DVC loan interest rates

[DVC Doctor]

I love DVC and have been a member 20+ years, BUT the news that DVC is offering a 15 year loan at 12.5% is a total rip off in my opinion. You can get it down to 12% with direct deposit

To buy a DVC contract, you need some deposit and there is tremendous value in the product and for DVC to be so greedy and not to offer something like 7% is absurd. The extra 5% is a killer for many buyers and they should really stand behind their product and offer a much more reasonable interest rate.

 

[lowlight]

I love DVC and have been a member 20+ years, BUT the news that DVC is offering a 15 year loan at 12.5% is a total rip off in my opinion. You can get it down to 12% with direct deposit

To buy a DVC contract, you need some deposit and there is tremendous value in the product and for DVC to be so greedy and not to offer something like 7% is absurd. The extra 5% is a killer for many buyers and they should really stand behind their product and offer a much more reasonable interest rate.

Oh wow. I financed for a few months until year end bonus time on one of my loans and it was something like 6.99, maybe a little less with autopay, it’s been a while and I forget the exact number. 12.5 has to be pretty close to what places like Monera are doing now.

 

[gvel]

I love DVC and have been a member 20+ years, BUT the news that DVC is offering a 15 year loan at 12.5% is a total rip off in my opinion. You can get it down to 12% with direct deposit

To buy a DVC contract, you need some deposit and there is tremendous value in the product and for DVC to be so greedy and not to offer something like 7% is absurd. The extra 5% is a killer for many buyers and they should really stand behind their product and offer a much more reasonable interest rate.

I completely agree. At these interest rates I genuinely believe that the DVC product does not make much financial sense specially considering that you are already paying top dollar by going direct. To each its own, but in my book if you have to finance at those rates for 15 years to get into a product like DVC you should step back and rerun the numbers and ask yourself if you can really afford it....

 

[Girlstar30]

Totally crazy, but people will justify it, so smart on Disney's part

 

[Kingkonig]

Oh wow. I financed for a few months until year end bonus time on one of my loans and it was something like 6.99, maybe a little less with autopay, it’s been a while and I forget the exact number. 12.5 has to be pretty close to what places like Monera are doing now.

I think what I read was Disney direct has better rates for current direct owners, but you also need to put a significant chunk down. Or if you have great credit, you can do sub-10% even without preferred pricing.

However given most loans are secured by an asset, and timeshares are some of the worst possible (financial at least) assets out there, it makes sense that interest rates for loans backed by them are approaching usury territory. The financial institution underwriting the loan will likely not receive much at all in recoveries for a defaulted loan, and they’re stuck with an asset that is difficult to move. This is why they want to offset their risk on the front end rather than the back end - higher interest rates.

 

[DVC Doctor]

However given most loans are secured by an asset, and timeshares are some of the worst possible (financial at least) assets out there, it makes sense that interest rates for loans backed by them are approaching usury territory. The financial institution underwriting the loan will likely not receive much at all in recoveries for a defaulted loan, and they’re stuck with an asset that is difficult to move. This is why they want to offset their risk on the front end rather than the back end - higher interest rates.

For most timeshares this is very true, BUT DVC has definitely bucked this trend for the past 20+ years. These inflated interest rates show that DVC either has no confidence in their product or are really greedy and this, again, is a huge profit for them. You would think sales would be MUCH higher if the interest rate was 5% or so and that is still a good deal for Disney.

 

[Kingkonig]

For most timeshares this is very true, BUT DVC has definitely bucked this trend for the past 20+ years. These inflated interest rates show that DVC either has no confidence in their product or are really greedy and this, again, is a huge profit for them. You would think sales would be MUCH higher if the interest rate was 5% or so and that is still a good deal for Disney.

Of course sales would be higher if the interest rate was lower, but that doesn’t mean it’s still a good deal for Disney.

If they wanted to get 4-5% on their investment, they would just buy US Treasury bonds. That’s the “risk free investment rate” (not technically risk free, but from an economic standpoint it’s the closest you’ll get). Then you’ve got the “Prime” rate which is what a bank will generally lend with no collateral to their best customers. I’m pretty sure that’s around 7-8% right now. On top of that, sure Disney has some faith in their product, but less in their customer base. Remember, it’s costly to foreclose on a timeshare because it’s technically a real estate interest, so it isn’t really “free” to get it back. Then there’s the obvious “if I’m currently selling this, I don’t want to get more of it back, even if it’s a good product I believe in”, they want to sell out of a resort and move on to the next.

 

[davidhr]

Something I’ve learned working for a popular company that has fans discussing in online “what’s best for the company”, is that people have absolutely no idea what’s best for the company

I can 100% guarantee the optimal loan rate is reviewed frequently by people with much more data than us.

 

[Mouseforward]

When I was buying the DVC rate was 10% for 5 years , And I chose a personal loan at 6% for 3 years but it was when you could get a mortgage for 3% so I guess it is still in line. Basically everything is 3% higher.

 

[DVC Doctor]

Something I’ve learned working for a popular company that has fans discussing in online “what’s best for the company”, is that people have absolutely no idea what’s best for the company

I can 100% guarantee the optimal loan rate is reviewed frequently by people with much more data than us.

Yep, this is the "optimal loan rate" for Disney, but NOT for their customers or fan base.

I never implied this would be best for Disney, I am just saying I feel the mouse is really getting greedy with 12.5% interest when even 7-8% would be a healthy profit and still strike a nice balance for borrowers. I guess that 20% interest (credit card rates) would even be better for Disney profit if they decide to get really greedy.

I am just glad I own $0 on all my contracts other than annual dues.

 

[davidhr]

Yep, this is the "optimal loan rate" for Disney, but NOT for their customers or fan base.

I never implied this would be best for Disney, I am just saying I feel the mouse is really getting greedy with 12.5% interest when even 7-8% would be a healthy profit and still strike a nice balance for borrowers. I guess that 20% interest (credit card rates) would even be better for Disney profit if they decide to get really greedy.

I am just glad I own $0 on all my contracts other than annual dues.

Not saying this in a bad way, but I never get these comments.

Yes, they’re greedy. And that’s what a for profit company is expected to do: Maximize their profits.

 

[DVC Doctor]

I have always thought DVC was a good deal and there has never been a bad time to join, but with the current prices, the current point chart for new resorts, and the mega high interest rate, I really don't see how the math can work for new buyers. Well, if you extrapolate it over 40 years, the fuzzy math is tolerable, but the first 5-10-15 years are probably more expensive to buy than it is to rent or just pay cash rates with no long term commitment.

High buy-in price and high annual dues and high point charts are doable, but when you allocate 12% interest, buying greatly exceeds the cost to rent or pay cash rates and buying no longer makes no sense to me.

 

[Mouseforward]

I have always thought DVC was a good deal and there has never been a bad time to join, but with the current prices, the current point chart for new resorts, and the mega high interest rate, I really don't see how the math can work for new buyers. Well, if you extrapolate it over 40 years, the fuzzy math is tolerable, but the first 5-10-15 years are probably more expensive to buy than it is to rent or just pay cash rates with no long term commitment.

High buy-in price and high annual dues and high point charts are doable, but when you allocate 12% interest, buying greatly exceeds the cost to rent or pay cash rates and buying no longer makes no sense to me.

Even resale prices at Boardwalk and Beach club are currently not a good deal vs. Renting points.

It’s only been a little over three years since I purchased and it’s gone up $50 a point for direct. The only thing that makes it a deal is the ridiculously high price that Riviera charges for cash rooms at the rack rate. Since they’re charging almost 1000 a night for a studio it’s not hard to make fuzzy math work. I really have to question who’s actually paying those rack rates..

 

[muppets3d]

If we're only going by what makes the most financial sense for the buyer, financing wouldn't be an option at all.

 

[Kingkonig]

If we're only going by what makes the most financial sense for the buyer, financing wouldn't be an option at all.

Exactly. Cause while this may be one of the best (if not the best) timeshare programs out there….its still a timeshare.

 

[Girlstar30]

The option is there, but people dont need to take that option or they can take it and pay it off faster.

15 years is a really long time to pay off a dvc loan at any rate, maybe they're just testing it out and seeing if people want to go for it, with sales slowing it might not be having the success they thought it might.

There are a lot of people that dont understand how loan amortization works. I would bet that some people would look at a 15% interest rate and be like hey im only paying 15% of $29,000, $4,350 isn't so bad and only paying $250 a month for DVC vacations for life!

Or maybe someone does understand it and doesnt care, no matter how you slice it for $250 a month they are going on Disney vacations with their family they otherwise couldnt pay upfront to go on year after year.

In 15 years it will be paid off and they dont regret it. Not recommending it, just saying that Disney on their end, is opening it up to people who otherwise couldnt go and want the option. Disney is taking a larger risk on them = more interest.

 

[Girlstar30]

Even resale prices at Boardwalk and Beach club are currently not a good deal vs. Renting points.

It’s only been a little over three years since I purchased and it’s gone up $50 a point for direct. The only thing that makes it a deal is the ridiculously high price that Riviera charges for cash rooms at the rack rate. Since they’re charging almost 1000 a night for a studio it’s not hard to make fuzzy math work. I really have to question who’s actually paying those rack rates..

I paid rack rate for one night at ccv because I wanted to stay and it was already sold out to rent dvc points from davids and rental store, but I wouldnt have paid 1k

 

[MicheyMouse]

If both husband and wife are on the contract and want to finance part direct with Disney, do they do credit pulls on both? Will each be a hard pull for Direct financing?

 

[TheDailyMoo]

I live in an upper middle class area and I can honestly say a majority of the people that live here are probably living in some sort of debt beyond their means. Dare I say a majority of Americans do the same. Read Rich Dad Poor Dad. There's usually a reason wealthy people are wealthy (assuming self made) and one common denominator is that when they borrow money it's to make more money with it not to use it for a depreciating asset. That said...we only go around on this Spaceship Earth once and if that's what people wanna go into debt for then so be it. Everyone has different goals. To ME personally paying an interest rate like that for a direct contract would kill me. I am very frugal with my money...but I also lease a new car every 3 years...huge waste of money...but I want a new car with a warranty every 3 years so I "waste my money" doing it but I'm more than happy.

TL:dr Spend however much you want on what you want even if it's a bad idea but just be aware there are consequences to going into debt.

 

[Joroc0801]

I live in an upper middle class area and I can honestly say a majority of the people that live here are probably living in some sort of debt beyond their means. Dare I say a majority of Americans do the same. Read Rich Dad Poor Dad. There's usually a reason wealthy people are wealthy (assuming self made) and one common denominator is that when they borrow money it's to make more money with it not to use it for a depreciating asset. That said...we only go around on this Spaceship Earth once and if that's what people wanna go into debt for then so be it. Everyone has different goals. To ME personally paying an interest rate like that for a direct contract would kill me. I am very frugal with my money...but I also lease a new car every 3 years...huge waste of money...but I want a new car with a warranty every 3 years so I "waste my money" doing it but I'm more than happy.

TL:dr Spend however much you want on what you want even if it's a bad idea but just be aware there are consequences to going into debt.

I was typing up something very similar. If Disney vacations are important to your overall happiness in life then go for it. But you can still stay at a value resort or an off site location and fulfill your Disney dreams. I've seen many posts in Facebook groups asking about how to sell quick because people have fallen on hard times or circumstances changed personally and they have a loan to payoff. It's a big committment and one I wouldn't want to walk into with a loan as baggage on the experience.

Another post above quoted 250 a month but that doesn't even cover the interest on top of paying principal down while still having maintenance fees to take care of each year.