Pay cash or finance

[dbinkley]

Hello
Does it make more financial sense to pay cash for a multiple small contracts 50-75 as finances allow or finance one larger contract?

 

[Louis morrell]

For me this is a pay cash, disposible income (not the emergency fund or kids college fund) luxury purchase. It is something I would never finance. It's a debt I would not want to carry. I'm sure others will soon be along to disagree.

 

[npatellye]

Agree with above. If we didn’t have disposable income to pay for DVC in cash, we wouldn’t own DVC points. DVC is not a necessity to us. Others may feel differently.

I would not recommend financing but that’s just me. YMMV.

 

[princesscinderella]

I think there’s multiple ways and there’s no wrong answer except if it’s going to be a huge struggle to pay for the contract, dues and all the tickets, meals etc that a Disney vacation entails, don’t buy DVC.

If you get a Disney visa it will give you 6 months no interest financing which can help when making small contract purchases. It can also be used for large ones but I’d only use it if you can fully pay it off in that time. You get Disney $ which can then be used to pay your dues.

If you have the $ to purchase 75 points but in the long run you really want 150 points, you will most likely be able to get an incentive with a larger point purchase bringing your cost per point down. Buy the 150 points put the 1/2 cost down that you saved to buy 75 points and finance the rest and pay it down as quickly as possible with extra payments. It might work out cheaper if you have good credit, between the extra incentive and the hedge against a rise in the cost per point which Disney keeps bumping up. There’s no deals on small contracts.

 

[kes601]

Agree with others. For us it was a cash purchase or we would not do it. With the interest rates I’ve seen for DVC purchases seems like throwing away money to me….

 

[thRob]

Agree, buy the contract you can afford in cash now, can always add on later

 

[emmymac17]

DVC was a cash purchase for us. Its a luxury above and beyond our savings, investments, etc. The interest rates are very high and really make the math not make sense. We did use a Disney Visa for our last purchase for the points but knowing we had the cash in hand to pay it off before interest kicked in of course

 

[dbinkley]

The 6 months no interest Disney visa is only for buying directly from Disney, correct? Not resale. I didn’t think you could buy a small contract as a new member.

 

[emmymac17]

The 6 months no interest Disney visa is only for buying directly from Disney, correct? Not resale. I didn’t think you could buy a small contract as a new member.

That is true-direct from Disney only. We purchased our first contract with cash outright then added on using the Disney Visa benefit

 

[Starport Seven-Five]

Buying small contracts increases the price per point, requires multiple closing costs, and is going to be a huge headache to line up UYs/resorts.

That being said, the interest rates on DVC purchases are ridiculous. I would wait until you can afford to buy the contract size you want in cash.

 

[VdoesDisney]

I’m going to be on the “it depends” camp, if you can save money by buying a larger contract it may be worth it to do so under some special circumstances:
- Can you pay a large chunk upfront?
- Can you find financing with a lower interest rate? (Disney and the advertised resale financing companies have extremely high rates).
- Can you pay it off quickly and aggressively?
- If you didn’t have more points would you be paying cash to complete your stays?
- And most importantly, is the monthly payment coming from 100% disposable income with no impact whatsoever to your finances?

Under these circumstances I think it could be ok, especially if you’re getting a very good deal on resale or locking in a direct price before an increase (like SSR now), I know most will disagree as this is definitely a luxury purchase but I can see a scenario where it could work.

 

[Sandisw]

All depends on how long you finance, the rate, and whether you will continue to go to WDW as a cash guest while "saving" for DVC. When we decided to buy in, we considered the financing option and when we laid it all out, it would have still made financial sense to do it. The only difference is that the break even point would add a few years. The plan was and still is to own DVC until expiration because we enjoy it as a vacation place, even now with adult kids.

We ended up not needing to go that route.. but we had a certain vacation budget that got spent every year, and since buying DVC fit into that, even with interest for the first 5 years (the length of loan we would have done), we went for it!

Prices do change so that is another thing to consider and sometimes, if things go up, what you saved in interest by waiting is actually less than what it costs you to buy for cash a few years later. I paid $73/point just 4 short years ago for SSR...its now closer to $110. For my 300 point contract, that is a difference of $11K. Even a 10 year loan at 6% comes up to total interest of $7500, a savings over waiting.

Now, its obviously a gamble because had SSR not gone up, but gone down, then you lose. In the end, it really is only something you can decide but in comparison to cash rates, I think financing isn't always a "no way" situation.

 

[RoseGold]

Closing costs make small contracts much more expensive per point, and financing can flip the math and make DVC make no sense at all.

I'm a math person and I wouldn't do either. Just rent points or pay cash.

 

[kdm31091]

Anything like this is a polarizing subject but in my opinion the cost of financing wipes out most if not all of the advantage of buying DVC. Things are rarely totally black or white and I'm sure there are situations where you can make it make sense, but I wouldn't finance it.

 

[J Spaziani]

Hello
Does it make more financial sense to pay cash for a multiple small contracts 50-75 as finances allow or finance one larger contract?

You'll have to break out the abacus for a definitive answer, but with the rate at which prices are climbing, my wife and I went for option #2. Went with a few more points then we originally wanted and ended up putting half down and paying the balance in 7-12 months. It is priority number one to get this paid off asap.

 

[davidl81]

So I am in the camp of it’s okay to finance to get a larger contract since we have seen DVC prices increase close to the same rate as interest rates over the past few years. Getting a light stream loan or something from a credit union at 6% or so makes mathematical sense IMO. The 12-15% rates are a different story though.
Basically it comes down to how long will you have to save to have the cash to buy? At that point how much would have prices gone up? And it has been a few years that’s also a few years that you didn’t get to “save” using your own points.

 

[welshman_us]

Hello
Does it make more financial sense to pay cash for a multiple small contracts 50-75 as finances allow or finance one larger contract?

we paid cash years ago - WELL worth doing it that way. Crazy to finance a time-share imho. We've been able to recoup some $ by renting points in the past when illness or other issue cropped up and not able to travel that year. We have more than one contract - the problem there is managing the various contracts and making sure you're banking correctly and use-years and all of that -ALSO if you get DIFFERENT resorts - that will really make a headache when trying to make large-point-requirement reservations depending on when your 'windows' for reservation are at the various resorts - so picking one resort and getting points only there is one option... free advice is just that, however, obv your mileage may vary =)

 

[BillPA]

if you need to finance, you can afford it. Just keep going and stay at POP until you can pay cash.

 

[bakerworld]

I think cash purchase would be optimal for anything however DH refused to part with his ready cash. He doesn't believe in reducing his ready cash for whatever reason so we financed and paid at an accelerated rate.

 

[stwaldman]

I think cash purchase would be optimal for anything however DH refused to part with his ready cash. He doesn't believe in reducing his ready cash for whatever reason so we financed and paid at an accelerated rate.

I did this as well, I was in the camp of a fast pay down still kept the out of pocket interest low while not interrupting any other savings activities, etc thanks to a rate I got from my own bank rather than a timeshare loan co. I get that a bad rate may flip the math, but there are plenty of ways to finance and still have the numbers works, especially resale.

Agree with those that said avoid multiple transactions, closing costs and fees can be 5-10 percent of a small contracts price.