how did you pay w/o financing?

[LuluLovesDisney]

Okay, I have been able to budget really well, and I am interested in DVC. People have said not to finance. If you can't afford it "cash" you shouldn't do it. This confused me.

This question of for everyone who *didn't* finance- did you have 20,000 cash to put out in one lump sum? or is there something here I'm missing?

If I do DVC, I wouldn't want to accumulate extra costs by paying interest on 200-300/mo. payments, but I don't have 20,000 cash! Is there an installemt plan? Is there a way I could make my own plan, say $5000 down and the rest like $1000/mo. to pay if off sooner? Do I choose my monthly payments? Is that the same as financing?

I really appreciate the help. I want to decide if/how/when I can afford it before I make any other decisions regarding resale/direct, etc.

 

[FanOfStitch]

I can't answer regarding the people who paid cash, I couldn't afford to. I did finance my DVC through Disney. Although the interest was a little high, I did find the monthly payments to be quite low. This enabled me to make larger monthly payments and I had it paid off in about 2 years. I never regretted once buying into DVC and I'm the kind of person who usually feels guilty spending too much on groceries.

 

[JerJan]

We paid cash for ours by using our equity line of credit at a much lower rate than what Disney was offering. If you have alot of equity in your home you can try that route. Good Luck!

 

[NJOYURLIFE]

We took the money that would have been our downpayment on 150 points through Disney and used it to purchase a small 50 point contract on the resale market. Even with closing costs we paid less per point then Disney was selling it for.

Now we are in the system and plan to add on either 25 or 50 per year for cash (saving that money through the year). We may do it through resale or through Disney depending on the situation at the time we are looking. I personally feel that there are benefits to both purchase ways, but went resale because we didn't want the monthly payments at this time and wanted to start out with a smaller contract.

Another thing which I didn't really research deeply, but saw online was that you can't break up contracts. We have 3 children and if we owned 150 we would like to leave 50, 50, and 50, but I have seen postings that said you can't separate it, they would have to be joint owners. Also, if you find that you have too many points (LOL-can't imagine that), you can easily sell smaller contracts.

There are many ways to do things, this is just what we did.

 

[Disney Doll]

We took the money that would have been our downpayment on 150 points through Disney and used it to purchase a small 50 point contract on the resale market. Even with closing costs we paid less per point then Disney was selling it for.

Now we are in the system and plan to add on either 25 or 50 per year for cash (saving that money through the year). We may do it through resale or through Disney depending on the situation at the time we are looking. I personally feel that there are benefits to both purchase ways, but went resale because we didn't want the monthly payments at this time and wanted to start out with a smaller contract.

Another thing which I didn't really research deeply, but saw online was that you can't break up contracts. We have 3 children and if we owned 150 we would like to leave 50, 50, and 50, but I have seen postings that said you can't separate it, they would have to be joint owners. Also, if you find that you have too many points (LOL-can't imagine that), you can easily sell smaller contracts.

There are many ways to do things, this is just what we did.

If you bought one 150 point contract you can't break it up. If you have three 50 point contracts, you most certainly may leave one contract to each child.

To the OP...when we purchased our 1st contract, we financed through Disney with a 10 year loan. Our reasoning was that the 10 year loan had the cheapest monthly payment, but we could always pay more every month if we had extra $$. However, if we didn't have extra $$ in certain months, then all we would have to pay was the low monthly payment. As it worked out, most months we paid more and paid it off in about 3 years. The second one we bought we paid cash for.

I have heard of folks putting their points on their Disney VISA card to get the reward $$ and then paying off the credit card the next month with cash or home equity funds. If you use home equity funds, you get to take something off your taxes too I believe. I have hear dof people paying it off with home equity funds only(no credit card first), and getting the tax break. I have heard of folks remortgaging their primary residence and allowing for extra from that $$ to pay for DVC. I have heard of people paying cash. Thse are basically the 4 ways I have heard of it.

If you have $5000 to put down, and can afford $1000/month, then do what DH and I did. Take the loan from Disney that gives you the cheapest interest rate and pay it down quickly.

 

[JimMIA]

We paid cash for our points -- cash cash, wrote a check. But I don't think I would ever advise that NObody finance something like DVC. I would rather see people pay cash, and obviously the cost is less if you do so, but I don't see it as an imperative.

Some large items, like a car or a college education, most people need to finance. And for many, the "need" for DVC comes when they have young children and are least able to pay cash for large-ticket items. You could argue that those families will either save money or have vacation experiences they otherwise could not afford. So I think financing DVC is more a priorities issue than a pure financial management issue.

I would argue that it doesn't make good financial sense to finance vacations (whether through DVC or any other way) when you are carrying credit card debt at 18-21%. If that's the choice, my advice would be to grit your teeth and pay off the credit card debt first.

I also would not recommend that anyone finance DVC if they anticipated having to put the trips to WDW on their credit card and carry the balances for more than a couple of months.

We often focus on the cost of DVC, but the truth is, it's only part of the cost of Disney vacations...and probably not the largest part for most of us. When considering a DVC purchase, many folks ask "how many points do I need?" A much better question might be, "How many dollars do I have to spend on Disney vacations each year -- and within that budget, is DVC realistic for us?"

 

[NJOYURLIFE]

I would argue that it doesn't make good financial sense to finance vacations (whether through DVC or any other way) when you are carrying credit card debt at 18-21%. If that's the choice, my advice would be to grit your teeth and pay off the credit card debt first.

I also would not recommend that anyone finance DVC if they anticipated having to put the trips to WDW on their credit card and carry the balances for more than a couple of months.

We often focus on the cost of DVC, but the truth is, it's only part of the cost of Disney vacations...and probably not the largest part for most of us. When considering a DVC purchase, many folks ask "how many points do I need?" A much better question might be, "How many dollars do I have to spend on Disney vacations each year -- and within that budget, is DVC realistic for us?"

Good points! People do frequently focus on the cost of the points and not on the cost of the trips themselves.

 

[EdTreo]

I started with 150 and add on a 120 after I paid off my my first contract. I made an arrangement with my guide to pay it off in 3 monthly instalment each time. So it was around 4-5K each month interest free.

 

[Dean]

We took the money that would have been our downpayment on 150 points through Disney and used it to purchase a small 50 point contract on the resale market. Even with closing costs we paid less per point then Disney was selling it for.

Now we are in the system and plan to add on either 25 or 50 per year for cash (saving that money through the year). We may do it through resale or through Disney depending on the situation at the time we are looking. I personally feel that there are benefits to both purchase ways, but went resale because we didn't want the monthly payments at this time and wanted to start out with a smaller contract.

Another thing which I didn't really research deeply, but saw online was that you can't break up contracts. We have 3 children and if we owned 150 we would like to leave 50, 50, and 50, but I have seen postings that said you can't separate it, they would have to be joint owners. Also, if you find that you have too many points (LOL-can't imagine that), you can easily sell smaller contracts.

There are many ways to do things, this is just what we did.

This a a great option for many and I like the approach. As a generalization, financing erodes the value of DVC and it's usually not a good idea to finance. But if you're spending the money anyway and never seem to be able to save it up for this type of issue, it might be right for some. And some people do a second mortgage or similar so they can deduct it and get better rates. Or maybe you have a CD or other money's coming that is already definite but not available yet.

As a rule though, it's rarely reasonable to finance any luxury purchase whether it be cars, boats, timeshares, etc; unless you can write it off on your taxes more than just the interest itself. I paid cash for all of the contracts except one which I traded another timeshare even for.

 

[JimC]

We paid cash for our points -- cash cash, wrote a check. But I don't think I would ever advise that NObody finance something like DVC. I would rather see people pay cash, and obviously the cost is less if you do so, but I don't see it as an imperative.

Some large items, like a car or a college education, most people need to finance. And for many, the "need" for DVC comes when they have young children and are least able to pay cash for large-ticket items. You could argue that those families will either save money or have vacation experiences they otherwise could not afford. So I think financing DVC is more a priorities issue than a pure financial management issue.

I would argue that it doesn't make good financial sense to finance vacations (whether through DVC or any other way) when you are carrying credit card debt at 18-21%. If that's the choice, my advice would be to grit your teeth and pay off the credit card debt first.

I also would not recommend that anyone finance DVC if they anticipated having to put the trips to WDW on their credit card and carry the balances for more than a couple of months.

We often focus on the cost of DVC, but the truth is, it's only part of the cost of Disney vacations...and probably not the largest part for most of us. When considering a DVC purchase, many folks ask "how many points do I need?" A much better question might be, "How many dollars do I have to spend on Disney vacations each year -- and within that budget, is DVC realistic for us?"

Well said Jim.

 

[Montana Disney Fan]

The reason we purchased into DVC was I was paying $4000 / year or more in rent for these same rooms anyway (2-bdr Home Away From Home). We like a lot of space and have always operated under the notion that vacations are memories and that you should splurge (without financing) to make the memories the best that you can possibly afford.

Now that we're DVC members, the $4000 / year rent goes away and is substituted by an annual $1000 maint. fee saving me around $3k per year.

If you factor in the $25k investment purchase into DVC and figure that money could have been earning me interest, along with the $1k annual fee, then back out what I used to pay to rent, you'll learn that I'm saving "a little" but not a lot. Most people do not factor what the investment into DVC could have earned them "somewhere else".

BUT!! The DVC has made vacationing very easy and we don't have to fight to get a 2-bdr anymore like we did back when we rented. We are very happy with our purchase but would have probably gone re-sale had we known all the facts at the time of purchase.

We put the entire $25k purchase price on our Airline Credit Card for miles (and thus free plane tickets) and paid it off when then statement came. Disney charged us no extra fee's for doing this even though it cost them roughly 2% in profit that they had to pay the credit card company. This brings up another good point: We've never paid for airline tickets for a vacation. Instead, we use an airline credit card for all of our purchases during a year (groceries, gas, clothes, insurance, you name it) and then fly down for free. The annual fee on the credit card is $40 and we receive $1700 worth of free tickets each year. This just makes good sense.

MDF

 

[stingmom]

We didn't want to finace $!5,000 to become DVC owners. No, we also don't have that kind of cash lying around. So, we researched and realized that we could afford to buy in smaller amounts through resale, and still have all the DVC membership benefits. After we have replenished what we used on our first DVC purchase, then we wait for our next batch of resale points to appear. Or, you can buy the add-ons direct through Disney (once you are a member.) If you can't afford it right now, you could use this time to rent some pts (from the rent/trade board) to try and help you diecide which resort you would like for your "home" to be. You won't regret you DVC purchase, no matter which way you decide to become a member. Have a Magical day!

 

[DebbieB]

I had a couple of CD's that I cashed in plus I did a 3 year loan from my 401K. I ran the entire purchase through my AOL Visa and got 6 or 7 months free internet, then paid it off when the bill came, so no interest there.

The 401K loan ended up being good since the market was high in late 1999 when I took the loan and dropped after that while I was paying it off.

 

[cdpa4d]

I have a different view on this than most. I feel you should finance. My reasoning is that I can make more money on investing $10,000 or $20,000 than if I paid my DVC points. In other words I could make more than 9.75% on the money than I would if I paid off DVC immediately. If you have $10,000, $15,000, or $20,000 laying around to spend on DVC I would suggest you invest it wisely before slapping it on DVC. I would finance for 10 years and, if you can pay it off sooner, I would go that route.

Use your money and buy sensible stocks and mutual funds.

I'm not a financial advisor by any means, but I think this makes good financial sense. Use Disney's money and not your own. Invest your money!

 

[Dean]

I have a different view on this than most. I feel you should finance. My reasoning is that I can make more money on investing $10,000 or $20,000 than if I paid my DVC points. In other words I could make more than 9.75% on the money than I would if I paid off DVC immediately. If you have $10,000, $15,000, or $20,000 laying around to spend on DVC I would suggest you invest it wisely before slapping it on DVC. I would finance for 10 years and, if you can pay it off sooner, I would go that route.

Use your money and buy sensible stocks and mutual funds.

I'm not a financial advisor by any means, but I think this makes good financial sense. Use Disney's money and not your own. Invest your money!

I don't see getting 10% or more on normal risk ventures but it's your dime.

 

[crazywig]

We put the entire $25k purchase price on our Airline Credit Card for miles (and thus free plane tickets) and paid it off when then statement came.

this is exactly what we did with our initial 150 pts (about 12k or so i think) in 2003. i cashed in some old espp stock that was never going to get near what it was purchased at, and bought BWV . btw we were able to write that stock loss off on our taxes for two yrs.

 

[Montana Disney Fan]

I don't see getting 10% or more on normal risk ventures but it's your dime.

I agree. Everyone has their own opinion on the subject but we didn't do any heavy investing until after we paid off our our house and college loans (of course we were maxed out on 401k but that's it). Since then we've enjoyed financial freedom to invest or buy toys and luxuries.

A lot of people would argue that you can make more than the interest on your home loan by investing, which is probably true, but it's not our philosophy. We worked hard for 12 years after college becoming debt free and we'll never be in debt again. We appreciate our goodies a lot more when we don't have to go to bed at night thinking about a minimum payment and interest that goes with it. JMHO

 

[Laurajean1014]

We paid cash.

 

[Tamar]

We used one of the 0%, no transaction fee credit card checks and paid it off in 6 months. Not sure if those are still available, but they were all over the place in 2001 when we first bought in. Our add-ons have been cash.

 

[DisFlan]

Paid with a cashiers check. We bought resale. If we'd had to finance or borrow in any way, we wouldn't have done it - mainly for the reasons JimMIA and Dean give.

Our accommodations are pre-paid at WDW, but the trips still cost money. We prefer to pay as much up front as possible, enjoy our vacation to the hilt, then pay off any charges made during the trip as soon as possible after we get back. We have a number of friends who are still paying off numerous, exotic "bragging rights" vacations from two or three years ago while planning new ones, including timeshares. We just don't think that's a good idea.

DisFlan