Financing vs. Paying in Full

[3DisneyKids]

Ok, I know that it is better to pay things in full rather than go into debt...this question isn't THAT silly, I promise!

DH and I plan to buy into DVC in 12 - 18 months b/c by then we will be able to pay the upfront cost out-of-pocket.

However, I know that there is always the threat of price increases. So, what do you think is better...buy now and finance for a year or two until we have saved the full amount OR wait until we can pay in full and risk price increases? A third option would be to finance, but for a very short time (I think 3 years is the shortest financing package available). TIA

 

[aero99]

We just paid our DVC loan off (after 1.25 years). In that time the point cost went up by $11. (true costs, we bought at 89 with $10 back or $79 and now it is 98 with $8 back or $90). We financed for the 10 years because unless you did 1 year, the interest rate was the same and we wanted to lower the payment just in case. We ended up paying a total of $8.45/point in interest. So for us it was cheaper for us to buy then and finance it then save up and buy now.

Good Luck
Melissa

ps. I just realized what a nerd I am to know all these figures. All well, another typical engineer.

 

[3DisneyKids]

Thanks Melissa--this is exactly the kind of info. I was looking for. How often do price increases occur? Do they seem to be on any type of schedule (i.e.: every October expect an increase?) And what about the promos? Are they usually comprable or do they vary wildly?

 

[aero99]

there is a really good thread on history just use the search function and type in price increase history. I should also mention one thing about my data. We "bought" in as soon as SSR was announced. We didn't have to start paying on the loan till the building we bought in was finished. I don't know if you still have that delay now.

Melissa

 

[Laurajean1014]

Wait the year and buy outright. Best way.

 

[Disney Doll]

Buy now, finance it and pay it off as quick as possible.

DH & I did that. We bought, took out the 10 year loan, because it had the lowest monthly payment. We figured we could always pay more on it whenever possible, but all we had to pay was the low monthly payment. We had it paid off within about 3 years.

I have known folks who have bought it using their Disney VISA card, gotten the rewards points, and then paid off the Disney VISA card the next month using a home equity loan to get the tax break that I think you can write off the interest. I actually think there's some sort of slight refund if you do use the Disney VISA card...seems to me I remember getting some sort of e-mail about that somewhere along the way.

Other folks have gone straight to the home equity loan.

Others have paid cash.

If you borrow to pay for it, obviously the sooner you pay off the loan, the better "deal" it becomes.

 

[3DisneyKids]

Great tip to use the Disney Visa--we already use it for everything (and pay it off every month), and for some reason, I didn't even think about using it for this! LOL Go figure.

Yes, we have a Home Equity Line of Credit--which for us is better than a traditional HE Loan--so we could write a check today and then pay off the Home Eq. My DH just has an obessession about having no debt other than our first mortgage. It's definitely a great attitude, but the wait is painful.

BTW...look at people's suggestions...buy now...wait...buy later...LOL. What else would I expect? Is there ever unanimous agreement on the DIS??? NOT

 

[dsneygirl]

Another thing to consider. I see you're going to WDW in 4 months, how much will your accomodation cost then? If you're shelling out $1000 you might as well put it towards DVC now and finance for the 12-18 months.

 

[JodyTG]

Buy now, before the price goes up, and pay it off early. That's what we're doing. We bought SSR at $95 per point with $10 off per point ($85 per point basically) right before the price increased and the promotion ended. We'll have this paid off in another year.

Also, at the time that we bought back in May, "our building" wasn't going to be ready until September, so we're about to make our first payment.

 

[snowbunny]

It depends on where you want to buy? The price just went up everywhere except SSR, so I would not think it would go up again in a year (although of course I am speculating), especially since the non-SSR resorts are approaching 40-year leaseholds. Once the amount of time left on the lease goes under 40 years, I would think increases will be minimal and at some point, the price will need to decrease.

Never finance what you can pay out of pocket.

 

[T.E. Yeary]

If you have good credit, the finance company we use, Tammac Financial, will give you 100% financing, you can even include closing costs and maintenance fees!

It's an open ended mortgage with NO prepayment penalty so you can pay it off early by doubling up on payments or paying it off with income tax return check or any windfall that may be just around the corner.

Tom

 

[JimC]

Price history thread. Note post 12.

http://130.94.75.33/showthread.php?t=698847&page=1&pp=15

Have you considered waiting and buying at the earlier of just before the next price increase or when you have the cash?

As a practical matter even if you pay more per point, it is a minor expenditure when compared to finance charges and immaterial when you consider what you will pay in maintenance fees over the life of the contract.

 

[ksoehrlein]

We "financed" using a CC that had a very low interest rate and then later transfered the balance to a new CC that was offering 1.99% interest for the life of the loan. Our DVC is almost paid off after 3 years, and we really haven't spent all that much in interest. I didn't do the math, but I think we're ahead of the price increase curve, especially since I was able to buy at a CM discount.

I realize we were lucky to get such a low rate, but keep an eye out for those CC offers -- you may get lucky too!

 

[3DisneyKids]

We "financed" using a CC that had a very low interest rate and then later transfered the balance to a new CC that was offering 1.99% interest for the life of the loan. Our DVC is almost paid off after 3 years, and we really haven't spent all that much in interest. I didn't do the math, but I think we're ahead of the price increase curve, especially since I was able to buy at a CM discount.

I realize we were lucky to get such a low rate, but keep an eye out for those CC offers -- you may get lucky too!

I have great credit (if I may say so myself, LOL) so I get those offers all the time. That may be a good way to go as it is even lower than my Home Equity Line of Credit (evenw hen figuring in the tax deduction). Thanks for the tip!

 

[JimC]

We "financed" using a CC that had a very low interest rate and then later transfered the balance to a new CC that was offering 1.99% interest for the life of the loan. Our DVC is almost paid off after 3 years, and we really haven't spent all that much in interest. I didn't do the math, but I think we're ahead of the price increase curve, especially since I was able to buy at a CM discount.

I realize we were lucky to get such a low rate, but keep an eye out for those CC offers -- you may get lucky too!

Churning credit cards in that manner does not help your credit score.

 

[3DisneyKids]

Price history thread. Note post 12.

http://130.94.75.33/showthread.php?t=698847&page=1&pp=15

Thanks so much for this--helpful! I am looking for the chart of how much dues increase per year. I found the thread where the chart was posted, but the chart is no longer visible--just a bunch of html codes now.

Anyone have this information?

 

[Y-ASK]

If you are able to, get a Loan off your 401K and pay yourself the interest. Two things to understand about a 401K Loan is that you should feel comfortable that you will stay employed during the entire length of the loan and that the market may at any given time go thru the roof (yeah right!). If you understand the risk and are able to minimize them then it's a win win deal. You get to own DVC now and you don't have to pay someone else any interest. And you should be able to make about 8% on your investment in yourself.

Y-ASK

 

[3DisneyKids]

If you are able to, get a Loan off your 401K and pay yourself the interest. Two things to understand about a 401K Loan is that you should feel comfortable that you will stay employed during the entire length of the loan and that the market may at any given time go thru the roof (yeah right!). If you understand the risk and are able to minimize them then it's a win win deal. You get to own DVC now and you don't have to pay someone else any interest. And you should be able to make about 8% on your investment in yourself.

Y-ASK

That's a great idea and I'm sure you are right that it can be a win-win situation, but I am way too chicken to mess around with my 401K!

 

[kadaten]

We waited until we could pay cash, but since we'd been financing vacations before then, it wouldn't have been bad to finance it short-term (in my opinion, anyway).

We actually got lucky. I paid the deposit when we did the paperwork, and put the balance on a credit card last week, so I could use the "cash back" feature of this card. (Note that this card had a zero balance...we'd paid it off the month before.) We have the cash in savings to pay off the balance, but we got a promotion the very next day that said as of September 1, any new purchases would be at 0% interest for the next 12 months. And since there's no previous balance, there's nothing I'm paying interest on, so I don't get hit with the "payments go towards balances with the lowest interest rate first" scam. So I may leave it on there and keep earning interest on the cash in the savings account, then pay off the credit card in month 11. Or just pay it off monthly as if it's a loan... It's not costing me anything, and I keep earning interest. Just got lucky on that one....

 

[JimC]

Thanks so much for this--helpful! I am looking for the chart of how much dues increase per year. I found the thread where the chart was posted, but the chart is no longer visible--just a bunch of html codes now.

Anyone have this information?

Unfortunately all of the dues tables that were easy to read were done in HTML code. I would post my spreadsheet but I don't know how any more. I could email it to you if you PM your email address to me.

Here is OKW:

1991 $2.5100
1992 $2.5629
1993 $2.6300
1994 $2.6986
1995 $2.8393
1996 $2.9883
1997 $3.1448
1998 $3.1743
1999 $3.1640
2000 $3.1623
2001 $3.1272
2002 $3.2163
2003 $3.4944
2004 $3.6766
2005 $3.8619