Financing was declined...trying hard to not take it as a "sign"

[RivShore]

I'm surprised no one has mentioned what stuck out to me right away with your original post: that you have the ability to pay for it in cash, but you'd "prefer not to." I'm not sure I understand why taking out a loan would be better than paying in cash????

Also, unless the OP's CC debt is on a zero interest promo, pay it off today!!!

 

[EM Lawrence]

I can understand not wanting to pay the whole thing in cash. I am in a similar situation. DH and I are both self-employed and sometimes cash flow is unreliable. I prefer to conserve cash and pay off large purchases over time. But I can also self-finance through an investment account and pay myself the interest, so we typically don’t use lenders.

 

[4luv2cdisney]

As others have said, unfortunately you need current / recent "debt".

If you have a lot of cash on hand, you shouldn't be carrying any credit card balance at all unless your interest rate is 0% or something ridiculously low. Pay in full every month. Get another card or two and do the same. Think about where you shop. Maybe start by just getting a Target / Best Buy / Kohl's.... wherever you are shopping anyway while you look around for a good rewards card ( Visa / MC / Am Ex / Discover ). Charge on it from time to time and pay in full.

Whenever we buy cars, we always finance at least a little or for a short period. If finance rates are 0-2%, we usually finance 100% and then our "car fund" stays fully funded for next time.

All that being said, we were denied once for a Home Depot credit card despite never having a credit score below 800 our entire marriage. I think we'd opened a HELOC when we did a refinance and it was the type that you didn't have to take any draw (so we borrowed ZERO) but the credit line was rather large (maybe 50K) in addition to most of our CCs having large available credit... so anyway, I think we were fairly young at the time and they thought we had a lot of potential opportunities to get into big trouble!

I guess I get it, but it really bothered me for some reason!

 

[4luv2cdisney]

I can understand not wanting to pay the whole thing in cash. I am in a similar situation. DH and I are both self-employed and sometimes cash flow is unreliable. I prefer to conserve cash and pay off large purchases over time. But I can also self-finance through an investment account and pay myself the interest, so we typically don’t use lenders.

Agree - for large purchases and/or at low interest.

DH's job is fairly stable right now (as stable as anything can be in this pandemic) but for most of our marriage, it was very seasonal and subject to temporary layoffs, reduced hours, etc.

We save for things and then usually still finance them in some way. Cars at 0-2%, electronics on my Best Buy card with their promos, I tend to prefer our home improvement purchases made at Menards because we have their card and they are always offering some short term promos, our DVC points on our Disney Visa, etc etc.

My oldest daughter is graduating college right now. Her college fund admittedly did not have the entire 4 years tuition available, but the intention was to take a large chunk each of the 4 years and cash flow, borrow, whatever we needed to do for the rest. We ended up cash-flowing it all. It was not easy and we did drain down a lot of our savings for other big ticket items during this last year. So, our "padding" is not there right now, but her college fund is still sitting there and will go to the next child and now we don't have to worry about hers at all. She's fully funded and we could just pay out of those funds and breathe a sigh of relief. But I know we won't. We'll try to cash flow her, too. And if we succeed, it'll be earmarked for something else and the cycle will repeat until we really need the money or we retire.

As you can see, I have a really hard time taking money out of the bank. I will suffer immensely to not touch it. I think it's because of the several rounds of unemployment we faced early in our marriage and the near poverty environment I grew up in.

I need to look into that self-financing thing. I've heard of that before, but don't really know how / where to look. That sounds like something that would work for us and maybe be less stressful than the way we currently do things.

 

[Ms.Minnie]

Have you thought of a home equity line of credit (HE) loan? You said you own your home and I do believe the interest rates should be very low right now, lower then the rates for on personal (secured by car) or car loan. You do need to be careful about pre-payment penalties but I would think a HE loan would give you the funds needed and the ability to pay it off when you want. Once the loan is paid in full you can choose to keep the line of credit open or close it out. I know that people here don't like putting your house on the line but you should have a good idea about yourself to know it that is a risk or not. This is how we bought our first DVC contract back in 2000, it worked out very well for us. Just another idea of how you can get the needed funds and still keep your cash on hand. I hope it all works out for you.

 

[mmackeymouse]

I'm surprised no one has mentioned what stuck out to me right away with your original post: that you have the ability to pay for it in cash, but you'd "prefer not to." I'm not sure I understand why taking out a loan would be better than paying in cash????

This is a fair question, but I think my answer is pretty reasonable as well.

It's the same thing as when I went to purchase my car years ago. I COULD have put a higher down payment on the car, but I chose a lesser down payment.

I would prefer to have more cash on hand.

As others have said, unfortunately you need current / recent "debt".

If you have a lot of cash on hand, you shouldn't be carrying any credit card balance at all unless your interest rate is 0% or something ridiculously low. Pay in full every month. Get another card or two and do the same. Think about where you shop. Maybe start by just getting a Target / Best Buy / Kohl's.... wherever you are shopping anyway while you look around for a good rewards card ( Visa / MC / Am Ex / Discover ). Charge on it from time to time and pay in full.

Whenever we buy cars, we always finance at least a little or for a short period. If finance rates are 0-2%, we usually finance 100% and then our "car fund" stays fully funded for next time.

All that being said, we were denied once for a Home Depot credit card despite never having a credit score below 800 our entire marriage. I think we'd opened a HELOC when we did a refinance and it was the type that you didn't have to take any draw (so we borrowed ZERO) but the credit line was rather large (maybe 50K) in addition to most of our CCs having large available credit... so anyway, I think we were fairly young at the time and they thought we had a lot of potential opportunities to get into big trouble!

I guess I get it, but it really bothered me for some reason!

I actually already have a Target Red card but it's a debit version, not credit, unfortunately.

That is crazy about the Home Depot thing. It's so strange to me how some people with iffy credit are able to get cards easier than those with great credit histories.

Really, I can't think of anyplace I shop with frequency that I could get a credit card for. Unless I can transfer my Target to credit. The places I shop most option don't have store cards. But, I am definitely going to look into some credit cards.

Have you thought of a home equity line of credit (HE) loan? You said you own your home and I do believe the interest rates should be very low right now, lower then the rates for on personal (secured by car) or car loan. You do need to be careful about pre-payment penalties but I would think a HE loan would give you the funds needed and the ability to pay it off when you want. Once the loan is paid in full you can choose to keep the line of credit open or close it out. I know that people here don't like putting your house on the line but you should have a good idea about yourself to know it that is a risk or not. This is how we bought our first DVC contract back in 2000, it worked out very well for us. Just another idea of how you can get the needed funds and still keep your cash on hand. I hope it all works out for you.

Yes. However, I sort of anticipating possibly needing a HELOC sometime in the next few years for house improvements. It may or may not be necessary. But, I would like to keep that line of funds open in case something comes up beyond what we want to pay out of checking/savings.

Our house is 120 years old, so as you can imagine...things are always coming up.

 

[buzznina]

I am not trying to be mean, but one of the most common things I read about getting into vacation clubs, is that you should never finance it for more than a couple of years. When you finance, it's not a good investment, and NEVER involve any loan that goes against your home because if an emergency comes up you will regret it big time.

 

[Disney Dad ADL]

This is a fair question, but I think my answer is pretty reasonable as well.

It's the same thing as when I went to purchase my car years ago. I COULD have put a higher down payment on the car, but I chose a lesser down payment.

I would prefer to have more cash on hand.





I actually already have a Target Red card but it's a debit version, not credit, unfortunately.

That is crazy about the Home Depot thing. It's so strange to me how some people with iffy credit are able to get cards easier than those with great credit histories.

Really, I can't think of anyplace I shop with frequency that I could get a credit card for. Unless I can transfer my Target to credit. The places I shop most option don't have store cards. But, I am definitely going to look into some credit cards.





Yes. However, I sort of anticipating possibly needing a HELOC sometime in the next few years for house improvements. It may or may not be necessary. But, I would like to keep that line of funds open in case something comes up beyond what we want to pay out of checking/savings.

Our house is 120 years old, so as you can imagine...things are always coming up.

Certainly I can understand the need to maintain liquidity, but if you go with places like Monera, the interest rates are pretty high. According to their website, their no credit check rates *start* at 9.9% For a $10k loan at 10% interest for 5 years, that's $2748 of interest you are paying over 5 years to maintain the liquidity. That's a lot to pay for just in case IMO, maybe more reasonable the interest rate were car loan or home loan levels (0-4%). I would much rather go with the HELOC if that is on the table assuming that the interest rates are < 4%, or just pay cash since you have it. Just my opinion.

 

[Jack_Sparrow_NJ]

LightStream





They actually already sent me something, most of which didn't make a lot of sense. "Insufficient credit history" was one, in spite of the fact that I have had a credit card for 20 years, and had multiple loans during that time as well. That didn't make any sense to me at all.

Lack of credit repayment history was another, which again...didn't make a lot of sense to me, because any debt that I have or have ever had has been on an autopay basis.

And lack of revolving credit was another, which makes the most sense of anything, because with only one credit card, it makes sense that there is not much revolving credit. So, I get that one.






Absolutely. My card is set to autopay the minimum each month. And, I usually pay extra sometime throughout the month to keep the balance either paid off or relatively low.

Have you run your credit report do you can see the details? You can get it free annually from each of the reporting agencies. Maybe there are errors you can address

 

[jlb727]

If you have cash on hand and your house is paid off, what if you put half down on the contract and use a HELOC for the rest? Pay off the rest of the DVC contract on the HELOC fast, and then you have some cash on hand cause you only financed half of the contract AND you have a home equity line of credit available as more things will inevitably go wrong on your older home. Would that work?

 

[Ms.Minnie]

Yes. However, I sort of anticipating possibly needing a HELOC sometime in the next few years for house improvements. It may or may not be necessary. But, I would like to keep that line of funds open in case something comes up beyond what we want to pay out of checking/savings.

Our house is 120 years old, so as you can imagine...things are always coming up.

Well it's up to you what you do or don't do but you did say you may plan to get a line of credit to do home repairs in the future. If you do it now it will already be in place so when you need it in the future you know you have it. I would also suggest you verify that the interest rate is fixed and not variable and that there are no early payoff penalties. You wouldn't want to be penalized for paying off early.... If it were me I would ask for more then I need, just because you have the line of credit doesn't mean you have to use it but it's there if you need it and the interest rate should be lower.

I am not trying to be mean, but one of the most common things I read about getting into vacation clubs, is that you should never finance it for more than a couple of years. When you finance, it's not a good investment, and NEVER involve any loan that goes against your home because if an emergency comes up you will regret it big time.

This is what I was referring to in my earlier post. I would say this is a matter or personal opinion. I'm a former banker and mortgage u/w so I understand the ins and outs of finance. I used my home equity loan to purchase our first DVC contract and paid it off quickly. I did so because the interest rate was very, very low when comparing to other types of financing and my line of credit was already in place. Also I know myself, I'm very disciplined when it comes to financing. I pay things off as quickly as possible, I purchase just about everything on credit card and reap the credits given by those cards. I always payoff my cards at the end of each month, I'm not going to pay those high interest charges. I don't like to be in debt but sometimes its necessary to achieve ones goals. I do agree there are people who shouldn't take out a 2nd mortgage for DVC, they aren't disciplined enough to pay it off quickly and don't know how to handle credit. JMHO

 

[buzznina]

Well it's up to you what you do or don't do but you did say you may plan to get a line of credit to do home repairs in the future. If you do it now it will already be in place so when you need it in the future you know you have it. I would also suggest you verify that the interest rate is fixed and not variable and that there are no early payoff penalties. You wouldn't want to be penalized for paying off early.... If it were me I would ask for more then I need, just because you have the line of credit doesn't mean you have to use it but it's there if you need it and the interest rate should be lower.



This is what I was referring to in my earlier post. I would say this is a matter or personal opinion. I'm a former banker and mortgage u/w so I understand the ins and outs of finance. I used my home equity loan to purchase our first DVC contract and paid it off quickly. I did so because the interest rate was very, very low when comparing to other types of financing and my line of credit was already in place. Also I know myself, I'm very disciplined when it comes to financing. I pay things off as quickly as possible, I purchase just about everything on credit card and reap the credits given by those cards. I always payoff my cards at the end of each month, I'm not going to pay those high interest charges. I don't like to be in debt but sometimes its necessary to achieve ones goals. I do agree there are people who shouldn't take out a 2nd mortgage for DVC, they aren't disciplined enough to pay it off quickly and don't know how to handle credit. JMHO

My DW was also in finance and she said that unfortunately, you are a small % and that most people are not as disciplined and this ends up costing them big time in the future.

 

[CraigInPA]

This should be a warning to people who think that because they pay cash for everything that they are a good credit risk. Just the opposite. FICO and other scores are based upon the perceived willingness and ability to make timely payments. Most of the formula weight is given to the last 36 months of payments on term loans (cars, boats, etc...), mortgages, and revolving accounts like credit cards. You get a boost to your score by paying everything on time. You get a decrease if you pay late. You get a boost if you can show you can handle multiple payments each month (e.g., a mortgage and car loan, or a car loan and a credit card). You get a decrease if you have only one payment per month (which is why many of those companies which offer credit card consolidation are ineffective at boosting your score). If you have a $15k credit limit, but regularly only use $3k, you're wise and get a boost. If you have a $15k credit limit and regularly use $14.5k of it, you're over-leveraged and a bad risk.

For the OP, you're too late for the following strategies because you're on a time line to settle on the purchase, but these are what I'd suggest you do to fix this for the future:
1. Get a second credit card, use it a little each month, pay it off entirely when it comes due. If you don't have a Disney Chase Visa, this would be an excuse to get one (that, and the discounts you get using it at WDW).
2. Request a higher credit limit on your existing card to reduce your utilization rate
3. Don't carry a balance on either card

 

[lovethesun12]

This should be a warning to people who think that because they pay cash for everything that they are a good credit risk. Just the opposite. FICO and other scores are based upon the perceived willingness and ability to make timely payments. Most of the formula weight is given to the last 36 months of payments on term loans (cars, boats, etc...), mortgages, and revolving accounts like credit cards. You get a boost to your score by paying everything on time. You get a decrease if you pay late. You get a boost if you can show you can handle multiple payments each month (e.g., a mortgage and car loan, or a car loan and a credit card). You get a decrease if you have only one payment per month (which is why many of those companies which offer credit card consolidation are ineffective at boosting your score). If you have a $15k credit limit, but regularly only use $3k, you're wise and get a boost. If you have a $15k credit limit and regularly use $14.5k of it, you're over-leveraged and a bad risk.

For the OP, you're too late for the following strategies because you're on a time line to settle on the purchase, but these are what I'd suggest you do to fix this for the future:
1. Get a second credit card, use it a little each month, pay it off entirely when it comes due. If you don't have a Disney Chase Visa, this would be an excuse to get one (that, and the discounts you get using it at WDW).
2. Request a higher credit limit on your existing card to reduce your utilization rate
3. Don't carry a balance on either card

Yes. You're basically like a student fresh out of school. Not bad credit, not good credit, just no credit.

 

[BillPA]

Do you know your credit score? Maybe some one has been using your ID. Get a copy of your credit report and see what's going on.

 

[becauseimnew]

I'm surprised no one has mentioned what stuck out to me right away with your original post: that you have the ability to pay for it in cash, but you'd "prefer not to." I'm not sure I understand why taking out a loan would be better than paying in cash????

I have friends that just purchased a used car, they could have paid cash but in these times of uncertainty they opted to save their cash.

 

[Ms.Minnie]

My DW was also in finance and she said that unfortunately, you are a small % and that most people are not as disciplined and this ends up costing them big time in the future.

I am not trying to be mean, but one of the most common things I read about getting into vacation clubs, is that you should never finance it for more than a couple of years. When you finance, it's not a good investment, and NEVER involve any loan that goes against your home because if an emergency comes up you will regret it big time.

I agree that not everyone should take a home equity loan out to buy DVC, I never said they should. I merely suggested that it is a good option for those of us who know how to handle our money in a responsible manner. I also supplies several reason why at this time it might be a good option, one of the main reason being the interest rates at this time should be very low when compared to a personal loan.

I think the real issue is when you say "NEVER involve any loan against your home". I don't agree with this statement for the reasons previously stated. I also don't think it's a good idea to say "never", you just never know when you might have to walk it back.

If you don't agree that is fine, that is your right to have your own opinion and one of the many great things about living the USA, freedom of choice. I just have a different point of view. To each his own.

Wishing you a magical day.

 

[buzznina]

I agree that not everyone should take a home equity loan out to buy DVC, I never said they should. I merely suggested that it is a good option for those of us who know how to handle our money in a responsible manner. I also supplies several reason why at this time it might be a good option, one of the main reason being the interest rates at this time should be very low when compared to a personal loan.

I think the real issue is when you say "NEVER involve any loan against your home". I don't agree with this statement for the reasons previously stated. I also don't think it's a good idea to say "never", you just never know when you might have to walk it back.

If you don't agree that is fine, that is your right to have your own opinion and one of the many great things about living the USA, freedom of choice. I just have a different point of view. To each his own.

Wishing you a magical day.

Then I guess we agree to disagree. I stick with 'Never loan against your home' when it comes to purchasing luxury/frivolous items like DVC etc.

 

[StitchesGr8Fan]

Wait, you sometimes carry a balance in your credit card but have the cash to pay for DVC in full? Why would you voluntarily pay interest on a credit card if you could pay it off?

 

[travelplanningnerd]

I have friends that just purchased a used car, they could have paid cash but in these times of uncertainty they opted to save their cash.

Maybe it's just me, but financing a car in uncertain times to keep the cash on hand does not strike me as odd as financing a vacation property, getting declined for the financing and not walking away.