Financing dvc purchase

[dawgs4disney]

We are in the process of buying into DVC? Do most members finance through Disney, or do you find you get a better interest rate if going with a bank back home? Thanks for any advice you may have!

 

[Crystal_27]

There are many options out there: financing through Disney, using a HELOC, financing/refinancing through another bank, paying cash, putting the cost on a Disney Visa for 0% interest for 6 months, etc. Disney's financing is easy and they will finance everybody, yes, but it carries high interest rates (10.75% and 14.25%), so there are pros and cons to doing it through Disney.

That said, we opted to finance through Disney. We put a significant portion down, and, at the end of every year will pay down the loan in large chunks, so that we should have the loan paid off in a couple years. For us, given that we'll be paying it off within a couple of years, it's not worth the time and energy to "shop around" to try and get it refinanced, but that's really sheer laziness on our part, and I know that. If you are diligent about shopping around and have a good credit score, you can absolutely expect to get a better rate from a local bank. Good luck!

 

[hellerjw]

Also, the financing through Disney is setup like a mortgage loan so for most folks the interest is tax deductible as a 2nd home. Getting a HELOC/equity loan these days may be tricky with the declining home values and the Disney financing offers similar tax benefits. All the other options (credit card, personal loan, resell financing, etc) don't have these tax benefits so that may be a deciding factor for you.
Each situation is different so check with your tax advisor.

 

[robert@dvcstore]

We are in the process of buying into DVC? Do most members finance through Disney, or do you find you get a better interest rate if going with a bank back home? Thanks for any advice you may have!

If one of your options are to purchase your DVC points resale, The Timeshare Store, Inc.® offers financing at 10.99% which are competitive with Disney's rates.

Robert

 

[princessbride6205]

I'm curious about this too. If I'm shopping around, what type of loan am I asking the bank for? Does DVC fall into a specific category or just a generic loan?

 

[hellerjw]

Most banks won't give you a loan specifically for a timeshare so you will most likely need to look for a personal loan or a equity loan/line of credit.

 

[JaysAGator]

Not to be a Negative Nancy (especially since I am a dude), but one of the first things I read when we started to consider buying was that financing the purchase price, and paying it off over a decent period of time, can pretty much eliminate all of the savings you are getting over the life of the membership if you buy upfront with cash. I wish I could find the page where they broke the numbers down but I can't seem to right now.

That said, I know many people can't afford to buy with cash up front, but if the savings are eliminated by financing why not just pay cash for Disney vacations and not lock in to a situation where you HAVE to vacation in WDW to use your points? Please don't take it as me trying to dissuade anyone from becoming a member, I am just trying to get info out there that I was glad to get when I first did my research. Whatever you end up doing, good luck with it!!

 

[Dizny Dad]

With most of our contracts, we have placed the purchase on our Disney Visa for the 0% for 6 mo. option, which gives you the reward points to spend when at Disney (yippee ), then if necessary, pay the visa off at the 6 mo mark with an equity line payment. Many states allow your equity interest to be taken as a tax deductable item.

 

[jlewisinsyr]

If one of your options are to purchase your DVC points resale, The Timeshare Store, Inc.® offers financing at 10.99% which are competitive with Disney's rates.

But the The Timeshare Store loan is not treated as a mortgage so the interest is not deductible. So the interest rate is even higher when taking that into consideration.

Not to be a Negative Nancy (especially since I am a dude), but one of the first things I read when we started to consider buying was that financing the purchase price, and paying it off over a decent period of time, can pretty much eliminate all of the savings you are getting over the life of the membership if you buy upfront with cash. I wish I could find the page where they broke the numbers down but I can't seem to right now.

Completely untrue. Even financing a week for 10 years at the higher interest rate will result in savings, often above the $100,000 mark, based on a full term use, annual dues increases at 3% and standard inflationary increases of hotel rates. The break even point is definately extended with financing plus length of time, but it still pays for itself. As a Financial Analyst who loves numbers, this was a key part of our decisions when we considered DVC.

 

[KKKKCS]

We used Disney to finance the original purchase just for the ease of it(we were in the middle of a cruise at the time). We then paid off the contracts (2@180) with our Disney VISA to get the reward dollars. While all this was going on we shopped around for the best home equity loan we could find, paid off the credit card, and now have a much lower interest rate and can deduct the interest on our taxes each year.

 

[bumbershoot]

Not to be a Negative Nancy (especially since I am a dude), but one of the first things I read when we started to consider buying was that financing the purchase price, and paying it off over a decent period of time, can pretty much eliminate all of the savings you are getting over the life of the membership if you buy upfront with cash. I wish I could find the page where they broke the numbers down but I can't seem to right now.

I saw one of those posts a few months back, and there's no absolute loss of savings, there's just a delay in getting to the break even point.

Even financing a week for 10 years at the higher interest rate will result in savings, often above the $100,000 mark, based on a full term use, annual dues increases at 3% and standard inflationary increases of hotel rates. The break even point is definately extended with financing plus length of time, but it still pays for itself. As a Financial Analyst who loves numbers, this was a key part of our decisions when we considered DVC.

Definitely.


I figured what we had been spending and projected what we will be spending, added it all up, and even without inflating those prices, it was insanely higher than financing + annual dues. Throw in how much hotel rooms will go up, even financing gets you a nice savings from what you *would have spent*.



OP, it's considered a mortgage through Disney. You won't get that sort of loan from another source. In fact, wamu wouldn't even sign our notary-needed form, b/c it had the word "mortgage" on it! Sent us across the street to Wells Fargo where they were happy to notarize it (for free, even though we aren't WF customers).

 

[cvrapclark]

Also, we were told that the disney financing is not reflected on your credit report. For us, we have a small business and have to really watch our credit scores and such so this was a benefit.

 

[rentayenta]

^^^ The loan through Disney is invisible.

 

[rmonty02]

We then paid off the contracts (2@180) with our Disney VISA to get the reward dollars.

How did you make your loan payment with the Disney Visa? Was this a balance transfer, balance transfer check? Or did you just give DVC your credit card number and charged the amount to your credit card?

 

[Sandisw]

I know that when I started my BLT purchase, I signed up for the financing so I could get time to arrange other financing.

I was able to do this and when the closing documents came, I called Quality Assurance and told them I didn't want to do the financing anymore and to just charge my card. They did and I just ripped up the finance papers.

But, in my case, the loan never actually happened. But it was a nice way to get the ball rolling without having to wait until I figured out a better way to do it.

 

[jlewisinsyr]

i know that when i started my blt purchase, i signed up for the financing so i could get time to arrange other financing.

I was able to do this and when the closing documents came, i called quality assurance and told them i didn't want to do the financing anymore and to just charge my card. They did and i just ripped up the finance papers.

But, in my case, the loan never actually happened. But it was a nice way to get the ball rolling without having to wait until i figured out a better way to do it.

thread jack: Hi neighbor!

 

[wildernessDad]

Even financing a week for 10 years at the higher interest rate will result in savings, often above the $100,000 mark, based on a full term use, annual dues increases at 3% and standard inflationary increases of hotel rates. The break even point is definately extended with financing plus length of time, but it still pays for itself. As a Financial Analyst who loves numbers, this was a key part of our decisions when we considered DVC.

Yep, I agree with that. The main cost driver over the long haul is dues.

 

[dcfromva]

Do most members finance through Disney, or do you find you get a better interest rate if going with a bank back home? Thanks for any advice you may have!

It is always a good idea to shop around for a better interest rate. If you can find a cheap interest rate, you will save yourself some money--what's not to love about that?

10.75% interest over 10 years adds up to a lot of interest!
Here is a link to a generic interest amortization calculator:
link to bankrate interest amortization calculator

For example, I plugged in $98.00 (the price of 1 point, assuming you take the maximum discount). The interest over 10 years would be $62.33! However, 5.0% interest over the same term would be $26.73.

Another place to look besides what has already been mentioned--a local credit union. Sometimes, they have special introductory rates. (Though, usually the term is 4 or 5 years, so you might have higher payments. )

 

[Sandisw]

thread jack: Hi neighbor!

HI there!!! Isn't a nice day today? Finally some great weather!! Where in Syracuse are you from?

I am in the city.

 

[natasg]

HI there!!! Isn't a nice day today? Finally some great weather!! Where in Syracuse are you from?

I am in the city.

Hey we are from CNY as well...Manlius to be exact. Recently moved from Boston and loving the cost of living and quality of life here