Financing in an unusual situation

[CastAStone]

Oh interesting! I believe I had gotten balance transfer checks from Chase for the first time a month or so ago. I don't know much about them and didn't think I would need them so I shredded them. Is this something that can be requested?

If you log in online you should be able to go to balance transfers and see your active offers.

 

[RichV03]

If I can also add on the financing side, if you only need a year- year and a half there are some creative ways to do it. I did a balance transfer using a discover card to pay for my resale contract. They have a way of doing balance transfers where it is basically just a check they give you to pay anything. They offered 0% interest and a 3% fee for 18 months. So I was able to finance for those 18 months and only paid 3% total and called it a day.

Does this balance transfer apply to loans? Or is this a check I would need to look into before closing?

 

[CanadaDisney05]

Without reading the whole thread, here are my comments:

1) Math: If you finance over 1 year with a 10% interest rate, the prices now have to be 5.5% cheaper than they will be in 1 year from now for it to be a better deal. If you finance over 1 year with a 15% interest rate, the prices now have to be 8.3% cheaper than in 1 year from now. Where will prices be in 1 year from now, nobody knows for sure. In simplest terms, any savings you MIGHT see by buying now is likely to be swept away by interest.

2) Risk: In the best of times, kids come out of school thinking they have these secure jobs lined up only to realize that they over estimated the security or misunderstood their tax/cost of living implications. What happens if she loses her job? What happens if the employer goes under? Let alone, what happens if the economy has not turned around due to Covid? Thats a lot of risk to be taking on at any time, let alone right now.

 

[zakdavid]

Oh interesting! I believe I had gotten balance transfer checks from Chase for the first time a month or so ago. I don't know much about them and didn't think I would need them so I shredded them. Is this something that can be requested?

At lead with discover you can call and ask for checks if you have an offer open

 

[zakdavid]

Does this balance transfer apply to loans? Or is this a check I would need to look into before closing?

I did it after closing. I financed with with Monera and then paid it off the first day via a transfer

 

[kkmauch]

Honestly, again, this is totally your decision. BUT, I will say, we just did something similar. We have owned in the past, always paid cash upfront for it, and we decided that we wanted to own again. So, we just submitted a contract for AKV for 270 points. Yes, there's a chance we'll get ROFR'd given the lower price ($99/pt), but we wanted to take the chance. We decided to finance because we want to get the contract now, at a good price, and pay it off in Dec/Jan when our normal bonuses will be paid (guaranteed) and we'll pay off the loan. So for us, it is only a few months (maybe we close by June or so), maybe 6 months at the max, and then we pay it all off. For us, that was worth the few months if interest to cash in on a good price. Assuming we pass...

 

[RichV03]

Without reading the whole thread, here are my comments:

1) Math: If you finance over 1 year with a 10% interest rate, the prices now have to be 5.5% cheaper than they will be in 1 year from now for it to be a better deal. If you finance over 1 year with a 15% interest rate, the prices now have to be 8.3% cheaper than in 1 year from now. Where will prices be in 1 year from now, nobody knows for sure. In simplest terms, any savings you MIGHT see by buying now is likely to be swept away by interest.

2) Risk: In the best of times, kids come out of school thinking they have these secure jobs lined up only to realize that they over estimated the security or misunderstood their tax/cost of living implications. What happens if she loses her job? What happens if the employer goes under? Let alone, what happens if the economy has not turned around due to Covid? Thats a lot of risk to be taking on at any time, let alone right now.

Thanks for the thoughts. We plan on financing through our credit union(rates are between 3-5% right now). So I like your math, that makes it a littler easier to digest our thoughts(im just thinking half of what numbers you provided, not sure if thats right or not). As far as the risk, I wish we were kids, we are both in mid 30's and have been at our jobs for 10 plus years. Both jobs are very good large companies so we arent worried. Obviously things could change on a dime but at current times we arent expecting any problems in the future unless our own health goes south. We have a large savings(enough to cover 9+ months of current expenses) that we don't want to dip into but could if needed should we lose our jobs. My 3 year plan is if something else comes up, we fully intend to use bonus's, tax returns, overtime and any extra money outside of normal monthly payments. It very well might be less than a year, just figured it wouldnt be more than 3.

 

[RichV03]

Honestly, again, this is totally your decision. BUT, I will say, we just did something similar. We have owned in the past, always paid cash upfront for it, and we decided that we wanted to own again. So, we just submitted a contract for AKV for 270 points. Yes, there's a chance we'll get ROFR'd given the lower price ($99/pt), but we wanted to take the chance. We decided to finance because we want to get the contract now, at a good price, and pay it off in Dec/Jan when our normal bonuses will be paid (guaranteed) and we'll pay off the loan. So for us, it is only a few months (maybe we close by June or so), maybe 6 months at the max, and then we pay it all off. For us, that was worth the few months if interest to cash in on a good price. Assuming we pass...

Thanks for that! That might very well be our case too. Just figured 3 years might be the worst case scenario of paying off loan.

 

[CanadaDisney05]

Thanks for the thoughts. We plan on financing through our credit union(rates are between 3-5% right now). So I like your math, that makes it a littler easier to digest our thoughts(im just thinking half of what numbers you provided, not sure if thats right or not). As far as the risk, I wish we were kids, we are both in mid 30's and have been at our jobs for 10 plus years. Both jobs are very good large companies so we arent worried. Obviously things could change on a dime but at current times we arent expecting any problems in the future unless our own health goes south. We have a large savings(enough to cover 9+ months of current expenses) that we don't want to dip into but could if needed should we lose our jobs. My 3 year plan is if something else comes up, we fully intend to use bonus's, tax returns, overtime and any extra money outside of normal monthly payments. It very well might be less than a year, just figured it wouldnt be more than 3.

1) Your interest rate is going to be around 4%. So you "win" as long as the price today is about 2% or more lower than the price you pay in a year. In reality, assuming were talking about 200 points @ $100/per (OKW), the interest is going to be pretty negligible for 1 year at that type of rate. Your talking about $430.

2) You both have secure jobs. I personally wouldn't make any large purchases over the next few months until this situation gets under control, but that's my personal risk tolerance.

3) You have a healthy savings account. So your financing in order to keep yourself liquid. Thats a bit different than people who generally finance. For example, I refinanced my house and used the funds to pay for my DVC. I had the cash on hand, but I'd rather have that invested in the market while paying a low interest rate. I don't consider that to really be financing my DVC. If anything, I'm just leveraging my investments.

Given these key things, I don't think your plan is bad. The only issue is timing. It's anybody's guess where prices will be in 6 to 12 months from now.

 

[RichV03]

1) Your interest rate is going to be around 4%. So you "win" as long as the price today is about 2% or more lower than the price you pay in a year. In reality, assuming were talking about 200 points @ $100/per (OKW), the interest is going to be pretty negligible for 1 year at that type of rate. Your talking about $430.

2) You both have secure jobs. I personally wouldn't make any large purchases over the next few months until this situation gets under control, but that's my personal risk tolerance.

3) You have a healthy savings account. So your financing in order to keep yourself liquid. Thats a bit different than people who generally finance. For example, I refinanced my house and used the funds to pay for my DVC. I had the cash on hand, but I'd rather have that invested in the market while paying a low interest rate. I don't consider that to really be financing my DVC. If anything, I'm just leveraging my investments.

Given these key things, I don't think your plan is bad. The only issue is timing. It's anybody's guess where prices will be in 6 to 12 months from now.

Thanks for your honest input. The contract is for 125 points at $140. Thought that was decent, have seen some lower and some higher. Contract has all of 19 banked into 20 plus an extra 94 from 18. Don’t think we’ll get to use those but maybe we can try and rent them. Either way not a loss out of our pocket as we aren’t paying MF for 18 or 19 points.

 

[we"reofftoneverland]

I just wouldn’t finance dvc. It is such an unnecessary purchase. But that’s just me. I think if you are asking whether you should do it or not, that means there is a Jiminy Cricket voice in your head telling you not to do it. No one wants to listen to that voice. Instant gratification is so much easier. But you saw what happened to Pinocchio.

 

[DisMomKY]

If I can also add on the financing side, if you only need a year- year and a half there are some creative ways to do it. I did a balance transfer using a discover card to pay for my resale contract. They have a way of doing balance transfers where it is basically just a check they give you to pay anything. They offered 0% interest and a 3% fee for 18 months. So I was able to finance for those 18 months and only paid 3% total and called it a day.

We looked into that and also looked into a HELOC since we are sitting really well in house value and could knock it out quick with a 1.9% interest rate on the HELOC, but are still undecided on what we will do. We are selling 2 smaller contracts so will have a chunk to pay towards it but thought instead of putting it all toward a purchase we could put a portion back to pad the emergency fund even more and then use the HELOC for a portion knowing it will be paid off quickly. It’s hard to decide what to do for sure right now

 

[RichV03]

We looked into that and also looked into a HELOC since we are sitting really well in house value and could knock it out quick with a 1.9% interest rate on the HELOC, but are still undecided on what we will do. We are selling 2 smaller contracts so will have a chunk to pay towards it but thought instead of putting it all toward a purchase we could put a portion back to pad the emergency fund even more and then use the HELOC for a portion knowing it will be paid off quickly. It’s hard to decide what to do for sure right now

This is actually the route we are taking now too after talking with our bank. I didnt realize that by doing that it would technically just be a cash option with title company and not have to deal with the bank. Our bank too said if it comes to a few months being tough we technically only have to pay interest, unless rates start going up and we roll borrowed money into a actual loan then it will be monthly payments. Its nice too that we only will pay interest on money drawn and not on how much is approved.

 

[Starport Seven-Five]

Hi all,

Read through all the replys and am wondering if I made a bad choice. We just put in an offer on the perfect BLT contract for our family. We plan on paying half in cash and financing the rest. I see just about everyone says no to financing but I am wondering if my thought is that bad on it. Recently my mother in law passed away at a young age, we decided at that point that life is short and do what we love when we love it. We figure, yes we could save up another 2-3 years to pay off a contract fully without finance, but thats 2-3 vacations we can enjoy with our two little ones. The small amount we will pay in interest(getting loan through our local credit union so much lower rates) is worth having magical moments now. In 10-15 years I can see the little ones not enjoying as much because they will be in their teens and lets be honest, teens are teens and probably will have other interests at that point. Figure we could resale then as there will still be plenty of years left to use for the next family. Am I really that crazy?

I think a lot of people (myself included) assume that people are financing at 9.9%+ when they talk about financing DVC so I would take the blanket advice with a grain of salt. I will take a loan on things I could buy cash if the interest rate is low enough so I'm obviously not opposed to financing... just people paying astronomical interest rates.

All you can do is do the math on what vacations you are planning to take over the next 2-3 years would cost and compare that to DVC + interest. Prices may go down from here but I think the predictions of sub $100 BLT are over calling it (way too many people that would buy that, myself included).

If I can also add on the financing side, if you only need a year- year and a half there are some creative ways to do it. I did a balance transfer using a discover card to pay for my resale contract. They have a way of doing balance transfers where it is basically just a check they give you to pay anything. They offered 0% interest and a 3% fee for 18 months. So I was able to finance for those 18 months and only paid 3% total and called it a day.

Read the fine print on this regarding what happens if you don't pay it off at 18 months. It's generally a big enough penalty that I wouldn't recommend using it to finance anything you couldn't pay off at the time of purchase.

 

[zakdavid]

Read the fine print on this regarding what happens if you don't pay it off at 18 months. It's generally a big enough penalty that I wouldn't recommend using it to finance anything you couldn't pay off at the time of purchase.
[/QUOTE]
I am with you there but too each his own, I did it knowing I could pay it off in that window and it worked out well.

 

[MonkeyKnifeFight]

Read the fine print on this regarding what happens if you don't pay it off at 18 months. It's generally a big enough penalty that I wouldn't recommend using it to finance anything you couldn't pay off at the time of purchase.

Most balance transfer and new credit card offerings just start accruing interest when the promotional period ends. At least in my experience. This is different than what furniture credit cards, PayPal credit and some others do with deferred interest.
But you are right, verify the terms and conditions. Paying interest on what is left going forward is way less bad than a year and a half of deferred interest on 20k+.

 

[zakdavid]

Most balance transfer and new credit card offerings just start accruing interest when the promotional period ends. At least in my experience. This is different than what furniture credit cards, PayPal credit and some others do with deferred interest.
But you are right, verify the terms and conditions. Paying interest on what is left going forward is way less bad than a year and a half of deferred interest on 20k+.

thats how discover worked

 

[mustinjourney]

IMO, now is a very risky time to take on debt for non-essentials.

My advice is to wait & save. FWIW, I don't think we've reached the bottom of the "dip", so that's another factor in favor of waiting.

Also, your wife's job could evaporate in 4 weeks, since it is easier to not hire someone than to layoff/furlough someone. Right now I would wait and see how low OKW resale prices drop and save up the money.

I agree with both these statements. I just can't fathom how prices are at their lowest right now. Far too much uncertainty (for me at least) to take on debt.

As far as the job -- my first job out of law school I got let go 3 days before I was supposed to start b/c of financial issues with the firm. And I was in the middle of a house being built that had over $13k in escrow already that was non-refundable. So speaking from experience, things are never guaranteed.

In my case -- I was fortunate and got a better job a month later, so we didn't have to back out of the house -- but it was an incredibly stressful time.

I was also extremely fortunate that my timing was 2007 instead of 2008 or later. Right now -- if a job falls through -- it's going to be much tougher to get a replacement.

Lastly -- if employers are faced with having to let people go -- they almost always start with the people that haven't shown up yet as opposed to people already working. So your wife is likely most at risk of all.

I really don't want to be a wet blanket -- but I hate seeing people overextend themselves...particularly when it isn't necessary.

 

[RoseGold]

I would not finance DVC. I guess I might consider it MAYBE if you had no student loans, but that's unlikely for a vet.

This is about risk.

If she gets sick or loses her job (very common right now!!!), or whatever, I wouldn't want both of these obligations hanging over me, especially for something this unnecessary.

Just book at AoA, pay off your student loans, and buy next year. DVC is not going anywhere. In 2007/08, pricing took several months to bottom out, and I don't think we are near the bottom anyway.

 

[RoseGold]

we decided at that point that life is short and do what we love when we love it. We figure, yes we could save up another 2-3 years to pay off a contract fully without finance, but thats 2-3 vacations we can enjoy with our two little ones. The small amount we will pay in interest(getting loan through our local credit union so much lower rates) is worth having magical moments now. In 10-15 years I can see the little ones not enjoying as much because they will be in their teens and lets be honest, teens are teens and probably will have other interests at that point. Figure we could resale then as there will still be plenty of years left to use for the next family. Am I really that crazy?

You could achieve the same thing more cheaply just staying at the AoA Nemo Suite. It's not like your choices were finance DVC or never go on vacation again.