Opinions on financing

[Chuck S]

Well, of course, anything in life is better if you pay cash. That said, we did short term financing (3 years) through Disney for our initial purchase, then paid cash for 3 add-ons. DVC, IMO, can still be worth it if you finance the purchase. But, like any other purchase, you need to weigh your options and choose what is best for you.

Also, if you finance, it is always better to pay it off as quickly as possible. But, again my opinion, the long term value of DVC is there whether or not you finance. Only the purchaser knows what they are comfortable with in their individual financial situation.

And yitbos I'm several years past 40.

 

[loritemp]

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.

!

This is us exactly, this sums up why we decided to buy DVC. We won't stay in a value, we have stayed in deluxe hotels and just can't go back. And we love the idea of being able to take family members and friends. We have a 2 YO and one on the way so our Disney adventures are just begining!

Good luck no matter what you choose!

 

[yitbos96bb]

Well, of course, anything in life is better if you pay cash. That said, we did short term financing (3 years) through Disney for our initial purchase, then paid cash for 3 add-ons. DVC, IMO, can still be worth it if you finance the purchase. But, like any other purchase, you need to weigh your options and choose what is best for you.

Also, if you finance, it is always better to pay it off as quickly as possible. But, again my opinion, the long term value of DVC is there whether or not you finance. Only the purchaser knows what they are comfortable with in their individual financial situation.

And yitbos I'm several years past 40.

:-D As I said, there are exceptions. It's actually a pattern I've been noticing recently with people I work with, family and on here. I'd love to actually do a formal study on the topic as I think the results would be fascinating.

If we add on, we'll probably pay cash and get a smaller amount of points. Of course, most likely we'll go through resale (probably BCV or BWV) UNLESS I move to the West Coast (then probably adding some Hawaii) OR DVC Poly happens which would make me do the happy dance

 

[yitbos96bb]

This is us exactly, this sums up why we decided to buy DVC. We won't stay in a value, we have stayed in deluxe hotels and just can't go back. And we love the idea of being able to take family members and friends. We have a 2 YO and one on the way so our Disney adventures are just begining!

Good luck no matter what you choose!

We were the opposite. At Disney we were always in Value resorts, and wanted to stay in a nicer place. Actually, the thing that sent us over the edge was the bus service to the All-Star resorts. Waited over an hour after park closing TWICE and the line barely made a dent to get on the bus. Finally got a taxi and then went on the tour after the guy promised us the promo fastpasses about 5 years ago... bought on the spot (granted I had been wanting one for years but avoided the tour to avoid temptation... my wife was the holdout that was convinced on the tour). Do not regret it at all, have either used or rented the points every year (such as when my wife was pregnant) and will gladly take any DVC room over All-Star or another value resort any day of the week. That being said, I think after next year's F and W/Halloween trip, we're going to take a break for a couple of years. Go do Hawaii, rent out some points and go take a cruise or go to Europe, maybe do Disneyland/CA. Just want a break to enhance the longing to go... we'll see if I can actually pull it off. (We usually go for 8-9 days to WDW)

 

[IknowDoYou?]

I take a slightly altered view on financing. We did finance, and we're glad we did. Though I agree with others that I would never finance a vacation, even with financing DVC, I'm still saving money over rack rates. True, it extends the break-even point out a few months (or years, depending on how fast you pay it off), but you're still buying in lower than you would if you need to wait a few years to have cash on hand, and you're paying much, much less than if you would stay on the resort without DVC.

 

[Brian Noble]

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.

Sorry, but at least in my situation, you couldn't be more wrong. We *didn't* buy DVC in part because we didn't have the cash on hand to buy a contract large enough to meet our needs at the time we were seriously looking at timeshares, four or five years ago. We kept our "grad school" dining room furniture until we had the cash on hand to replace it. And so on.

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.

In terms of straight cash flow, this is true. But, if you are accounting for the opportunity cost of your purchase price, it's less so.

We could have paid cash, but we choose not to, we didn't want to drain our accounts to purchase it.

This can make sense---if you are earning more after-tax with your nest egg than the rate you can obtain would cost, then it's not a bad idea. But, if you are doing it as a hedge against uncertainty (loss of job, large unforeseen expense) then it doesn't really help because you still have the liability of the loan to offset the nest-egg asset.

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.

I'm 41. That must explain it.

 

[JBx3]

Quote: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. ]

Sorry, not in my case either. DVC is hardly a steal even if paying cash comapred to many other timeshares with upfront buy ins. I paid cash because my core belief is to finance the neccessites in life and pay for the luxuries in life upfront. Inheriting? Never received a dime from any relative yet! Becuase I have the money? Hardly.....my retirement nest egg is nowhere it should be and sure wish I simply just had money. I couldn't disagree more with your assesment on why people pay cash. Guess that is why this is called the disboards.

 

[ddoconnell]

We are one of the ones that financed our initial purchase and our add-on.....and we haven't looked back since. This has enabled us to bring family and friends with us, while enjoying a deluxe resort. We looked at is "pre-paying" for our vacations and keeping the rack rates for the year that we bought. Would we have done it if it didn't make sense financially, no. But you are the only one that knows your financial situation. We are very particular about what we do that causes us additional debt, but making memories and enjoying some wonderful resorts was worth it to us. Think it out, write out the pros and cons and feel comfortable with whatever you finally decide....there will always be naysayers no matter what you decide!

 

[JWG]

This is a personal decision based on personal life style choices. Trying to debate cash vs. finance is like trying to convince someone they should vote R or D, or buy American car vs. foreign. All we can do is offer our opinion (and respect others) and let the OP decide.

As a side, I'm also not in the camp of those who paid cash could just afford to, didn't have to save for 10 years and is over 40. I'm under 40, first looked at DVC in 1998 and will hopefully be buying, with cash, a small BLT contract very soon. We did, literally, take 10 years to save up for such a purchase. We'd like to have 175 pts, but realize that's well more than we can pay cash for. Buying 75 prevents us from over extending ourselves should something unexpected happen, allows us to stay in BLT every other year for now. In 3-4 years we may add on.

Again, that's our personal position. We certainly could finance this purchase for as many points as we wanted by either reducing retirement savings or shifting monthly money from savings to this. We choose not to, and that's not good or bad, it just is.

Do what makes you happy but keeps you financially safe. This purchase isn't for any person who fears the next check may bounce. It's a premium priced luxury.

 

[jlewisinsyr]

This can make sense---if you are earning more after-tax with your nest egg than the rate you can obtain would cost, then it's not a bad idea. But, if you are doing it as a hedge against uncertainty (loss of job, large unforeseen expense) then it doesn't really help because you still have the liability of the loan to offset the nest-egg asset.

It is a liability but I know if I took the $20,000 out of my emergency fund account if something happened I wouldn't have any money to pay for things. By financing I could split the risk, defer some of the liability and still leave a cushion. I can last a lot longer on $20,000 in cash with a financing payment and paying for my residence then I could with $0.00 in cash and paying for my residence.

...Never received a dime from any relative yet! Becuase I have the money? Hardly.....my retirement nest egg is nowhere it should be and sure wish I simply just had money...

Doesn't paying cash for DVC at the sacrafice of funding a healthy retirement just like financing a DVC?

 

[JBx3]

It is a liability but I know if I took the $20,000 out of my emergency fund account if something happened I wouldn't have any money to pay for things. By financing I could split the risk, defer some of the liability and still leave a cushion. I can last a lot longer on $20,000 in cash with a financing payment and paying for my residence then I could with $0.00 in cash and paying for my residence.



Doesn't paying cash for DVC at the sacrafice of funding a healthy retirement just like financing a DVC?

Yes, but 2 things. I was responding to a previous post that stated, "people that pay cash do it becuase they have it". I did n ot think that was an accurate assesment for cash buyers so I mentioned an example. Why I mentioned the example is when we first purchased, the lion share if the investment market disappeared, 2008, 2009 in that range, so at the time we said "pour more into a declining market or grab a DVC until the market turns" Now, the market is slowly recovering but I would have lost more money in the market at the time of the DVC purchase. We are now and have been donating back to retirement. I was n ot funding a healthy market at the time of the DVC purchase. My point was more tongue and cheek than anything and was trying to make the point that I think a lot of people work and save long and hard for things they desire and that all does not come from "inheritance and becuase it someone that already has a lot of money"

And as a prevoius poster just mentioned...this topic is like talking R or D , there is no end! Buyers will choose the method they are most comfortable with anyway.

 

[Dean]

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.

I know a lot of people that make good money and bad choices and are thus poor or living on borrowed time. To me being poor is more of a lifestyle choice than anything else. Living beyond means including financing cars and other luxuries is a means to keeping that status quo. Financing DVC, and other luxuries, adds risk as a minimum, increases the cost of such items and increases the likelihood that one will live beyond their means. Look at all the posts we've seen recently about having to sell.

Looking deeper, I disagree with your basic premise's that include that you have to finance to have nice things, that you have to finance DVC to enjoy the benefits of DVC and ultimately, that people who reasonably can afford DVC, can't do so without financing. I'd turn it the other way and say that if you can't do it without financing, you likely shouldn't buy at all. One may choose to finance something they didn't have to, their choice of course. Ultimately people have the right to make bad choices, we've all made bad choices where finances are concerned, IMO, financing a timeshare is an example of that right.

 

[jodifla]

This is a personal decision based on personal life style choices. Trying to debate cash vs. finance is like trying to convince someone they should vote R or D, or buy American car vs. foreign. All we can do is offer our opinion (and respect others) and let the OP decide.

As a side, I'm also not in the camp of those who paid cash could just afford to, didn't have to save for 10 years and is over 40. I'm under 40, first looked at DVC in 1998 and will hopefully be buying, with cash, a small BLT contract very soon. We did, literally, take 10 years to save up for such a purchase. We'd like to have 175 pts, but realize that's well more than we can pay cash for. Buying 75 prevents us from over extending ourselves should something unexpected happen, allows us to stay in BLT every other year for now. In 3-4 years we may add on.

Again, that's our personal position. We certainly could finance this purchase for as many points as we wanted by either reducing retirement savings or shifting monthly money from savings to this. We choose not to, and that's not good or bad, it just is.

Do what makes you happy but keeps you financially safe. This purchase isn't for any person who fears the next check may bounce. It's a premium priced luxury.

I don't get the logic of this at all! Do you know how many GREAT vacations we've had in the time you've been saving up? Did you not go to Disney the past 12 years?

 

[Jason@dvcstore]

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.

Jason

 

[Jason@dvcstore]

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.

I agree that you can't get the time back and can't spend too much time saving.

Jason

 

[ML_LovesDisney]

We financed! Don't regret it at all. We hope to pay it off early but if not, I'm not too worried about it.

 

[tkalita]

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??

Where did you find this 2.9% credit card with no expiration and no transfer fee? We bought in October 2009 with all intentions of transferring it to a home equity loan and didn't get approved for it! We have EXCELLENT credit, no CC debt, and bills that we are managing just fine. I need to get out of this 10.99% loan ASAP!

 

[marynvince]

Where did you find this 2.9% credit card with no expiration and no transfer fee? We bought in October 2009 with all intentions of transferring it to a home equity loan and didn't get approved for it! We have EXCELLENT credit, no CC debt, and bills that we are managing just fine. I need to get out of this 10.99% loan ASAP!

late 2008 early 2009. I had been using my chase card for all expenses and paying off the balance monthly to get the cash back rewards. Got the 2.9% in the mail and couldnt pass it up. Had to stop using the card because back then they would put payments toward the lower interest rate and higher rate purchases would rack up interest. One of the things credit card issuers can no longer due. They can also, no longer give you free transfers. All that I've seen are 3% of balance, so that obviously raises the quoted interest rate by at least that much. Good Luck.

 

[JWG]

I don't get the logic of this at all! Do you know how many GREAT vacations we've had in the time you've been saving up? Did you not go to Disney the past 12 years?

We did, we just paid for them out of pocket as the years went by and anything left over went to the savings account. Since then we have been on 2 Disney cruises and numerous trips. My father and I attend the NCAA Men's Hockey Championship every year. We put money toward a vacation fund every month. That fund has grown over the years as our vacations haven't caused us to spend it all. In my mind, I've not paid a 15% premium on vacations by financing them and have earned more money toward future trips by saving the money with interest (That was obviously more true the first 5 years of this plan than the last).

I'm not saying financing is bad or wrong, it just wasn't right for us. We have lots of friends who carry credit card debt and finance purchases we don't, we love them just as much as our friends who don't.

 

[JBx3]

We did, we just paid for them out of pocket as the years went by and anything left over went to the savings account. Since then we have been on 2 Disney cruises and numerous trips. My father and I attend the NCAA Men's Hockey Championship every year. We put money toward a vacation fund every month. That fund has grown over the years as our vacations haven't caused us to spend it all. In my mind, I've not paid a 15% premium on vacations by financing them and have earned more money toward future trips by saving the money with interest (That was obviously more true the first 5 years of this plan than the last).

I'm not saying financing is bad or wrong, it just wasn't right for us. We have lots of friends who carry credit card debt and finance purchases we don't, we love them just as much as our friends who don't.

That's a great answer. Thank you. This is what I have said all along, you don't need a disney DVC to create tradition, family bonding, and memories. It can be accomplished in a very normal way such as yours above and also mine prior to DVC ownership.

Guess I am not undersatanding in some previous posts as to why some feel they need to finance a DVC and also combine it with the fact they do not want to wait to build traditions and memories. I think they are completely 2 separate topics, some in the posts have combined the 2????? Nothing wrong if you like to finance but does anyone feel the reason why some have attempted to combine the 2 is to established a main reason to finance?