiting until I had all the cash.

This is one of the biggest advantages to financing through Disney. My rate was 8.99 on 50% down. That is a few points more than the personal loan I was offered through my bank. But the Disney loan doesn't get reported to the credit agencies. I suspect that means I will save more than the interest difference long term by being able to get better rates on a more significant purchase, that I won't pay off as quickly.

 

[DisneyOutsider]

This is one of the biggest advantages to financing through Disney. My rate was 8.99 on 50% down. That is a few points more than the personal loan I was offered through my bank. But the Disney loan doesn't get reported to the credit agencies. I suspect that means I will save more than the interest difference long term by being able to get better rates on a more significant purchase, that I won't pay off as quickly.

I may have misunderstood you and I'm sorry if that's the case, but taking out a new loan doesn't necessarily hurt your credit score. In many cases it will actually improve your credit score assuming you make timely payments. The only obvious negative is you get a hard inquiry, but that is usually a very small and temporary factor

 

[DVCanadian]

HELOC is excellent for temporary financing.

 

[GrtDisGuy]

Are they what? I don't understand the question.

I think scoobdoo is trying to say that Disney is not really trying to convince people to take the loan (tell me if I'm wrong). Disney simply presents it as an option. My guides (my first retired) have been very good at not pushing or even mentioning the loan as an option. I'm thinking the loan is a big money maker for them and allows for an easy fast close - but I think the guides seem to handle it very well. Has anyone else felt the guides push the loan?

 

[jodifla]

We financed our purchase 25 years ago through Disney. At the time, the interest rates weren't that far off the rates of those days but 14.99 seems VERY high to me with rates today.

We paid our loan off early, and the price was so low at $62 a point it was only a 5 year loan anyway.

People on these boards will argue with you saying you can't afford it if you have to finance, but we didn't find that true at all. We bought before we had kids and we both had high paying jobs. It has worked out absolutely perfectly.

Financing from Disney was super super easy and immediate.

 

[scoobdoo]

I think scoobdoo is trying to say that Disney is not really trying to convince people to take the loan (tell me if I'm wrong). Disney simply presents it as an option. My guides (my first retired) have been very good at not pushing or even mentioning the loan as an option. I'm thinking the loan is a big money maker for them and allows for an easy fast close - but I think the guides seem to handle it very well. Has anyone else felt the guides push the loan?

exactly right. My guide never mentioned the loan option, and certainly didn’t push it.

 

[DisneyOutsider]

I think scoobdoo is trying to say that Disney is not really trying to convince people to take the loan (tell me if I'm wrong). Disney simply presents it as an option. My guides (my first retired) have been very good at not pushing or even mentioning the loan as an option. I'm thinking the loan is a big money maker for them and allows for an easy fast close - but I think the guides seem to handle it very well. Has anyone else felt the guides push the loan?

exactly right. My guide never mentioned the loan option, and certainly didn’t push it.

I wasn't trying to suggest that DVC guides are twisting arms or being deceptive at all, but the reality is that most people who finance at these terms do so because paying cash is not an option for them.

At the end of the day they are still salespeople.. and getting you to sign on the dotted is a result of their sales pitch plus your decision making. But if the language above the dotted line says you'll pay them back at 15%.. that's one hell of a sales job. Either that or one foolish customer. Probably a little of both.

 

[vacay77]

We financed through Disney - the best they could give us was a 9.99% interest rate for a 10 year loan. I contacted our bank to see if we could get a lower interest rate but they told me that was not something they could do. We ended up refinancing our house to take advantage of the low interest rates right now (we got a 2.85 interest rate), and we were able to get the money that way to pay off the DVC, too. So that might be another option if you have enough equity in your home and are thinking of refinancing anyway. It worked out for us because we wanted to refinance our house in any case, especially because the interest rates are currently so low.

 

[T-i-double-guh-er]

Financing allowed us to buy just before the blue card minimum went from 75 to 100 points. We then paid the loan off in a year. If we had waited until we had the cash to buy, the minimum would have been 125 points, and the price per point would have been higher.

 

[bakerworld]

If you belong to a credit union, you could probably swing a long from them for 2/3 less and there is also a entity call Monera that provides loans at a reasonable rate. We purchased our first thru Disney at their rate and refinanced the loan thru our credit union for a better rate for less years. We weren't in a situation to repay in 6 months but 36 months was doable.

By the way, there is a whole echelon of people who lose their **it about financing DVC - don't let that deter you.

 

[brazzledazzler]

There is a lot of great information in these threads. Also, great insight from personal experience with DVC purchases.

Saying that, I don’t recommend taking financial advice from strangers on the internet.

Good luck with the purchase! I’m so excited for you and your family.