Help me justify the financing

[Disneymooners93]

You can't swim in SAB with your receipt for 10% interest.

Yes you can, but it will get soggy.

 

[tjkraz]

Finacing DVC seems crazy. I would LOVE to own DVC and am ready to buy as soon as I have the cash. I know everyone says the reason to purchase DVC is for "future vacations." But I belive we all realize DVC is more of a financial investment than anything; as WDW resort prices will go up over time.

Many people here use the phrase "prepaid vacation", and IMO that's the best way to look at it. To me, the word "investment" relates more to an asset that will appreciate in value over time. While the cost and resale value of DVC points has increased over the last 13 years, that will not continue forever. Given that DVC contracts do have ending dates, the value will begin to decline at some point approaching the ending date.

That being the case, you are throwing money away by financing.

Which makes more sense:

1. In 2003 pay $79 per point for 150 points ($11850), paid-off in one year at 10% ($1185 interest) and get 50 years of vacations for $13,035.

2. In 2004 pay $85 per point for 150 points with no financing and get 49 years of vacations for $12,750.

Getting an additional year's worth of DVC points for less than $900 ($300 difference above plus dues of $600) seems pretty good to me. Renting 150 points would have cost about $1500.

DVC's selling prices will be on the upswing into the forseeable future. Meanwhile the longer you wait, the more years you lose off of the contract.

Since you said that you are not a member, any idea what points were selling for when you first made the decision to wait? How much more do points cost now? How does the amount of interst you would have paid compare with the years lost on a contract (or, more importantly, the cash you've paid out to WDW for resort rooms)?

At least if you are spending higher prices on resorts, you are actually physically there.

Even if you don't finance, it takes about 6-8 years to break-even on the thousands paid up-front to buy into DVC. Financing over 10 years may add another 3-4 to that. But at least you have the benefit of the DVC asset after the payments are complete--another 30+ years of vacations at a fraction of the cost.

You can't swim in SAB with your receipt for 10% interest.

Well, it's not as if you don't get any points over the 10-year finance period. What do cash paying guests have to show after a dozen years? Receipts.

 

[TammyAlphabet]

I believe that if you need justification, then you have decided to buy but need a "justification" to do something that doesn't make the best financial sense in your mind. I think that financing a prepaid vacation plan is not much different than financing a car or SUV. People pay thousands and thousands of dollars for new cars and sign contracts to pay hundreds of dollars per month and no one thinks they are crazy (well, maybe some people do). You can buy a car for as little as 1500 dollars that runs reasonably well and will get you from point A to point B.

IMHO, If you are going to take the vacations and want to get the best possible accomodations for the money that you are spending, then by all means go for it. I mean, really, why do you get up and slave and go to work everyday. My vacations with my family are priceless and all this talk about justification is really not necessary for me. If I am paying for it, then it is my business and let everyone spend the money they work for however they please.

I will now step down from the soapbox. I hope you become a member soon and enjoy years and years of vacations with your family. (I am ready to be flamed.... )

 

[Y-ASK]

May I ask why you use a negative return in your analysis for the 401K.

The reason why I use negative numbers is because they are real. That is what has happened over the last five years. We hope for the best when we put money into our 401K but it's all speculation.

I'm sorry for hijacking this thread and will stop. It's just one option that is not as negative as some people seem to think.

Y-ASK

 

[mwehttam]

If the purchase is financed through DVC, how does it appear in your credit report? My DW and I are interested in DVC but also planning on selling our condo and buying a house in the next year.

We are in the same boat as the OP. We are interested and don’t want to be like many here when the say “I wish we did it sooner” as we know the price will only increase and the current pricing deal will run out in a week or so.

-Matt

 

[RAD]

If the purchase is financed through DVC, how does it appear in your credit report? My DW and I are interested in DVC but also planning on selling our condo and buying a house in the next year.

We are in the same boat as the OP. We are interested and don’t want to be like many here when the say “I wish we did it sooner” as we know the price will only increase and the current pricing deal will run out in a week or so.

-Matt

I had two mortages going through DVC for awhile. Neither of them showed up on any credit report that I saw.

 

[gjw007]

The reason why I use negative numbers is because they are real. That is what has happened over the last five years. We hope for the best when we put money into our 401K but it's all speculation.
Y-ASK

Using the Jan ending close from http://finance.yahoo.com/q/hp?s=^DJI&a=09&b=1&c=1928&d=01&e=21&f=2005&g=m from 2005 to 1995, the results are:

Year Dow Gain / Loss
2005 10,785.22 2.8% (10,785.22/10,488.07-1)
2004 10,488.07 30.2% (10,488.07/8,053.81-1)
2003 8,053.81 -18.8% (8,053.81/9,920.00-1)
2002 9,920.00 -8.9% (9,920.00 / 10,887.36-1)
2001 10,887.36 -0.5% (10,887.36 / 10,940.53-1)
2000 10,940.53 16.9% (10,940.53/9,358.83-1)
1999 9,358.83 18.4% (9,358.83/7,906.50-1)
1998 7,906.50 16.0% (7,906.50/6,818.09-1)
1997 6,818.09 26.4% (6,818.09/5,395.30-1)
1996 5,395.30 40.4% (5,395.30/3,843.85-1)
1995 3,843.85

Depending where you pick your dates, these number will change but they provide an idea of the gain/loss for the DOW. You can see the loss from the Dot-com bust that started in 2000. Individual stock variation will probably be greater than that shown for the index as a whole.