financing

[Cinderella1122]

I need to finance $5000 for my DVC purchase. Is a personal loan the best way to go?

 

[Tozzie]

I need to finance $5000 for my DVC purchase. Is a personal loan the best way to go?

I think it all depends on your circumstances, and the rate for the loan, if you are purchasing from Disney you can finance through them, I would see what the rates are for personal loans and for a loan from disney and go from there.

 

[Y-ASK]

401K Loan is one option as long as you understand and agree to the risk.

Y-ASK

 

[DVC Mike]

Home equity loan is good too.

 

[jerseygal]

From what I understand, 401K Loan Standards Very Stringent!

If you even so much as miss 1 payment, the "loan" could be treated as a distribution and fully taxable....Also, if it is a distribution and you are under 59 1/2, it could be subject to an additional early distribution penalty..10% of the distribution amount.

Be very careful with strict adherence to loan payment schedules!

 

[marynvince]

I need to finance $5000 for my DVC purchase. Is a personal loan the best way to go?

If you need to borrow money, isn't the best way to go the way with the cheapest interest rate? Here's your list

1) Take some cash out of the mattress
2) Buy some lottery tickets
3) Low interest credit card balance transfer offer
4) Home equity line of credit
5) Finance through Disney
6) Personal Loan
7) Loan Shark
8) Payday advance

 

[WilsonFlyer]

Given the current economic situation, I'd take the loan directly from DVC. You'll likely get it at 10.xx%. they don't report to the credit agencies. Approval is fairly painless and MOST importantly, consumer credit is getting VERY hard to get right now.

It's simple interest. There's no penalty for early payoff (you can pay against the principal anytime online).

Even with STELLAR credit, it may be harder to obtain the loan personally than you might think. The lending world has been turned upside-down in just the last 2-3 weeks. (I'm a part-time banker in another life and was professionally in the banking industry for 10 years).

Take the Disney loan and be happy you got it (you will).

 

[dbertola]

I would go with Disney. No one should ever take out a loan from their 401k for a timeshare.

 

[WendyinNC]

I took a loan from my 401k last year and am paying it back with interest to myself. It's my retirement account's best investment return for the year.

 

[browniemtb]

I would agree with some of the posters here.....going with DVC financing you would be in the 10.75 to 11.75% range with no pre-payment penalty. Personel loans tend to hover around 14 to 16% depending on bank. 401K loan could be used with a rate of 7 to 9%. In todays market paying yourself 7% or so isn't a bad deal considering. But the other side if this is the length the note would be taken. Disney could be a 10 year loan making monthly payments low compared to the 5 years loans that you may get from a personel or 401K.

 

[Y-ASK]

I would go with Disney. No one should ever take out a loan from their 401k for a timeshare.

It would be nice if you added "In my opinion..." since what you are saying is just that.

Y-ASK

 

[kdepot]

On the 401k loan we just paid off a 15000 loan in 5 years for our truck.

Paid it back with payroll deductions. If the payments arn't bad and your job is safe it's not bad. However we did Disney financing for 10 years knowing we will pay it back much sooner. and with no payoff penalty.

 

[Jeremy&Susan]

If you need to borrow money, isn't the best way to go the way with the cheapest interest rate? Here's your list

1) Take some cash out of the mattress
2) Buy some lottery tickets
3) Low interest credit card balance transfer offer
4) Home equity line of credit
5) Finance through Disney
6) Personal Loan
7) Loan Shark
8) Payday advance

My Vote, because Vinny has been hit with some pretty hard times due to this whole financial crisis we are in right now. Maybe if you default, Vinny can get some of the $700 Billion to help fund his golden parachute.

 

[mom of princessx2]

Our offer is still pending ROFR but we are doing a Home Equity loan because our rate will be 3.99%. Of course that can fluctuate but our pymt can't. Although we plan to have it paid off in 2yrs, we do not have to and we can deduct the interest from our taxes. The 401K loan would be a choice I would consider as well. Not sure if I personally would ever do it through Disney. I can't imagine ever paying 10% on anything. My credit card rate isn't even that high (yet).

 

[dalt01]

It would be nice if you added "In my opinion..." since what you are saying is just that.

Y-ASK

OMG

 

[chalee94]

It would be nice if you added "In my opinion..." since what you are saying is just that.

Y-ASK

well, i will add that it's also the opinion of every single financial advisor and CPA i know. pulling money out of your retirement accounts while the market is down ("sell low" is an interesting "opinion") and using it to buy a discretionary luxury like a timeshare is an extremely questionable choice at best.

(with that said, people are certainly free in this country to be as silly as they like...but they may need to acquire a taste for ramen noodles as they hit retirement age.)

 

[Y-ASK]

well, i will add that it's also the opinion of every single financial advisor and CPA i know. pulling money out of your retirement accounts while the market is down ("sell low" is an interesting "opinion") and using it to buy a discretionary luxury like a timeshare is an extremely questionable choice at best.

(with that said, people are certainly free in this country to be as silly as they like...but they may need to acquire a taste for ramen noodles as they hit retirement age.)

Yeah like these so called financial advisors have a clue. Tell me did they tell you to move all your 401K money over to a money market fund before the market fell. In my opinion most of those advisors couldn't make a dime if they had to, because if they could they certainly wouldn't be advising you. I actually had an Edward Jones guy questioned me when I asked him to sell all of my Wachovia stock last July. He actually asked me if I thought Wachovia was going to fail as if I was some idiot. Guess who looks pretty dumb right about now...

Y-ASK

I only said that a 401K loan is an option if you know and accept the risk. I much rather pay my 401K 8% than a credit card or bank 12%.

 

[chalee94]

Yeah like these so called financial advisors have a clue. Tell me did they tell you to move all your 401K money over to a money market fund before the market fell.

most of them would tell you that you can't time the market. you are the one suggesting that you can. while the cliche about blind squirrels and nuts is probably more accurate over the long run, if you really have a knack for market-timing, then keep it up. it's great that you're smarter than everyone else. OTOH, most people can't time the market and advising someone to take money out of a down market (even if there is a risk that it could go lower) to buy something as frivolous as a timeshare is almost always a bad idea.

 

[Y-ASK]

advising someone to take money out of a down market (even if there is a risk that it could go lower) to buy something as frivolous as a timeshare is almost always a bad idea.

Please keep in mind that I advised no one. I merely put it out there as an option. I really don't think there is a "good time" or "bad time" to take a 401K loan. Unless of course you think (as you said) you can time the market so that you don't miss a huge up swing. Which may happen shortly .

But in this case we're talking about a very small $5000.00 loan. There is not a lot of risk with such a small loan (if you don't spread the payments out too long) and the up side is that instead of paying the credit card company or bank the interest, you'll be paying yourself that interest.

And if DVC is so frivolous why do you own here?

Y-ASK

 

[chalee94]

And if DVC is so frivolous why do you own here?

i suspect you don't understand what the word "frivolous" even means, so i'll help you out. it means "of little weight or importance."

retirement savings OTOH is more of an essential. owning a timeshare is not...it is "of little weight or importance." that does not mean something bad as you mistakenly imply, but it does mean that you should only spend money on "frivolous" things once you first take care of necessary expenses and savings (such as retirement savings).

the market only averages 8-10% over time by offsetting huge declines (like the one we're in now) with larger gains. it's a bad idea to risk missing one of those larger gains by paying yourself a small amount of interest for something like a timeshare that is a nonessential. in general, you shouldn't mess with your retirement funds in a case like this simply because you're impatient and want instant gratification.