How did YOU finance DVC?

[Pinkerbelle8]

Just curious about this...
We are going to purchase a resale in April or May probably...
We were thinking of opening a line of credit to finance DVC because of the 10.25 interest rate that seems to be offered.
How did you do it? What is your interest rate?
Does anyone have any ideas I haven't considered?

Thanks!

 

[dandave]

I think if you have to finance it, then you shouldn't buy it. I am definitely not trying to be snooty or holier than thou, either.
I've been wanting to own a small piece of DVC "just because", since 1999. The economy and my saved up cash have only now come together, so that I am able to buy a small piece. It's a luxury, like dessert. I certainly don't *need* either one.

 

[BLLB]

We used our home equity line of credit and paid it off in 8 months. This is what we planned to do when we purchased.

 

[masswdwfan]

Put it on an AMEX Starwood branded card to get the points, then immediately paid the AMEX off with a Home Equity Credit Line (at a 4% interest rate). I plan on paying it off in four years. I understand the point that if you can't buy it outright, don't but it at all, but we were going to go next year and a room at a WDW Deluxe Resort will set you back around $2K a week. I figured, why not put that $2K towards a purchase?

 

[oakmanner]

We put a sizable downpayment with DVC and send in extra principle payments whenever we can. We plan to have it payed off in three years.

Dennis-

 

[Pinkerbelle8]

I think if you have to finance it, then you shouldn't buy it. I am definitely not trying to be snooty or holier than thou, either.

I understand what you are saying. We have the money in liquid savings; however, we want to hold on to our savings in case we would ever need cash quickly.

We want to finance it so that we don't tie all of that money up in the purchase.

 

[dandave]

Pinkerbelle, I certainly would never suggest that anyone put all or even most of their cash into a luxury. I think luxuries are for extra cash, the same extra cash that one would use for a vacation.
There are so many codes, public discounts, AAA discounts, Annual Passholder discounts, so forth and so on, that I do not see DVC as some great money saving investment. If you get an AP discounted room that you can afford to pay for, save the principal plus the interest it could earn that you would have spent on a DVC contract, and avoid paying dues... I honestly think you will come out ahead.
That's why I see it as a luxury. I can stay at SOG. I get AP discounts and Florida resident discounts. I can do free dining. I can do buy 4 get 3 free, etc., etc., etc. I want DVC like I want a new purse or some cute shoes. I just want it. It's not an investment, but hopefully I'll come out at least even.

 

[pfp258]

We paid cash for our 400 points. We are not big fans of debt!

 

[DisneyStarWisher]

I got a special offer with a credit card--0% on cash advances until August 2009. I had the money put into my checking account and wrote a check. I plan on having it paid off by then, so I will avoid having to pay interest!

I agree with masswdwfan. We were planning on paying $2800 to stay at WL this last October. I decided to instead put that money toward DVC and got to stay at SSR with developer's points. Plus we are staying at HHI this July (savings of $1600) and at AKV next October (savings of over $4000). How can I not be saving money???

 

[dd08]

DanDave is saying the correct financially sound advice. Seriously whether we want to hear it or not.....

That being said....

We waited until we got a Credit Card offer of 0% for 12 months....

We have paid 1/3 down and will put the rest on the card with the goal to pay off the balance by July.

 

[kikiq]

We also had a sizable down payment, cash and our Disney VISA. Financed the rest and pay extra every month. Is it worth it? The extended family vacation last summer originally planned for the Poly would have cost us $1000/night for 3 rooms AP rate for 7 nights. $7000+ just for the room and essentially forced to eat out every day. The extended family paid us token monies toward the use of the villa, so we put that money to our finance payment.

 

[ems_mom]

While the advice offered ("dandave") is well-meaning, I believe it's too simplistic.

Perhaps, given your overall financial picture, DVC is a luxury. However, for those who know where they want to be, and plan their vacations in advance, DVC can be a viable financial outlay.

We also used our line of credit to pay for our DVC, at a very good rate.

If you truly want it and the "credit gods" OK your purchase, I say go for it!

 

[dandave]

Anyone who pays rack rate for a room at WDW just ain't trying, IMHO. You must compare apples with apples.

You can get AP rates on villas, too (40%ish off and no dues). I've done it.

Even if they gave me a room, a vacation at WDW can easily run a couple of grand on food and tickets. I'm not even counting transportation. A few "free" trips a year could easily break an already fragile budget.

You don't really save money by buying an X just to get an X for free, if you really didn't need an X in the first place.

A bird in the hand is worth two in the bush. (I can't take credit for that one. ) Trying too hard to catch that free one can land you flat on your face in no time.

And finally, it's simply just really none of my business. Until the government decides we need a DVC tarp/bailout funded partly with my tax $$, I don't care how you pay for it. And I mean that in the nicest possible way.

 

[JasonDVC]

10 year finanace thru Disney. Will pay it off in 2-3 years. We vacation a lot anyway so paying a little interest is OK for 49 years of prepaid lodging

 

[kimberh]

I was fortunate enough to pay for the resale contracts that I bought, but the one with Disney I did finance. I have paid one of them off with the Disney visa, then paid it off the next month. I have enough... I am not buying anything else, unless I sell one and replace it.

 

[Tamplain]

Well I am like you pink as we are thinking about getting DVC (Still back and forth). But can't decide how to finance.

If I go resale I save dollars on the contract but tie up all my money by using my line of credit. If I go disney I pay more on the contract but my money is not all tied up in DVC and can stretch it out to get low monthly payment (plan is to pay off in a couple of years though or sooner).

Conflict, Conflict

We just came back from Disney in early December and with discounts, etc we still spent over $3000 with food and everything. I do this a couple times and I could pay for the DVC. I have had others say wow you paid alot well maybe but I work my butt off all year and usually take one really nice vacation and I don't plan on slummin it.

As for the fact that if you have to finance you shouldn't buy it is nonsense. I have bought many things by finance that I would never have been able to buy on cash (Say Car, etc) gotta have them. Do I have to have DVC no, Is it a luxury probably but if your careful and use good money management then finance if perfectly fine way to pay.

 

[quentina]

It's a personal choice that only you can make!

We financed, still make payments however, my kids get to enjoy vacations every year, sometimes 2-3 times. We may pay off a little early...nothing to write home about.

Family memories are worth some interest $$$$ to me.

 

[kimberh]

Well I am like you pink as we are thinking about getting DVC (Still back and forth). But can't decide how to finance.

If I go resale I save dollars on the contract but tie up all my money by using my line of credit. If I go disney I pay more on the contract but my money is not all tied up in DVC and can stretch it out to get low monthly payment (plan is to pay off in a couple of years though or sooner).

Conflict, Conflict

We just came back from Disney in early December and with discounts, etc we still spent over $3000 with food and everything. I do this a couple times and I could pay for the DVC. I have had others say wow you paid alot well maybe but I work my butt off all year and usually take one really nice vacation and I don't plan on slummin it.

As for the fact that if you have to finance you shouldn't buy it is nonsense. I have bought many things by finance that I would never have been able to buy on cash (Say Car, etc) gotta have them. Do I have to have DVC no, Is it a luxury probably but if your careful and use good money management then finance if perfectly fine way to pay.

I hear excately what you are saying, one thing that pushed me to go ahead and buy was the cost of my trip of 3 savanna view rooms for 3 days with the AP discount... $2900. One thing I want to mention are the dues. They are pricey and go up every year. Just keep this in mind. I am taking the same people, My married children...this Oct, we are staying in a 2br at AKV for 152 points. Big difference, more days. We have made this trip 3 times since I have bought DVC.

 

[logan115]

I'm another one "on the fence" about buying in. We've gone the last 2 years and rented ressies and it's been a huge savings over what we would've paid otherwise (or for the same money we would've been in a value or moderate for the same money that we paid for a 1 BR at BCV and our studio at SSR). I keep doing the math and it all boils down to how often are you planning on going. For us, DW, DS-5, DD-2months and me I see us going at least every other year for the next 10 years. To state the obvious going to WDW ain't cheap when you factor in airfare for 4 from Chicago, park tickets, food, and a room. Each of our previous trips have been about $5K when it's all said and done.

The one thing that I've seen left out of most of the analysis done on whether to buy or not is the resale value. Most people do the math assuming you'll own this until expiration (2042 or later). The way I see it is I buy a 75-80 pt resale contact, and I pay $100/pt upfront (or finance it). If my first trip is next year and I have banked my 09 points, I will have paid 2 yrs of dues (roughly $800 assuming 80 pts and $5 dues), otherwise I would have paid $1500 if I rented a ressie (savings of $700), or closer to $2500 (at least) going straight thru Disney. Now if I can recoup $700 per trip, and I take 5 trips making back just under 1/2 my investment I'm in good shape. If I decide in 5 years that it's not for me I can sell (albeit at a loss) and get back some of my money.

I figure that by not going this year, I'm saving $5K which will cover most of what I'd spend on owning DVC. Perhaps not the most intelligent view, but to a certain extent it's a reality. You work to make money to provide for yourself and family, and be able to do the things you really love doing. If for $8K (which will not cause any major financial hardships on us) I can own my own little piece of Disney and I HAVE to go there every other year, oh well..........

Not sure what I'll end up doing, and I would suggest you continue to solicit the advice here because you'll get every possible angle. But remember this is a decision that YOU need to make, take in all of the information you get and decide if it's really for you.

Good luck - perhaps we'll both be flipping a coin on the same day making the decision

Chris

 

[kaffinito]

Pinkerbelle8, it does make sense to pay for part and finance part, as long as you get a good rate and you have the extra $$$ to spend. If you can afford to buy DVC outright now, but prefer to wait to pay it off at the end of the year, then go for it. I paid for it outright instead of financing, just because I didn't want another bill floating around.

I do agree with dandave as well, to a point. "You don't really save money by buying an X just to get an X for free, if you really didn't need an X in the first place" is spot-on. It's so true that I am not saving money now by buying DVC, and that I can't really say that I have saved anything for a few years.

As often as we travel to WDW, and since our families needs have changed, it makes sense for us vacation -wise to buy DVC. Yes, there are codes, rates, and discounts, but when you factor in the need for two rooms and the need for cheaper meals, then the savings of DVC over paying even discounted rates means that we will hit our break-even point in three years.

Yes, DVC is a big luxury, and yes, it's one I don't need, but it will pay off for us in the end with vacation savings and a level of comfort that discounted room rates just can't match. Right now I may be spending extra money on trips, even with DP's, but in a few years I will be saving money and still enjoying a few really nice vacations a year.