DVC loan interest rates

[Girlstar30]

For the month of May, the Orange County Comptroller website shows Disney sold 831 deeds. It also shows Disney purchasers had 511 mortgages. That's 61.49% of purchases for the month were financed.

I wasn't expecting to see numbers like this, but it helps me understand why Disney received so many contracts back during the great recession.

This doesnt surprise me at all, im surprised its not 75%

 

[Brian Noble]

~60% were financed by Disney. I would bet a fair few more were financed by e.g. personal loans, HELOCs, etc.

 

[maui22]

~60% were financed by Disney. I would bet a fair few more were financed by e.g. personal loans, HELOCs, etc.

Excellent point

 

[Kingkonig]

For the month of May, the Orange County Comptroller website shows Disney sold 831 deeds. It also shows Disney purchasers had 511 mortgages. That's 61.49% of purchases for the month were financed.

I wasn't expecting to see numbers like this, but it helps me understand why Disney received so many contracts back during the great recession.

I legitimately am surprised it is that low. I know I have said here that financing a timeshare is a bad investment (and it is!!!), but that doesn't mean it is uncommon, or that it isn't something that my wife and I do at times. We put a 60% downpayment on our contract and are using our cashflow to pay it down faster, but didn't want to dip into our savings too far. Debt financing is a tool we're using, and we could pay the entire thing off today if we needed/wanted to, but paying a small monthly amount (dollar-wise, not interest % wise) in order to have a more...comfortable cash cushion is something we elected to do this go round. Depending on what rates are when we add on next (ideally if it is sub 6% we would, but if it remains at the 9% we are paying.....might do a significant downpayment again unless we catch a good deal).

 

[DVC Doctor]

For the month of May, the Orange County Comptroller website shows Disney sold 831 deeds. It also shows Disney purchasers had 511 mortgages. That's 61.49% of purchases for the month were financed.

I wasn't expecting to see numbers like this, but it helps me understand why Disney received so many contracts back during the great recession.

That seems about right to me. My point creating this tread was to FOCUS on the high interest rate, not judge people that finance a DVC purchase.

My opinion remains the same - the mouse is a little greedy with 12% and considering how strong the market is and that it is a RTU and that Disney can easily rent points or inventory in the event of a default, I still think they should offer competitive 7% or so mortgage rates (but that again in my opinion). In reality, even at 7% it is a huge money maker for Disney as they make major profit off the original building and sales and have a returning customer for the life of the contract and then get the land back in 50 years.

I really don't have a dog in this fight (finance or don't finance) other than I pay annual dues and if the 12% helps lower my annual dues, then I think Disney should raise the interest rate to 20% as that is credit card rates and then use the profit to lower annual dues.

 

[BeachClub2014]

That seems about right to me. My point creating this tread was to FOCUS on the high interest rate, not judge people that finance a DVC purchase.

The 12% you previously referenced isn't even the midpoint of the range. Here's the current APR language:

Interest Rate – We offer fixed interest rates as low as 9.99% (10.0% APR) for a 15-year loan and up to a maximum rate of 18.0% (18.01% APR). The Sample Financing Terms above assume a 10% down payment and a fixed annual rate of 15.0% (15.01% APR) which requires, among certain other criteria: (1) minimum credit score of 675 - 724, (2) current on any primary residence mortgage, (3) no foreclosures in the prior 3 years, (4) no open federal tax liens, (5) no open bankruptcy, (6) no foreclosure or deed-in-lieu in last 7 years on any Disney Vacation Club ownership interest. The rate is reduced by .50% if automated electronic monthly payments are selected and maintained. You may still qualify for financing even if your situation doesn’t match our assumptions. Your loan’s interest rate will depend upon the specific characteristics of your loan transaction and your payment history. Other restrictions may apply.

The example DVC provides under the cost of membership tab lists the payment with a 10% down payment at 15% APR. The 10% APR isn't really out of line with other consumer loans, and I suppose 18% is better than carrying a balance on a credit card.

 

[maui22]

Just for fun, I looked at Marriott Vacation Club. I have no clue about MVC.

Unlike a regular loan, financing a timeshare usually brings along slightly higher interest rates, often hovering between 17.9% and 20% annual percentage rate (APR) for owners.

 

[TheDailyMoo]

I legitimately am surprised it is that low. I know I have said here that financing a timeshare is a bad investment (and it is!!!), but that doesn't mean it is uncommon, or that it isn't something that my wife and I do at times. We put a 60% downpayment on our contract and are using our cashflow to pay it down faster, but didn't want to dip into our savings too far. Debt financing is a tool we're using, and we could pay the entire thing off today if we needed/wanted to, but paying a small monthly amount (dollar-wise, not interest % wise) in order to have a more...comfortable cash cushion is something we elected to do this go round. Depending on what rates are when we add on next (ideally if it is sub 6% we would, but if it remains at the 9% we are paying.....might do a significant downpayment again unless we catch a good deal).

Using debt as a tool for you, not against you...yes. That's exactly it. There's absolutely nothing wrong with financing or going into debt if you know how to manage it. Unfortunately many don't (present company on thread excluded) and that can really do irreparable damage or at best those that misuse it have to really struggle out of it. It's really hard to watch people go through that. Going into debt to own a car or house is beyond normal, it's expected. Going into debt for a depreciating luxury item is also fine...many of us do it...but cannot be lumped into the "need to have" category. At what point do the years and interest rates not make sense anymore? 20 years at 18%? 25 years at 24%? At some point it becomes intolerable no? There are two or three conversations happening in this Venn diagram and I think the intersecting circle seems to be small...my tangential arguments are not helping either lol. This thread did not start out as one aimed at financial literacy or one soliciting advice for making informed financial decisions so I'll leave my opinions at that. No shaming ever intended. It's a healthy-ish conversation though.

 

[DVC Doctor]

The 12% you previously referenced isn't even the midpoint of the range. Here's the current APR language:

Interest Rate – We offer fixed interest rates as low as 9.99% (10.0% APR) for a 15-year loan and up to a maximum rate of 18.0% (18.01% APR). The Sample Financing Terms above assume a 10% down payment and a fixed annual rate of 15.0% (15.01% APR) which requires, among certain other criteria: (1) minimum credit score of 675 - 724, (2) current on any primary residence mortgage, (3) no foreclosures in the prior 3 years, (4) no open federal tax liens, (5) no open bankruptcy, (6) no foreclosure or deed-in-lieu in last 7 years on any Disney Vacation Club ownership interest. The rate is reduced by .50% if automated electronic monthly payments are selected and maintained. You may still qualify for financing even if your situation doesn’t match our assumptions. Your loan’s interest rate will depend upon the specific characteristics of your loan transaction and your payment history. Other restrictions may apply.

The example DVC provides under the cost of membership tab lists the payment with a 10% down payment at 15% APR. The 10% APR isn't really out of line with other consumer loans, and I suppose 18% is better than carrying a balance on a credit card.

^^^ That is even worse....I started this tread after learning about the New and Improved DVC financing announced a few weeks ago as follows:

Disney Vacation Club has revealed a new 15-year finance option for both first-time buyers and current owners adding-on. Interest rates for new owners start at 12.5% for either a 10 or 15 year term. Those rates are reduced to 12% by opting into direct debit of monthly payments. Existing DVC owners start slightly lower, with a base interest rate of 11.5% or 11% with monthly debits.

 

[cruisehopeful]

Existing DVC owners start slightly lower, with a base interest rate of 11.5% or 11% with monthly debits.

I'm not sure where it says that. When you use the add on tool, it shows a lower rate. My rate for a new loan is 8.99%.

 

[DVC Doctor]

I'm not sure where it says that. When you use the add on tool, it shows a lower rate. My rate for a new loan is 8.99%.

Well, that is much closer to a reasonable rate than the published rates