Financing resale contracts?

[Caryn020]

I’m finally taking the plunge and looking at DVC resale contracts. We go yearly (sometimes 2x a year and it just makes sense). I can’t really justify buying direct for almost 20k more so I’m looking at retail.

Unfortunately, I can’t pay it upfront. I can pay more than 10% down on a contract but can’t pay the full contract.

I keep reading that financing is a bad idea. I know interest rates are high but is there any other reason? Thanks!

 

[AstroBlasters]

Have you compared the buy and finance overall costs to just renting points?

 

[RoseGold]

The DVC math is already razor thin against renting, and often there are much cheaper options like cash rooms or off-site. For my August dates, Margaritaville is $150/night. DVC math will never work against that. Even Dolphin at $250 is probably a better choice.

And that's assuming you pay cash for DVC. Add in financing costs and often extortionate interest, I would just wait.

One of the coolest things about DVC resale is that you can just sell it and you won't be out much. That isn't true with financing. It's easy to be underwater and to flip the math fast.

I've seen some math using something like a 4% HELOC (if those even exist anymore???), or people who take out a loan for a few months, I guess sure. But I would never do something that risky for an unnecessary luxury.

Just book your next trip at Dolphin and breathe. DVC is not going anywhere.

 

[AnnaKristoff2013]

I’m finally taking the plunge and looking at DVC resale contracts. We go yearly (sometimes 2x a year and it just makes sense). I can’t really justify buying direct for almost 20k more so I’m looking at retail.

Unfortunately, I can’t pay it upfront. I can pay more than 10% down on a contract but can’t pay the full contract.

I keep reading that financing is a bad idea. I know interest rates are high but is there any other reason? Thanks!

Once you add in financing charges it makes much more sense to just rent points or pay cash rates. This is especially true given that you are likely to get terrible interest rates right now on this type of loan. There is just no way this is worth it. You are probably looking at double-digit interest rates right now. That is nuts.

 

[Matty B13]

We financed our first 2 contracts, but paid them off in under 3 years, but this was back in 2016 when prices were even lower than they are now. Both myself and my wife have very secure jobs and weren't worried about getting laid off, and our mortgage payment was less than $1k/month. If you can't pay it off in under 3 years and/or have a huge mortgage payment, I would strongly suggest you don't finance a purchase of DVC either direct or resale, especially in this economy. Layoff's are happening everyday, and you don't want to get caught short on a payment. Our first 2 contract were fully loaded a year after they were bought, which means that the person who bought them never used any points and had to sell.

 

[pianomanzano]

There really is no other reason besides the math of it all. Depending on the loan length and rate, you could be paying an additional 15%-100% of the contract price. Suddenly a $100/pt SSR contract isn't so hot anymore. And don't forget you're also on the hook for dues and vacation costs if you're using the points instead of renting them out to pay it down quicker.

 

[AnnaKristoff2013]

We financed our first 2 contracts, but paid them off in under 3 years, but this was back in 2016 when prices were even lower than they are now. Both myself and my wife have very secure jobs and weren't worried about getting laid off, and our mortgage payment was less than $1k/month. If you can't pay it off in under 3 years and/or have a huge mortgage payment, I would strongly suggest you don't finance a purchase of DVC either direct or resale, especially in this economy. Layoff's are happening everyday, and you don't want to get caught short on a payment. Our first 2 contract were fully loaded a year after they were bought, which means that the person who bought them never used any points and had to sell.

Interest rates in 2016 were also way lower compared to the interest rates of today.

 

[Matty B13]

Interest rates in 2016 were also way lower compared to the interest rates of today.

Yes they were, our DVC loan was at 5.5%, house mortgage was at 3.25%, car loan was at 0%. Thankfully they are all paid off now!

 

[AnnaKristoff2013]

Yes they were, our DVC loan was at 5.5%, house mortgage was at 3.25%, car loan was at 0%. Thankfully they are all paid off now!

I'm guessing the best OP is going to be able to do right now is about double that.

 

[TinkAgainU]

+1 for just wait. If you are sure you want to do DVC eventually - make it a fun wait by visiting 2-4 resorts each trip and playing with the transportation (boats, skyliner, etc.). Etsy even has booklets you can fill out like passports for each resort you visit - you'll find some that are great "backups" when your future resort is full.

 

[Sandisw]

When we were looking into DVC, we did consider financing. We used the yearly cost we were spending on the room each year and compared that to what we would get buying DVC, which including financing. What we realized is that even if we had financed the contract, we would be getting 5 nights at BLT for the same yearly price we were spending for a room at the CR, using the average discount we might get.

So, in our mind, we were not going to save money but rather get the larger room. Things worked out so we ended up not needing to, but we would have been fine with it. We did run the what if situation if we had to sell, and even with getting only 50% back of the purchase price, we had additional funds to handle paying the balance.

Everyone is different and as long as one understands what financing adds to the purchase, is comfortable with the payments, and know what will happen if one has to sell for an emergency, then its a personal choice.

 

[pianomanzano]

Yes they were, our DVC loan was at 5.5%, house mortgage was at 3.25%, car loan was at 0%. Thankfully they are all paid off now!

I'm a prisoner to my low rates right now. We need a bigger car since our daughter came along (different kind of addonitis), but we're about 2 years into our 0% loan for our current car. We also want to move into the suburbs, but with our current mortgage at 2.375%, no real financial incentive to do so! Don't think we'll be seeing anything like that for awhile (if ever!).

 

[EYL]

I’m finally taking the plunge and looking at DVC resale contracts. We go yearly (sometimes 2x a year and it just makes sense). I can’t really justify buying direct for almost 20k more so I’m looking at retail.

Unfortunately, I can’t pay it upfront. I can pay more than 10% down on a contract but can’t pay the full contract.

I keep reading that financing is a bad idea. I know interest rates are high but is there any other reason? Thanks!

It's mostly about the interest charges. Most will advocate not to finance since it adds on to the cost, but I advocate "finance responsibly". You'll need to do the math to see if it's worth it for you. A 10-year loan of $10,000 at 10% interest means that after the whole term, you would have paid over $5850 in interest. Yes, this is a lot! Look for a personal loan rather than a timeshare loan (which typically has a higher percentage) and pay it off ASAP.

Assuming you fast-track it and pay your loan off in 3 years... That's at least 3 extra DVC vacation memories you will have rather than saving up for it. Kids get older and life changes. Will the interest paid be worth it for you?

Also, If you decide to save for it, prices might go up and/or new restrictions could be in place. If you finance, you would have "locked in the price" and be grandfathered in. Will the interest paid be worth it for you?

I am glad to have financed in January 2019 and quickly repaid it. I can use all my resale points in all future resorts, and I was glad to be able to take my parents to Disney in 2019 since my dad's health has declined. The interest paid was definitely worth it for me!

 

[tom1944]

I'm a prisoner to my low rates right now. We need a bigger car since our daughter came along (different kind of addonitis), but we're about 2 years into our 0% loan for our current car. We also want to move into the suburbs, but with our current mortgage at 2.375%, no real financial incentive to do so! Don't think we'll be seeing anything like that for awhile (if ever!).

As someone who looked to buy my first house in the 80's when mortgages rates were running over 16% I still cannot get past that today's rates are considered high.

It's all relative, I guess.

 

[DonMacGregor]

As someone who looked to buy my first house in the 80's when mortgages rates were running over 16% I still cannot get past that today's rates are considered high.

It's all relative, I guess.

This right here. Those of us old enough to know, know.

I’m one who “financed” my initial direct 200 points at SSR. I had an opportunity to refi my home mortgage down from 6% to 2.95% in 2020. I had the cash to pay for the points, but instead took $30k out in cash on the refi, and ended up with a monthly payment still $700 less than I had been paying (and the $30k was only 6% of the available equity).

 

[WAstateDVCDaddy]

There are options to finance with some of the online finance companies as well. We were considering financing and had looked into financing via the resale company financing (at 10%) vs short term (3 year) loans at around 6%.

3 years at 6%, when we had trips planned within 12 months, it made sense to finance since we wouldn’t have to rent points (or pay cash rates) for the upcoming trips.

 

[Caryn020]

There are options to finance with some of the online finance companies as well. We were considering financing and had looked into financing via the resale company financing (at 10%) vs short term (3 year) loans at around 6%.

3 years at 6%, when we had trips planned within 12 months, it made sense to finance since we wouldn’t have to rent points (or pay cash rates) for the upcoming trips.

Thank you. Where can I look for these companies? Or what should I search on google?

 

[Sandisw]

Thank you. Where can I look for these companies? Or what should I search on google?

I have used https://www.lightstream.com/ for short term financing when I was selling a DVC and buying another and needed to bridge things for a month or two.

 

[WAstateDVCDaddy]

Thank you. Where can I look for these companies? Or what should I search on google?

I used https://www.bestegg.com/ - there are a few of them out there. BestEgg had the lowest rate for my inquiry, but there are several articles online which compare the companies. I think they all have different criteria for calculating credit risk and rates, so compare rates when you’re ready.

 

[RamblinWreck]

I'm a prisoner to my low rates right now. We need a bigger car since our daughter came along (different kind of addonitis), but we're about 2 years into our 0% loan for our current car. We also want to move into the suburbs, but with our current mortgage at 2.375%, no real financial incentive to do so! Don't think we'll be seeing anything like that for awhile (if ever!).

That's where I am with my house!

2.25% on my mortgage. I couldn't dream of "upgrading" to a bigger house. Even selling my house and buying a house of the exact same size and price would be a burden!