Opinions on financing

[Bullseye]

I saw some numbers a year or so ago that said that about 75% of all direct DVC sales were financed. I don't have any data on resales, but I'd think few resales are financed, although there is financing available. If you need to finance and you have a home equity line available, that will usually be your best rate.
Should you finance? Who knows? You'll get some opinions, but truthfully none of us know your finances, job stability, etc. That's a personal financial decision and I don't think any of us can really give you sound advice there.

We just joined DVC about a month ago and thats what we are doing, we refinanced our mortgage to 15 year fixed rate with cash out. Rates are fairly decent right now. I will pay off my mortgage 7 years earlier and for about the same cash outlay as my previous mortgage my DVC will be paid off also. Yet I'm going to pay way less in interest. There's no way I could see paying 10-14% interest to DVC.

 

[lucyskys]

we entered RORF yesterday we're using a heloc. i want to start making memories now, this is something that i know i can pay off sooner rather than later. i went with a medium contract 200pts owk. my husband and i have excellent credit and little debt, but not the lump sum sitting in savings!

so hopefully if all goes well we will be able to USE our heloc!

 

[Dean]

I've been doing a ton of research on DVC - my wife is either going to divorce me or have to invest in some ear plugs. I probably should just stop talking to her about it and ask the dogs opinion on SSR vs. OKW or UY or resale vs. direct or . . . . you get the picture.

Anyway, I was reading on mousesavers about DVC. This article mentions that DVC is a much better decision when it doesn't need to be financed - no kidding! So is not financing my house, car, hot tub, about half of my furniture, furnace, my new flat screen tv (very nice), and my second child. No, wait a minute, my second child wasn't financed - I paid cash for him. Seriously though, over the years we financed many things and we have a great credit score, little debt, and are looking to enjoy our lives with our children. So my question is - do most people finance or pay cash? Should I be rethinking this or should I chalk this one up to another luxury purchase that would benefit my family?

Opinions are appreciated - just don't let my wife know I'm talking about this again!

Since you asked, I don't feel financing such a luxury purchase is a good idea. Better to buy less points, buy a cheaper property, or wait and save, even if it means skipping a year of vacation. If you decide to finance, remember that doesn't lock you out of resale.

 

[Dean]

I saw some numbers a year or so ago that said that about 75% of all direct DVC sales were financed. I don't have any data on resales, but I'd think few resales are financed, although there is financing available. If you need to finance and you have a home equity line available, that will usually be your best rate.

Should you finance? Who knows? You'll get some opinions, but truthfully none of us know your finances, job stability, etc. That's a personal financial decision and I don't think any of us can really give you sound advice there.

Good rate but will put your home at risk. A no interest CC is likely the best rate but caries great risk.

 

[javamom]

We split the difference and financed a portion of the cost through a home equity loan. We deduct the interest on the loan for taxes, and the property tax portion of our annual dues. We were happy with this choice as it allowed us to not break the cash flow, yet not finance that huge amount.

oh and we bought resale through TSS.

 

[JBx3]

Since you asked, I don't feel financing such a luxury purchase is a good idea. Better to buy less points, buy a cheaper property, or wait and save, even if it means skipping a year of vacation. If you decide to finance, remember that doesn't lock you out of resale.

I sure second this as well. Luxury vs. Neccesity is how I weighed our decision.
In previous post above, some feel they did not want to wait to have family bonding and traditions and memories and financing was their option to have these things happen.

For us, we can do a ton of other things in life to build family traditions and memories other than Disney.

Our first contract was direct and we paid cash once we had that cash, our second contract is resale and we just passed ROFR and will pay cash as well.

The numbers simply did not add up for us if financing, better to rent points or pay for a cash vacation. Just our opinion.

Best of luck

 

[Brian Noble]

I'm not a fan of financing any luxury or lifestyle purchases, personally. I prefer to pay cash for such things, even though it means not doing some things I'd like to do. But, you've already been down that road (hot tub, furniture, TV) so my opinion probably doesn't carry much water for you.

It certainly does change the rent-vs-buy balance though. If you are financing the purchase, you might be better off economically to rent from an owner.

For us, we can do a ton of other things in life to build family traditions and memories other than Disney.

That's been true for us too. We've bought some truly inexpensive timeshares on the resale market that have given us some wonderful vacation memories---including some fortuitous stays in DVC units---for very little cash.

 

[adminjedi]

We only pay cash for vacations. That is what keeps the actual "saving with DVC" formulas lucrative.

 

[PoohNFriends]

We bought 100 AKL points direct in April and put $5000 on my Disney Visa with no interest for 6 months and paid the rest cash. In May we went to the Doorway to Dreams event and decided we wanted a small 50 point contract at VGC since Disneyland would be our next planned trip and this would give us the 11 month advantage. I didn't have the credit limit to put this purchase on the Disney Visa and didn't want to take the cash from somewhere else so we financed. We plan on having this payed off within a year. Financing this small purchase is worth it to us to get a small contract before the price increased and VGC selling out, and to be able to use it now vs. saving $$ and buying later at an unknown price (whether direct or resale).
Just wanted to share what we did; some would agree and some would disagree with that thinking, but it works for us personally.

 

[FindTheMickeys]

My first purchase was 150 points at SSR. Financed through Disney for 10 years. Paid off in 4 years. Just bought another 100 points. Financed through Disney for 10 years. Will have it paid off in 2 max... I say whatever works for the individual. You know your finances and your life. You can talk yourself into or out of anything you want to do (at least I know I can)..

 

[walkdmc]

If you're looking for opinions, mine is one should not finance vacations. I don't see DVC as an investment, it's a vacation plan, IMO. I don't finance vacations. Many people do, I don't. If I can't pay cash, or pay off the CC before finance charges accumulate, I don't take the vacation. I find a cheaper alternative. There are ways to visit WDW on the cheap. There are decent onsite Value resorts as well as off-property suites that make WDW affordable for most people.

We finance a house for obvious reasons and homes are investments (well, they used to be ), cars get us to jobs that pay for our food and houses, so cars are a necessity for most. So, I don't think you can compare financing things like homes, education and cars with a Disney vacation.

It sounds like you just have to step back for a little while, weeks-months, then reassess. When you're comparing financing a vacation plan with mortgaging your house, I think you've got the Disney fog/disease/virus, whatever.

Again, I'm not saying you shouldn't go to WDW. Go. And often. But do it in a way that you can afford, in cash.

 

[JWG]

If you're looking for opinions, mine is one should not finance vacations. I don't see DVC as an investment, it's a vacation plan, IMO. I don't finance vacations. Many people do, I don't. If I can't pay cash, or pay off the CC before finance charges accumulate, I don't take the vacation. I find a cheaper alternative. There are ways to visit WDW on the cheap. There are decent onsite Value resorts as well as off-property suites that make WDW affordable for most people.

We finance a house for obvious reasons and homes are investments (well, they used to be ), cars get us to jobs that pay for our food and houses, so cars are a necessity for most. So, I don't think you can compare financing things like homes, education and cars with a Disney vacation.

It sounds like you just have to step back for a little while, weeks-months, then reassess. When you're comparing financing a vacation plan with mortgaging your house, I think you've got the Disney fog/disease/virus, whatever.

Again, I'm not saying you shouldn't go to WDW. Go. And often. But do it in a way that you can afford, in cash.

Agreed. We're a family that doesn't carry debt if we can avoid it - personal opinion, not saying it's right. Pay off credit cards every month and only outstanding debt are a mortgage and my graduate student loans. We do finance auto purchases, typically over 5 years and then pay ahead never taking more than 2.5-3 to pay off.

I'd love to have about 175 pts at BLT now, enough for a 1 BR in Magic Season every other year. We can't swing that down payment. We can easily do 75 points and could stretch to 100. 75 is enough for a studio every other year, 100 doesn't add much value (not enough for a 1 BR every other year so not a "sweet spot" for points). We decided to get the 75 and I'm confident we'll add an additional 75-125 someday in the future. While the purchase price per point may go up, we figure we'll save that in not paying the dues until we buy again.

We'll grow into what we can afford as our family grows. A studio for mom, dad (me) and DD (4) will suit us for the time being. Eventually, we'd like to be able to do a 2 BR and bring frinds/family with us. Baby steps.

I just think $114 a point (with incentives, $120 without) is already expensive, now add a 15% finance charge on that and it I think you'd be better served staying on existing discounts (30-40% off room, free dining, etc.) and saving some money toward a future purchase. At a minimum, if discounts go, AAA usually has 10-20% off rooms always.

I just rented points for a future stay in December. That's another option until you can buy. What I paid was equal to paying for a moderate before tax. Accounting for tax on cash rooms (not when renting) my cost actually was between a value and a moderate.

All this lengthy overspeak to say, I'd agree with vacations are a luxury item and should not be financed at 15% over 10 years. There's ways to save for DVC (or any timeshare) while still vacationing.

Now, in the spirit of honesty, we've been able to enjoy DVC because my parents bought in 1999. So, while I had graduated from college by then (thanks a lot mom and dad), we still traveled with them and were able to enjoy their points in a 2BR as we're aspiring to on our own.

 

[kristie03]

It sounds like we were similar to the OP. To us it it was a purchase that we wouldn't have been able to make in cash, are fine with financing it and like a lot of others are on track to pay it off early.....

and the best part is I'm loving my DVC!

 

[marynvince]

Don't listen to the rationalizers that say I dont finance anything except for Home or cars or whatever. Financing is Financing. Or the folks that only pay cash because blah blah blah. They pay cash because they can, because they have plenty of it. They havent saved for 10 years to buy DVC. Trust me. Likely they have good jobs or inherited money. Hey I've got nothing against paying cash. I am one of those people that have no credit card debt.

But I did finance DVC and quickly transfered to a 2.9% CC offer with no expiration and no transfer fee (technically CC debt). Now that cash I would have used on DVC goes toward investments earning much more than 2.9% There is a cost to using cash that I've not heard mentioned once??

You can't get the time back that you mssed, or the memories you would have created, especially with kids, if you wait until you have the money.

I say finance smartly and enjoy your time on earth. Good Luck.

 

[3girlsfun]

We are also thinking through this same decision right now. I believe we are going to save for another year, and then make a decision. We currently have a trip planned, and it would be nice to put that money towards the DVC, but, I am about $600 away from having that vacation paid off, so, no big deal.

I think if we save for another year, and use some of our tax return money this coming up year, we should be able to purchase around 100 points. This will be a great start for us, and we could then add on 25 or 50 point contracts until we get to the amount we would like to have. (about 250-300).

I think having a nice savings account, with about 3 to 6 months worth of income saved up is important in case of job loss. (My DH lost 2 jobs just last year!!!!) Way more important than a trip to Disney. Our upcoming Disney trip in October will be our first "real" vacation in about 2.5 years. And, I can tell you, it is much appreciated and deserved!

Just try to be cautious. I can't imagine financing something like this and taking 10 years to pay it off. I might consider financing a small amount after we get out tax return this upcoming year if I know we can pay it off within 6 months, but, beyond that.........

 

[jodifla]

Don't listen to the rationalizers that say I dont finance anything except for Home or cars or whatever. Financing is Financing. Or the folks that only pay cash because blah blah blah. They pay cash because they can, because they have plenty of it. They havent saved for 10 years to buy DVC. Trust me. Likely they have good jobs or inherited money. Hey I've got nothing against paying cash. I am one of those people that have no credit card debt.

But I did finance DVC and quickly transfered to a 2.9% CC offer with no expiration and no transfer fee (technically CC debt). Now that cash I would have used on DVC goes toward investments earning much more than 2.9% There is a cost to using cash that I've not heard mentioned once??

You can't get the time back that you mssed, or the memories you would have created, especially with kids, if you wait until you have the money.

I say finance smartly and enjoy your time on earth. Good Luck.

Yes, THIS!!!!!!!!!!!!!!!

ITA.

 

[loritemp]

We are currently waiting to hear about ROFR on our first contract. We are paying cash for our 150pt BWV contract. A couple of years back my DH and I inherited some investments from a relative and we haven't touched it, we roll everything over and reinvest it. When we considered how to pay for our DVC membership, we originally planned to save for a couple of years nad then finance the rest. But we looked at our portfolio and even in this down economy, we have made some money. So we are selling a small fund to pay for our membership and even then we are still ahead of where we started when we got the original inheritance.

We have worked really hard these last few years to pay off our debts and have just a small amount left on a home equity loan. We decided going back inot debt wasn't for us. So once that loan is done, that money we were paying fo rthat will go into our savings/vaca fund. For us, it just seemed like the least impactful way to do this.

I will say, I have a friend who financed 100%. He has been a member for about 10 years. He paid his off early and while he knows he paid a load in interest, he says the time he had with his family on thsoe vacations makes that extra oney spent well worth it!

 

[bhiggs7]

I just wanted to thank everyone for their opinions.

As in most cases, "what works best for you is what works best", is clearly the right answer.

I believe that purchasing a DVC contract is both a luxury and an investment. Not in the sense that we are looking to make some money, but in regards to saving some money in the long run. I know that we will be going to Disney many, many more times. The ability to "go big" and invite some other family members is very exciting to my wife and I. I hope that I don't sound like an elitist here, but at this point in my life, the glass slipper just doesn't fit at a value resort any more.

With two trips already booked and paid for, I have some time to find the right contract. Looking at the number of contracts in the resale market, I am confident that with a little patience and timing, I will find the right one for both my wishes and my budget.

Thanks again for all your input!

 

[yitbos96bb]

I've been doing a ton of research on DVC - my wife is either going to divorce me or have to invest in some ear plugs. I probably should just stop talking to her about it and ask the dogs opinion on SSR vs. OKW or UY or resale vs. direct or . . . . you get the picture.

Anyway, I was reading on mousesavers about DVC. This article mentions that DVC is a much better decision when it doesn't need to be financed - no kidding! So is not financing my house, car, hot tub, about half of my furniture, furnace, my new flat screen tv (very nice), and my second child. No, wait a minute, my second child wasn't financed - I paid cash for him. Seriously though, over the years we financed many things and we have a great credit score, little debt, and are looking to enjoy our lives with our children. So my question is - do most people finance or pay cash? Should I be rethinking this or should I chalk this one up to another luxury purchase that would benefit my family?

Opinions are appreciated - just don't let my wife know I'm talking about this again!

Nothing like lighting a match in a gunpowder factory ;-)

As always hot button topic...

My opinion is that, Yes, it is obviously better if you pay cash. The interest rates are around 9-11%, and the ammatorization schedule is such that the interest is paid off ahead of the principal (which is common for most long term loans such as mortgages or cars), so the longer you take to pay off, the more you'll pay... You might make it to 3 years, want to pay it off and see that your payoff isn't that far below what your initial loan was.

I'm not a fan of the arguement at Mousesavers if I remember what they are correctly. I believe its the old "if you put the money in a CD, etc" argument. It's a valid one, but of course that assumes you actually DO stick the money in a CD or whatever investment vehicle. (If I am mistaken on this being the argument at Mousesavers, ignore this)

All this being said, I also have no issues with someone choosing to finance. People can look down upon you, say your crazy, etc. Ultimately, its your money and you can spend it how you want.

If you have the money now, then pay in cash if it won't hurt. If you don't and you feel this is a good purchase for you with your current economic situation, then by all means finance it. Either way, Enjoy.

(For the record, I did finance mine and paid off early, hence my comment on the interest )

 

[yitbos96bb]

In the grand scheme of things, whether you finance or pay cash the largest portion, by a long shot is not the initial buy in; it is the dues/maintenance fees.

There are some members who are adamantly against financing a "luxury" purchase, others who don't care. Ultimately, if you're financial able to pay for it (that includes having a financial cushion) it shouldn't matter.

We could have paid cash, but we choose not to, we didn't want to drain our accounts to purchase it. Sure I'm paying more for it, but I'm also not paying for annual stays on a cash basis, those funds have been redirected to the DVC loan.

I'm probably generalizing too much, but in those "discussions" about this topic, I've notice a lot more of the younger, under 40 set, such as you and myself seem to be more ok with financing than the Older, over 40 set. Obviously, there are some exceptions to this, but anecdotally there seems to be some truth.