Pay cash or finance

[karen4546]

From my many years on these boards, my takeaway is this:

People on the DIS are either dirt poor or 1% ers, but somehow everyone is convinced they are middle class.

lol

 

[Stank]

In general, consumer debt is not financially savvy. It masks true costs and transmutes it into monthly payment affordability. It’s trained most to be on a lifetime hamster wheel. Mortgages, credit cards, auto loans, timeshare loans, all are forms of magic money making tomorrow attainable today.

Using a HELOC to buy DVC is something I’d never do. Most of the time it works out, but that’s like saying I’m thankful I sent a text message while driving. You’re internalizing higher and higher risk tolerance by thinking repeated risk-taking is driving the risk to zero. The risk doesn’t decrease nor disappear. Putting your primary residence at risk of foreclosure to buy a vacation is a low-risk venture that may result in catastrophic loss.

Likewise, most people who text and drive end up okay. Except for those who don’t. Mortgage your house to buy a timeshare and you lose your job. Then what.

 

[CarolynFH]

There was a time you couldn't Finance DVC Later a company more like a credit card allowed it at like 21% interest. later in the Mid 2000 I believe Disney start Financing.

When we bought in 1997, DVC offered financing, but I don't know when they began (can't remember whether it was offered in 1994 when we first toured). Maybe you're referring to financing resale purchases?

 

[J-Dog]

In general, consumer debt is not financially savvy. It masks true costs and transmutes it into monthly payment affordability. It’s trained most to be on a lifetime hamster wheel. Mortgages, credit cards, auto loans, timeshare loans, all are forms of magic money making tomorrow attainable today.

Using a HELOC to buy DVC is something I’d never do. Most of the time it works out, but that’s like saying I’m thankful I sent a text message while driving. You’re internalizing higher and higher risk tolerance by thinking repeated risk-taking is driving the risk to zero. The risk doesn’t decrease nor disappear. Putting your primary residence at risk of foreclosure to buy a vacation is a low-risk venture that may result in catastrophic loss.

Likewise, most people who text and drive end up okay. Except for those who don’t. Mortgage your house to buy a timeshare and you lose your job. Then what.

Well, just as we found with Covid, everyone's acceptable level of risk is different.

Me, I would rather take that risk and get to go on many decent vacations, if the alternative is to just work my life away...

 

[Stank]

Well, just as we found with Covid, everyone's acceptable level of risk is different.

Me, I would rather take that risk and get to go on many decent vacations, if the alternative is to just work my life away...

It’s certainly not either you take many vacations or nothing at all. But mortgaging your house to buy a timeshare? I thought the running “I-can’t-believe-that-was-a-thing” after 2008 was hearing how people used home equity for this type of stuff, and then lost their homes. It’s like Deja vu with others rooting it on.

And let’s not exaggerate a DVC contract—that HELOC is buying you one hotel stay a year for 5-7 days on average with thousands in additional costs every time you go. Most people still manage to vacation without mortgaging their house. Why wouldn’t a 401k non-qualified withdrawal also be acceptable? Seems like any choice is a good choice so long as it’s your choice is the vibe I’m getting—seems more enabling than helpful. Not discerning between the two is rather troubling.

 

[J-Dog]

It’s certainly not either you take many vacations or nothing at all. But mortgaging your house to buy a timeshare? I thought the running “I-can’t-believe-that-was-a-thing” after 2008 was hearing how people used home equity for this type of stuff, and then lost their homes. It’s like Deja vu with others rooting it on.

And let’s not exaggerate a DVC contract—that HELOC is buying you one hotel stay a year for 5-7 days on average with thousands in additional costs. Most people still manage to vacation without mortgaging their house. Why wouldn’t a 401k withdrawal also be acceptable? Seems like any choice is a good choice so long as it’s your choice is the vibe I’m getting—seems more enabling than helpful. Not discerning between the two is rather troubling.

I'm assuming that you are replying to me since you quoted my post, even though you have no clue what my financial situation is.

I'm not sure who you are implying should be making the "choice" for me. You? I don't take financial advice from anonymous interwebz posters, but thanks anyway.

 

[sethschroeder]

Well, just as we found with Covid, everyone's acceptable level of risk is different.

Me, I would rather take that risk and get to go on many decent vacations, if the alternative is to just work my life away...

Except there are tons of great vacation locations for less money while you save a touch more to buy DVC. Also never a better time than now to wait it out on the resale side as we see no ROFR and reduction in prices it seems.

 

[J-Dog]

Except there are tons of great vacation locations for less money while you save a touch more to buy DVC. Also never a better time than now to wait it out on the resale side as we see no ROFR and reduction in prices it seems.

Maybe you guys have me confused with someone else. I bought my points years ago. And yes, I did use a HELOC to buy them.

My point was that, when someone on the internet starts trying to give advice based on their opinion, then those have to be taken with a grain of salt because that person's situation is not your own.

 

[Stank]

I'm assuming that you are replying to me since you quoted my post, even though you have no clue what my financial situation is.

I'm not sure who you are implying should be making the "choice" for me. You? I don't take financial advice from anonymous interwebz posters, but thanks anyway.

Yes, I quoted you as you did me. That’s usually how conversations go—I’m confused as to why that’s surprising.

Financial situation is irrelevant and I’m not giving advice, I’m stating the obvious. Mortgaging a home for a timeshare is like pretending candy can be a substitute for a meal. Discernment is appropriate. Just as a non qualified withdrawal from a 401 when you’re to buy a timeshare shouldn’t be met with enabling encouragement. Financial situation has zero to do with it.

 

[Jack Kerouac]

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….

I know someone who bought DVC via financing. The purchase was around $20,000 or so for 125 points back in December 2017. So far, they have spent more than $10,000 on interest over the past five years of ownership. Still another five years to go on the loan too. I would never suggest this method for purchasing DVC.

The only way financing makes sense is if you know you want to travel to WDW within a year, you want the cost of your accommodations to go towards the DVC purchase, you know you can pay off the loan very quickly, and you will incur less interest on the loan than the difference between the DVC maintenance fees for your stay(s) and the cost of renting points or booking direct. Otherwise, you should just continue to save money. Additionally, based on the resale market of late, you may actually save money by waiting.

 

[gskywalker]

Depends on the person and variables. I wouldn't recommend borrowing for it but as an example I considered getting a loan back during covid because the cdn to us$ fx rate was horrible and I knew it would be better in probably a year. I decided against it because of the extra fees, notary etc but it would have worked out better financially if I had done that and then paid it off once the cdn dollar was better.

I give that just an example of it can work out better if you do it for a good thought out reason. Unless it for sure saved me money in the long term, no I wouldn't borrow because I wanted it and couldn't come up with the money.

 

[Jack Kerouac]

My comment is not targeting you specifically, and I'm not really sure if this is insulting or complimentary. But your comments seem to me that, if you are someone who doesn't need to finance a vehicle in today's current economy - when almost every middle class American has to finance a car - that speaks to the affluence of some DVC owners.

I don't know if DIS posters are especially affluent, or just that most DVC owners are especially affluent, but if that's the case, then that will probably affect their opinions on financing DVC.

i.e. if you are richer than most people, then that's certainly going make financing less necessary for you, individually.

Well, I am not affluent, and I financed DVC because it seemed like a sound investment that also "forced" us to take yearly vacations, which is something that I wouldn't do otherwise. We did finance - although it was 2 years ago using a HELOC loan with much lower than current interest rates - and I don't regret it whatsoever at this point.

I always thought DVC was for the wealthy based on the initial buy-in and my unwillingness to finance (and my initial thought that others would also not finance a timeshare). But after hearing from other DVC members, I would liken DVC to a RV group rather than a group of 1%ers. A lot of DVC members bring crock-pots to make meals and travel off-season and book lower-tiered rooms (which is why DVC busy seasons aren't always aligned with WDW busy seasons; value rooms book up faster than 3BR villas, etc.) Yes, DVC requires one to have the means to buy the points upfront, or cover the monthly payments, but the average DVC owner probably skews a bit lower economically than most would think. The same is probably true for the average attendee at WDW on any given day.

 

[Stank]

I know someone who bought DVC via financing. The purchase was around $20,000 or so for 125 points back in December 2017. So far, they have spent more than $10,000 on interest over the past five years of ownership. Still another five years to go on the loan too. I would never suggest this method for purchasing DVC.

The only way financing makes sense is if you know you want to travel to WDW within a year, you want the cost of your accommodations to go towards the DVC purchase, you know you can pay off the loan very quickly, and you will incur less interest on the loan than the difference between the DVC maintenance fees for your stay(s) and the cost of renting points or booking direct. Otherwise, you should just continue to save money. Additionally, based on the resale market of late, you may actually save money by waiting.

What gets lost is often most calculations only consider DVC vs. deluxe hotel room costs, when in reality DVC means you’re taking a vacation that still costs several thousand dollars each time even with the “$0” room.

“Free” room included you will find vacationing with DVC to escalate your vacation budget than otherwise. This is rarely articulated.

 

[J-Dog]

Yes, I quoted you as you did me. That’s usually how conversations go—I’m confused as to why that’s surprising.

Financial situation is irrelevant and I’m not giving advice, I’m stating the obvious. Mortgaging a home for a timeshare is like pretending candy can be a substitute for a meal. Discernment is appropriate. Just as a non qualified withdrawal from a 401 when you’re to buy a timeshare shouldn’t be met with enabling encouragement. Financial situation has zero to do with it

So now your opinion to not use a HELOC loan is "stating the obvious"? That's pretty condescending.

 

[Jack Kerouac]

What gets lost is often most calculations only consider DVC vs. deluxe hotel room costs, when in reality DVC means you’re taking a vacation that still costs several thousand dollars each time even with the “$0” room.

“Free” room included you will find vacationing with DVC to escalate your vacation budget than otherwise. This is rarely articulated.

When we decided to buy DVC, it was after booking a AoA room and tickets for several thousand dollars and realizing we wanted to do WDW each year while the kids are young. We now get deluxe accommodations for the cost of a value resort. And our August trip will cost us around $8,000 without counting accommodations. If we counted the direct cost, it's closer to $16,000 to $18,000. I started a thread about the cost of a WDW vacation for 2023. I factored in the MFs for our trip in the cost to make it not appear "free." Others with DVC felt otherwise. To each their own, but I wouldn't want a prospective DVC buyer thinking its free after the initial buy-in.

 

[Jack Kerouac]

What gets lost is often most calculations only consider DVC vs. deluxe hotel room costs, when in reality DVC means you’re taking a vacation that still costs several thousand dollars each time even with the “$0” room.

“Free” room included you will find vacationing with DVC to escalate your vacation budget than otherwise. This is rarely articulated.

Our annual vacation budget went from a few thousand (no more than $3,000) to probably $10,000 with DVC after MFs. But we save for retirement, we save for our boys' college, and we save for rainy days. Our income has also gone up recently. And, I happen to not be great at prioritizing long (week+) getaways for our family and investing in experiences. DVC forces me to do that. I have forced myself to prioritize my family and finding ways to create memories, and not just saving every single dollar I can.

 

[Sandisw]

No more arguing. People have different tolerance levels and choices for financial decisions and there is no right or wrong decision..it’s a personal choice.

Further back and forth will result in this thread being closed.

 

[Jack Kerouac]

No more arguing. People have different tolerance levels and choices for financial decisions and there is no right or wrong decision..it’s a personal choice.

Further back and forth will result in this thread being closed.

My apologies. I had no intention of arguing with anyone and I was unaware that was the impression I was giving. I was just sharing my point of view on the topic. Thank you Sandi!

 

[tom1944]

Our annual vacation budget went from a few thousand (no more than $3,000) to probably $10,000 with DVC after MFs. But we save for retirement, we save for our boys' college, and we save for rainy days. Our income has also gone up recently. And, I happen to not be great at prioritizing long (week+) getaways for our family and investing in experiences. DVC forces me to do that. I have forced myself to prioritize my family and finding ways to create memories, and not just saving every single dollar I can.

I think your estimate is very accurate.

 

[sethschroeder]

Maybe you guys have me confused with someone else. I bought my points years ago. And yes, I did use a HELOC to buy them.

My point was that, when someone on the internet starts trying to give advice based on their opinion, then those have to be taken with a grain of salt because that person's situation is not your own.

I don't need to be in your situation to know financing a luxury timeshare is a poor decision. I don't have anything confused.


You stated:

I would rather take that risk and get to go on many decent vacations

Okay nothing is risk free but DVC is inherently riskier if financing (which this whole thread is about)

Then you say:

if the alternative is to just work my life away...

Except that is not the alternative. As I stated there are tons of options that are amazing vacation options regardless of your interests, location, sex, religion, or anything else.

So many people seemingly want to say their either finance DVC or they sit at home on their couch. Its not an accurate statement. There are places in the world where they only have possibly once choice for doing something fun or a vacation but in the US that is far from true.