Financing Through Disney - Interest Question

[helloconnie]

Okay, so we are looking at financing through Disney as a bridge loan until we can payoff the note at the EOY. (BTW...if anyone knows where you can get unsecured financing these days please let me know.)

Our Guide is telling us that Disney starts charging you interest from the moment you say 'go', before a note is even signed so that if it takes you a month to send back signed paperwork they have you on the hook for interest. That makes no sense to me. Has anyone had any experience with this? Is this true or is my Guide just trying to make us sign sooner rather than later? We haven't received any of the paperwork yet so I haven't been able to read the acutal language.

 

[Crystal_27]

Since it takes about a month from the time you sign your paperwork until the contract is closed ("closed" meaning only that the deed is recorded with the real estate records) my guess is that your Guide is saying that interest is accruing in that interim month period. So, I'm sure what your Guide is telling you is correct. However, the way it's offset is that your first payment will be slightly higher than your other payments by about $20 which is probably where DVC accounts for that month's interest. Hope that helps.

 

[helloconnie]

Thanks Crystal. The way our Guide explained it was that we would pay interest even before we signed paperwork. So, if we received paperwork on the 15th we would start paying interest then even if we did not sign the papers until 1st. I could certianly understand the interest accruals starting on the 1st but I can't understand why they would start charging you interest from the time the Fed Ex is sent out. Where this really has an impact is if we don't sign for say 60 days. He basically said we would still have to pay 60 days worth of interest even though we had not signed the paperwork.

 

[Crystal_27]

I could certianly understand the interest accruals starting on the 1st but I can't understand why they would start charging you interest from the time the Fed Ex is sent out. Where this really has an impact is if we don't sign for say 60 days. He basically said we would still have to pay 60 days worth of interest even though we had not signed the paperwork.

Yeah, I agree with you there. However, I think that I recall reading some language in the closing documents or the accompanying instructions that you had to sign your paperwork within 7 days of receipt and return it to DVC?? So, even though you have until 60 days to pay your down payment, DVC probably anticipates that that you will be a member within that 7 day period and starts the interest clock ticking.

I'm purely speculating so if anyone has any "real" knowledge, hopefully they will post and correct me here.

I'm so excited for you - - how many points did you end up buying??

 

[helloconnie]

We are buying 200 at BLT.

 

[Crystal_27]

We are buying 200 at BLT.

Time to get yourself a BLT signature!!

 

[Sandisw]

I just took out my original financing paperwork. It states that the interest is projected to start on the date of closing. The exact wording is:

"The amount of payments, the payment due dates and the date that interest begins to accrue are estimates based upon a projected closing date of xxx. If the actual closing date is different from the projected closing date, these estimates may change accordingly."

And, the figures that are on the paper seem to support that I would have been paying an additional months worth of interest--from the projected date of closing. And as Crystal said, the first payment that would be due was two months after closing and it indeed included this extra interest.

As it turned out, I didn't end up financing and paid off the balance. I called the day I got the papers and was told to just rip up the mortgage documents and they took my CC over the phone. There was no mention that I would still owe interest for those few days.

I don't see how they can charge you interest on something until you have actually signed the mortgage papers and the transaction is closed, especially since you have, by law, 10 days to rescind the contracts--that is why Disney waits that long to close the contracts.

Good luck and congratulations on your purchase!!!

 

[helloconnie]

Thank you! That helps.

 

[WilsonFlyer]

They can't legally charge interest until the note is filed with the clerk of court and the money has been lent. Both those criteria must be met for interest accrual to begin.

It's not yours until the document is filed with the clerk ("closing") and you can't be charged interest until then because they haven't lent you anything except good will until then.

 

[Crystal_27]

It's not yours until the document is filed with the clerk ("closing") and you can't be charged interest until then because they haven't lent you anything except good will until then.

I wonder, though, it you wouldn't be contractually obligated once the 10 day rescission period has passed...? I totally understand what you're saying but maybe in DVC's eyes, they've given you 10 days to back out and, after that point, you're in regardless of when the contract closes? Again, I'm purely speculating but that is interesting to ponder when you're offically considered having been lent the money.

I mean, say a person bought 200 points through Disney and signed all of the paperwork one week. Could that person book a stay using those points 2 weeks after he signs the paperwork even if the contract hadn't closed? If the answer to that question is yes, Disney obviously thinks of you as a member (and having lent you the money) at that point instead of waiting until the contract closed before letting you book your stay. Very interesting...

 

[WilsonFlyer]

I'm not a lawyer and I certainly don't know anything about FL lending laws. I am in banking in NC and I can tell you that's the way it works here and I believe that I remember federal lending/banking laws govern this but again, I'm not an attorney. YMMV