DVC Direct Sale vs Resale!!! A way to save MONEY!!!

[arpasquajr]

This is how I bought into DVC.

First, let me state that this would only apply to people with excellent credit, who are well disciplined & don’t mind making larger sized payments.

Four years ago, my DW and I purchased 350 points for around $32,000 with closing costs directly from Disney. I asked my guide if this would go as a cash advance or purchase on my credit card. He told me it would be a purchase.

We decided to charge the entire amount between the 2 of us on 0%, no fees, no interest cards for one year. We obviously made sure that we had nothing on these cards (we each had one). We made the purchase.

The cards were also both cash earning (no rewards, it was actual cash back). After the purchase, we made approx $350.00 back with no interest. Again, we were making payments of anywhere from $500.00 to $1000.00. This varied by month. We were averaging about $650.00/$750.00 month . After the year, we balance transferred the remaining balance out with no fees, no interest for another year. Remember, at this point, we have paid zero interest & fees and are approx $350.00 ahead of the game.
The third year, we balance transferred it to a zero card with a balance transfer fee which was approx $750.00.

Finally, in our last year, we did another balance transfer with no interest for a year but had a balance transfer fee of approx $300.00.

So in total, we paid $1050.00 in fees, but we made $350.00 in cash back so we only paid $700.00 on $32,000.00.

I checked on the resale market and the most they would let me put on a charge card was $1000.00. So you would have to either pay the rest in cash or borrow it. This is not the type of loan that you get at .9 or 1.9% from a bank. Buying from Disney at about 11.5% for 5 years on $32,000.00 would have resulted in roughly $10,000.00 in interest. I don’t know what the aftermarket resale providers are giving for interest rates. I am assuming it is a little less than Disney’s rates.

Now before everyone starts in on me, the point I am making is that for people who have the credit and they don’t want to take the money out of the bank, this is the one advantage you have to buying direct. The interest savings will make up for the savings you would get from the resale market – in most cases.

The bottom line is that you pretty much make out the same and in a lot of cases, better. I found this advantageous for me as I didn’t want to deal with Disney’s first right of refusal and I wanted to just buy in.

I truly understand that this is not for everyone. You have to make sure you are NEVER late on one payment or you will start to accrue interest. You need to make sure that you balance transfer before the year is up. It is not for the unorganized. You need to stay on top of it. I put this out there for the people who have the option of buying direct because it is sometimes easier. This is a way to do it with little interest. I also didn’t know if people were aware that you can charge the whole thing.

Do not charge the entire purchase unless you have a game plan that you can and will stick to!!!​

If you want to use your cash than buy on the resale market. For direct sales this may be an option for you.

 

[Sandisw]

I agree with you that it is a great strategy for those that are disciplined to follow through with a plan. I did this years ago with our credit card debt and thus the reason why we no longer have any. It was also at a time when balance transfers carried no fees which made it awesome!

We used our Disney Visa and got the 6 months with 0% when we bought last year which was enough to carry us to when we needed.

We are considering adding on more points right now and will do it again that way.

Congratulations on getting it paid off and keeping your money working for you!!!

 

[adminjedi]

I am guessing you cancelled the cards before the year was up, or there is a fee and an additional cost to your formula!

We do not use our credit cards as loan instruments. We pay them off in full every month, ie we only spend what we can afford. We have mileage cards and put every expense possible on them (any that don't charge a fee to do so). The result? We have enough free plane tickets to take all 7 of us to DW to enjoy our DVC! Our 7 "free tickets" actually cost us $150 due to card fees.
Especially love putting our DVC point purchases on them!

 

[JimMIA]

Your strategy is a very good example of a thoughtful plan that worked well for you several years ago, but will not be realistic for most prospective buyers today. It might still work for people buying small contracts at BLT who have the good credit, stable income and discipline that are required to pull it off, but one would just have to run the numbers carefully to see if it's really beneficial.

You didn't say which resort you bought, and that would make a world of difference in today's market. With many WDW resorts selling $30-35 per point less resale today, there would have to be a huge interest savings that was not possible through resale just to break even.

In addition, this strategy carries considerable risk. The obvious downside to this strategy is that if any unexpected problems occur (illness, loss of job, divorce, etc), you have a big debt load for a luxury item you may no longer be able to use.

I'm not one of those who is smart enough to look at other people's posts and tell them they should or should not finance a DVC purchase. We pay cash, but I don't presume to tell others what they should do. But folks certainly should be well aware of the risks posed by this type of a strategy.

 

[Sandisw]

I am guessing you cancelled the cards before the year was up, or there is a fee and an additional cost to your formula!

We do not use our credit cards as loan instruments. We pay them off in full every month, ie we only spend what we can afford. We have mileage cards and put every expense possible on them (any that don't charge a fee to do so). The result? We have enough free plane tickets to take all 7 of us to DW to enjoy our DVC! Our 7 "free tickets" actually cost us $150 due to card fees.
Especially love putting our DVC point purchases on them!

Not necessarily. None of the cards I have used that offered me the 0% interest balance transfers had yearly fee. So, as long as I paid off the balance on the card before the promotion was up, there was no cost. I still have some of those cards, although I don't use them and there is no cost to keeping them.

 

[weaver9710]

I tried to post a link but since I have fewer than 10 posts it won't allow me.

Put "creditcardguide" into google. The first thing that comes up is a great source of information on the best credit card deals available.


On one card you can get 1 yr of 0% interest and no annual fee. After 1 year the rate goes to 13.9%. You also get 1.25 miles for every dollar.

Like the previous posters have said...... You would have to have a solid plan going into this.

 

[Coach81]

Credit cards.. are very risky...

 

[jlewisinsyr]

Credit cards.. are very risky...

Carrying cash is even more. Credit cards in themselves are not risky, its abuse by the cardholders of the credit provided.

 

[deide71]

Interesting. I did something similar to bring the cost of my BLT points. I wanted 100 points in 2 50 point contracts. The cost at the time was $107 per point. My husband and I had just received separate Soutwest Visa cards with the offer of 16 frequent flyer credits (enough for a round trip) and $500 in Southwest gift cards after $5000 in spending in the first 3 months. Our purchase price was $10,700 and we split this cost to $5,350 on each card to qualify for the bonus.

So far purchase price $10,700
Southwest gift cards -$1000
2 roundtrips -$500
__________________________
Purchse price $9200

To further off set my cost I rented out my '09 and 2010 points for $11 per point. My purchase was made in January 2010 so I was in my '09 use year (Feb) but did not pay dues on them (dues are based on calander year not use year). Therefore my net after dues was an addittional $1830. $9200-$1830=$7370. This is in line with what I purchased my Saratoga Springs points for back in 2005.

Needless to say I need to consider that in order to get this price I needed to not only part with any points until 2011 put find a renter that was willing to pay a premium for the 11 month window at BLT. Not to mention tie up $7000 in capital on something I wont use for a couple of years. I also received gift cards and airfare vouchers, not as good as cash, but close for a family of 5 that likes to travel.

Even without the credit card manuvers I would have still done better resale, but only if wanted more SSR points. I wanted BLT points. I would like to stay there every 2-3 years in standard view villas which I feel will likely require the 11 month booking window. I also feel BLT's resale value will hold up better in the future but obviously that is a crapshoot as well.

This type of financial manuvering can be done by certain individuals with good cash flow and even better credit, but it is not a tactic I would reccomend for everybody. It was a considerable amount of work just writing it in an internet post, imagine actually doing it!

 

[arpasquajr]

I am guessing you cancelled the cards before the year was up, or there is a fee and an additional cost to your formula!

We do not use our credit cards as loan instruments. We pay them off in full every month, ie we only spend what we can afford. We have mileage cards and put every expense possible on them (any that don't charge a fee to do so). The result? We have enough free plane tickets to take all 7 of us to DW to enjoy our DVC! Our 7 "free tickets" actually cost us $150 due to card fees.
Especially love putting our DVC point purchases on them!

To answer your question the credit cards I used for this purchase carried no annual fee. I will not carry any credit cards that carry an annual fee. Also I pay all my credit cards off every month with the exception of 1 or 2 I may have used in a case like this. Again it will be carfuuly thought out and planed.

 

[arpasquajr]

Carrying cash is even more. Credit cards in themselves are not risky, its abuse by the cardholders of the credit provided.

Exactly!!! Could not have said it better myself.

 

[Snurk71]

We did something similar, but not quite on the longer term payment plan. We had the $20K cash for our point purchase (and the $15K add-on a year later). But we had Disney run all of the payments through our Disney Chase card - so we ended up with $350 in Disney Reward Dollars (or whatever that card's reward is called).

 

[arpasquajr]

Your strategy is a very good example of a thoughtful plan that worked well for you several years ago, but will not be realistic for most prospective buyers today. It might still work for people buying small contracts at BLT who have the good credit, stable income and discipline that are required to pull it off, but one would just have to run the numbers carefully to see if it's really beneficial.

You didn't say which resort you bought, and that would make a world of difference in today's market. With many WDW resorts selling $30-35 per point less resale today, there would have to be a huge interest savings that was not possible through resale just to break even.

In addition, this strategy carries considerable risk. The obvious downside to this strategy is that if any unexpected problems occur (illness, loss of job, divorce, etc), you have a big debt load for a luxury item you may no longer be able to use.

I'm not one of those who is smart enough to look at other people's posts and tell them they should or should not finance a DVC purchase. We pay cash, but I don't presume to tell others what they should do. But folks certainly should be well aware of the risks posed by this type of a strategy.

To answer the question about which resort, it was AKV. I agree with the risk factor. I would have to say my original post was more to do with someone who was going to borrow the money, so the risk is there weather you do credit card charge or take a loan. IMO I believe most people who purchase a 350 point contract probably borrow the money.

I actually had the money but did not want to take that type of a hit on my accounts. I also did not want to pay $10,000.00 in interest. I have done transactions like this before but not to this degree. Believe me when I say... I thought long and hard before doing it. I will say I would do it again, to use the banks $32,000.00 for just about 4 years and only pay $700.00 in total fees.

This was my way of a VERY low interest loan. I was well approved to borrow the money, I just found my own way to not have to pay so much interest.

Again I would not recommend this avenue to someone who is not well disciplined in their finances.

 

[JimMIA]

To answer the question about which resort, it was AKV.

And at the time you purchased, I'd guess there was virtually no market in AKV resales.

Today - four years later - there is, and AKV seems to be selling in the high $70's. I'm not sure what Disney's direct price for AKV is, but I would guess that it's at least $100 per point. That's not the biggest differential around, but certainly much greater than when I saved $4,000+ buying OKW resale with an $11/point difference!

I don't think there is any way your strategy would break even in this market today on a 350 point contract. For a person buying 50 points at BLT...maybe. 350 points anywhere? -- naw.

Don't get me wrong, I think your smart strategy worked out great for you, in your special situation, four years ago. But these are different times, different realities.

 

[GEB@okw]

Credit cards.. are very risky...

Actually, there is no risk to a credit card. The risk on a debit card is very high. No consumer protection, at all, on those debit cards and it is attached to your checking account. Dangerous!

 

[CMOORE185]

This is how I bought into DVC.

First, let me state that this would only apply to people with excellent credit, who are well disciplined & don’t mind making larger sized payments.

Four years ago, my DW and I purchased 350 points for around $32,000 with closing costs directly from Disney. I asked my guide if this would go as a cash advance or purchase on my credit card. He told me it would be a purchase.

We decided to charge the entire amount between the 2 of us on 0%, no fees, no interest cards for one year. We obviously made sure that we had nothing on these cards (we each had one). We made the purchase.

The cards were also both cash earning (no rewards, it was actual cash back). After the purchase, we made approx $350.00 back with no interest. Again, we were making payments of anywhere from $500.00 to $1000.00. This varied by month. We were averaging about $650.00/$750.00 month . After the year, we balance transferred the remaining balance out with no fees, no interest for another year. Remember, at this point, we have paid zero interest & fees and are approx $350.00 ahead of the game.
The third year, we balance transferred it to a zero card with a balance transfer fee which was approx $750.00.

Finally, in our last year, we did another balance transfer with no interest for a year but had a balance transfer fee of approx $300.00.

So in total, we paid $1050.00 in fees, but we made $350.00 in cash back so we only paid $700.00 on $32,000.00.

I checked on the resale market and the most they would let me put on a charge card was $1000.00. So you would have to either pay the rest in cash or borrow it. This is not the type of loan that you get at .9 or 1.9% from a bank. Buying from Disney at about 11.5% for 5 years on $32,000.00 would have resulted in roughly $10,000.00 in interest. I don’t know what the aftermarket resale providers are giving for interest rates. I am assuming it is a little less than Disney’s rates.

Now before everyone starts in on me, the point I am making is that for people who have the credit and they don’t want to take the money out of the bank, this is the one advantage you have to buying direct. The interest savings will make up for the savings you would get from the resale market – in most cases.

The bottom line is that you pretty much make out the same and in a lot of cases, better. I found this advantageous for me as I didn’t want to deal with Disney’s first right of refusal and I wanted to just buy in.

I truly understand that this is not for everyone. You have to make sure you are NEVER late on one payment or you will start to accrue interest. You need to make sure that you balance transfer before the year is up. It is not for the unorganized. You need to stay on top of it. I put this out there for the people who have the option of buying direct because it is sometimes easier. This is a way to do it with little interest. I also didn’t know if people were aware that you can charge the whole thing.

Do not charge the entire purchase unless you have a game plan that you can and will stick to!!!​

If you want to use your cash than buy on the resale market. For direct sales this may be an option for you.

I used this same method to purchase my DVC points, as well as other purchases. The only difference is I would wait for a card that had no transfer fees. They are hard to find, but they are out there. So I have made large purchases in which I have paid zero interest and zero transfer fees. I would cancel the credit cards when I was done with them. I have stopped doing this lately though because I am not sure if this practice adversely effects your credit rating or not. This method is definitely an advantage to people with a great credit rating.

 

[CMOORE185]

Actually, there is no risk to a credit card. The risk on a debit card is very high. No consumer protection, at all, on those debit cards and it is attached to your checking account. Dangerous!

Our bank uses a Visa debit card which has the exact same protections as any Visa card, at least this is what the Bank has told me. It is scary though because it is your Bank account.

 

[FindTheMickeys]

First of all, I refuse to carry a debit card. I use my DVC card for my purchases and pay it off at the end of each month. So I use the money, interest free and I earn Disney points that I use when I travel to the World each year.
Next, I just added on 2 50 point contracts at SSR. I financed with Disney only because the credit limit on my DVC card wouldn't carry the entire amount. So, I'll pay a little interest to Disney as I pay off the contracts with my DVC card... I had a larger credit limit on a card that had 0% for 2 years. So I took advantage of a balance transfer to that card with a small transfer fee. Therefore, ultimately my add ons will cost me about $200...

 

[jlewisinsyr]

Our bank uses a Visa debit card which has the exact same protections as any Visa card, at least this is what the Bank has told me. It is scary though because it is your Bank account.

In a general sense, for the most part that is true, there are some differences and the time line can be very different between a credit and debit card. Also think about it in this way, would you want your cash tied up if something went wrong or just a credit line tied up? Personally I'd choose the latter.