Financing Resale Questions

[cobbler]

I've done a search and don't think I came across entirely information that I'm looking for so if I missed it links would be good too.

This is strictly curiosity (and so I can advise family / friends when it comes up). What is the current interest rate for buying direct through DVC if needing to finance? Is there still a minimum 10% down? Also what is the interest rate if buying resale? Are there other finance places beside Monera? I know Disney does a credit check but the loan doesn't end up on your credit report, is the same true if financing through resale?

Basically what would the process be like if wanting to purchase resale and needing to finance - interest rates, credit checks, closing costs (I think it varies by contract but is the amount established similar as the MF's are - $$ per point of contract?

Thanks

 

[Dean]

I've done a search and don't think I came across entirely information that I'm looking for so if I missed it links would be good too.

This is strictly curiosity (and so I can advise family / friends when it comes up). What is the current interest rate for buying direct through DVC if needing to finance? Is there still a minimum 10% down? Also what is the interest rate if buying resale? Are there other finance places beside Monera? I know Disney does a credit check but the loan doesn't end up on your credit report, is the same true if financing through resale?

Basically what would the process be like if wanting to purchase resale and needing to finance - interest rates, credit checks, closing costs (I think it varies by contract but is the amount established similar as the MF's are - $$ per point of contract?

Thanks

The 3 resale financing options I know of are Monera, timesharelending.net & lightstream. Of those lightstream normally has the best rates. I don't have the rate tables and I wouldn't try to keep up with it for possible future recommendations. I've seen recent reports of 10-15% and that's consistent with the charts I've seen at light stream. I'm sure others will have more that have investigated recently. IMO the best recommendation one could make in this area is don't and buy resale for most situations. One should contact each of the options and see what specifics are for one's situation.

 

[Marriedbythemouse]

We used Lightstream a few years ago and paid it off in a couple months. Lightstream is a personal loan, not tied to the timeshare deed. So when you close it's like a cash deal. I think the interest was 6% but that was a few years ago. They were simple to deal with and I will use them again. We are looking at a construction loan for our back yard and lightstream will be who we go with. Good luck!
Edit - With Lightstream there is no "downpayment" needed. It's a personal loan so you just borrow what you need. You have to declare what you are borrowing for, but it's not tied to your purchase.

 

[cobbler]

Thanks Dean and Debbie

We used Lightstream a few years ago and paid it off in a couple months. Lightstream is a personal loan, not tied to the timeshare deed. So when you close it's like a cash deal. I think the interest was 6% but that was a few years ago. They were simple to deal with and I will use them again. We are looking at a construction loan for our back yard and lightstream will be who we go with. Good luck!
Edit - With Lightstream there is no "downpayment" needed. It's a personal loan so you just borrow what you need. You have to declare what you are borrowing for, but it's not tied to your purchase.

Debbie -
So this loan would show up on your credit report then and that is good information to know too. I just like to be prepared to answer questions, should they arise.
Do you - or anyone - happen to know of the others have the loans appear on the credit report?

 

[Marriedbythemouse]

Thanks Dean and Debbie



Debbie -
So this loan would show up on your credit report then and that is good information to know too. I just like to be prepared to answer questions, should they arise.
Do you - or anyone - happen to know of the others have the loans appear on the credit report?

Yes I assume it would. We paid it off and I never noticed it on the credit report, I guess if I look it will show up as a paid loan. I never really thought about it. We own our home and our cars, aside from fraud monitoring we don't really pay attention to the credit report.

 

[iheartcoasters]

Would you be able to get a personal loan through your own bank? Why would you go through one of the places previously mentioned?
Thanks!
Terri
Waiting for points at Aulani

 

[Dean]

Thanks Dean and Debbie



Debbie -
So this loan would show up on your credit report then and that is good information to know too. I just like to be prepared to answer questions, should they arise.
Do you - or anyone - happen to know of the others have the loans appear on the credit report?

I'm told Monera doesn't show on your credit report and doesn't do a hard inquiry up front but Lightstream does do a hard inquiry. I assume they would all report if there was a problem with the loans. Personally I think it's foolish to finance and worry about inquiry's and reporting but I know some disagree. There are other options like a local bank/CU for a personal loan and sometimes they are more than competitive. One option often mentioned is a HELOC and IMO, it's about the worst way in the world one can make a luxury purchase by putting one's home at risk. My personal view is that if it's important to someone that can afford it, they can save up and pay cash fairly quickly and if they can't/don't either they can't afford it or it's not that important to them. But the timeshare industry likely wouldn't exist if people made smart choices, same for Best Buy which makes far more on financing/extended warranties than on sales as do car dealerships (esp leases).

 

[BillPA]

IMHO, if you need to finance a luxury item like DVC, you really can't afford it.

 

[Matty B13]

Just the other side of the coin, people finance luxury cars and boats and other high priced items all the time, many with higher price tags. Shop around for rates on the internet other than the ones that come up with when researching DVC resales.

 

[DisneyRegulars]

We used our credit union and got a personal loan for 4% interest. That may be an option for you as well.

 

[Dean]

Just the other side of the coin, people finance luxury cars and boats and other high priced items all the time, many with higher price tags. Shop around for rates on the internet other than the ones that come up with when researching DVC resales.

It adds risk best case scenario but it's often a recipe for disaster. Often those people are driving their retirement.

 

[Matty B13]

It adds risk best case scenario but it's often a recipe for disaster. Often those people are driving their retirement.

I hope not unless it is a Ferrari.......

 

[Dean]

I hope not unless it is a Ferrari.......

A single Ferrari or a couple of SUV's aren't that much difference. One of the issues is it's not generally a single option but a pattern of choices over time. Basically death by a thousand paper cuts. Some people win Russian Roulette but some don't. Why play and take the risk?

 

[DisneyRegulars]

Some people win Russian Roulette but some don't. Why play and take the risk?

Because if I play the "finance the resale timeshare game" and something goes wrong, WORST case scenario I sell my resale timeshare for a few thousand dollars lost after years and years of enjoyment. I'm willing to take that risk. I would not be willing to play Russian Roulette, way different game with way different consequences. Personally if I sold my resale contracts now, I would be up a couple thousand dollars, even selling them stripped. I'm glad I played the game.

 

[Dean]

Because if I play the "finance the resale timeshare game" and something goes wrong, WORST case scenario I sell my resale timeshare for a few thousand dollars lost after years and years of enjoyment. I'm willing to take that risk. I would not be willing to play Russian Roulette, way different game with way different consequences. Personally if I sold my resale contracts now, I would be up a couple thousand dollars, even selling them stripped. I'm glad I played the game.

That's your decision but that's not the worst cases scenario, that's best case scenario if there are hiccups and even that takes a couple of months at best. It adds risk plain and simple but the amount of risk varies with the rest of the story. As I noted, for many it's a pattern of risky choices that add up on the red site of the column and is often the difference in long term success or failure.

 

[crisi]

Because if I play the "finance the resale timeshare game" and something goes wrong, WORST case scenario I sell my resale timeshare for a few thousand dollars lost after years and years of enjoyment. I'm willing to take that risk. I would not be willing to play Russian Roulette, way different game with way different consequences. Personally if I sold my resale contracts now, I would be up a couple thousand dollars, even selling them stripped. I'm glad I played the game.

We saw the worst case scenario play out quite a few times around 2009. It was people who bought and financed in 2007 or 2008, then lost jobs, couldn't make the payment on DVC, the DVC market crashed, and they were out thousands that they couldn't afford at that point in time. We saw bankruptcy and foreclosures on primary residences.

The problem with financing a luxury is that when it works, its great. But when you need the money to pay for essentials you would be using to pay down the loan, its often due to an economic downturn - boats, luxury cars and timeshares loose value fast in those circumstances. And as Dean said, its a pattern. You finance your house and education - fine. Then maybe a car. Then you carry a little credit card debt, a timeshare, have a phone contract - you build a house of cards that will stand fine - as long as the stiff wind of a few months out of work doesn't hit.

 

[ELMC]

It's sort of a black and white situation. No matter how you try to justify it, financing a timeshare purchase is not a conservative, stable financial decision. However, if you are willing to overlook that in order to achieve some pleasure, then that is your decision. I know many people who drive cars that they can't afford because they lease them which makes the monthly payment achievable. But they could never afford to purchase the car, and that is a distinct difference. The best thing that you can do is openly acknowledge the risk of financing a timeshare purchase, as opposed to justifying it as a sound decision. That way, when things go south, at least you aren't surprised.

 

[thelionqueen]

To each his/her own. You can debate backwards and forwards the "right" decision or what not to do. Bottom line is that different see and do things differently. Just because you see it as a bad idea doesn't make it so across the board.

 

[crisi]

To each his/her own. You can debate backwards and forwards the "right" decision or what not to do. Bottom line is that different see and do things differently. Just because you see it as a bad idea doesn't make it so across the board.

No, there are times when financing is a good idea. But the worst case is far from "we will take a lot of trips then sell for a couple thousand less than we bought it for."

Part of the reason some of us are pretty adamant on the whole "bad idea" is that for the FEW people for whom its a good idea, they tend to know who they are. For each one of those, there are probably ten people who read the DVC purchasing board exploring the idea of buying DVC for whom it is not a good idea and are not financially savvy. If even one of those ends up in a less secure financial position because of something I posted, I'd feel like I did them a disservice.

And it isn't just that - when people get themselves into bankruptcy situations, or foreclosure situations - that effects all of us. Its a drag on the economy. It increases costs for the rest of us - or, in the case of DVC, can lead to depressing the costs on the resale market - where I plan on selling my DVC. I suppose if you are in a position where you want to buy points, you could cheer on people, hoping there would be a lot of distressed contracts hitting the market.

Even short of bankruptcy situations, if you spend today and don't have money to help your kids with college or for your retirement, society as a whole suffers.

 

[BillPA]

Leasing a car is typically a 3 year commitment, DVC can be 30-50 years. Lots can happen in that amount of time. Be careful what you choose, life happens whether you're ready for it or not.