Paying for DVC

[CanadaDisney05]

or can you pay for it over the course of a year, two years, etc.? I know it's possible to finance it, but I was unsure on what Disney expects if you don't finance it.

Paying it over time is the definition of financing. I believe they make you pay a deposit upfront, and then you have 30 days to pay them in full if you are not financing.

One thing I don't hear talked a lot on these boards is financing through your mortgage. I'm not sure what the logistics are in the US, but for myself it was much cheaper to finance through my mortgage. Paying 2.5% interest is clearly better than paying 10% interest. It is also better than paying cash, because the cash I would have paid for it with will earn a much better return invested in the markets than the 2.5% interest I will be paying. It also allows for an extended pay back period if life happens.

 

[Bing Showei]

Paying it over time is the definition of financing. I believe they make you pay a deposit upfront, and then you have 30 days to pay them in full if you are not financing.

One thing I don't hear talked a lot on these boards is financing through your mortgage. I'm not sure what the logistics are in the US, but for myself it was much cheaper to finance through my mortgage. Paying 2.5% interest is clearly better than paying 10% interest. It is also better than paying cash, because the cash I would have paid for it with will earn a much better return invested in the markets than the 2.5% interest I will be paying. It also allows for an extended pay back period if life happens.

Surely you're not suggesting leveraging your home against a luxury purchase? If you lose a job or suddenly incur tremendous medical bills (more of an issue here than across the border, perhaps), not only do you have to worry about your mortgage, you now have a HELOC over your head.

If "life happens" I'd rather sell my timeshare for what I can get not having to worry about if I can sell enough to pay off my HELOC.

And rewind to December 2007. Knowing what you know today, would you be dispensing the advice that it's better to take out a 2.5% loan against your home, given how you can invest in the markets and make better money than cash, to go see a fake castle year over year? A lot of people thought exactly this back then.... then life happened.

 

[CanadaDisney05]

Surely you're not suggesting leveraging your home against a luxury purchase? If you lose a job or suddenly incur tremendous medical bills (more of an issue here than across the border, perhaps), not only do you have to worry about your mortgage, you now have a HELOC over your head.

My fault. I Should have been more explicit. The assumption is that you have A) the cash available to purchase B) an adequate emergency fund C) a diversified portfolio of investments D) Enough equity in your home where a refinance would be allowed (not sure what this is like in the US. Here in Canada you can only refinance up to 80% loan:equity on a fixed term mortgage, or 65% on a HELOC). If you literally don't have access to the capital required to purchase, then no, you should not be buying either way.

If your paying cash, your just leveraging your investments (long term goals) against a luxury purchase.

If "life happens" I'd rather sell my timeshare for what I can get not having to worry about if I can sell enough to pay off my HELOC.

And rewind to December 2007. Knowing what you know today, would you be dispensing the advice that it's better to take out a 2.5% loan against your home, given how you can invest in the markets and make better money than cash, to go see a fake castle year over year? A lot of people thought exactly this back then.... then life happened.

This all depends on what stage of life you are in. If you are closing in on, or in retirement, then your expected rate of return should not be enough above that 2.5% where the risk is worth the reward.

However, if you are on the younger side of things and are still 10+ years away from retirement, you have plenty of time to ride out the downturn of your investments. Your long term average expected rate of return should be much higher than 2.5%

At the end of the day, if 2007/2008 happens again, you can still sell your DVC for whatever you can get for it. You also should have an emergency fund, and enough equity in your home that should leave you far from being underwater.

 

[DSLRuser]

I bought 175 points. @ $172 totaling $30,100. Put $5,000 down on amex. Financed the rest over 10 years. Like $360 a month payment.

But Every few months i flipped them $6k and paid it off in 18 months. Use your money in a way that is best for you.

 

[BillPA]

If you can't afford to pay cash, but can afford DVD's 10%+ rate go for it.

 

[Bing Showei]

I bought 175 points. @ $172 totaling $30,100. Put $5,000 down on amex. Financed the rest over 10 years. Like $360 a month payment.

But Every few months i flipped them $6k and paid it off in 18 months. Use your money in a way that is best for you.

I'm not discounting the fact that people have financed Disney successfully. They’re happy with their choices and it worked for their family. At the end of the day, that’s all that matters.

When I was researching prices on the OCC before buying in, I saw the number of foreclosures filed with the OCC and it is disheartening to see the personal finances of so many potentially ruined by a vacation timeshare.

That said, everyone here is a grown-*** adult and can do whatever they want, but if we’re willing to call it out on these boards when people plan to buy 75 points at CCV to stay regularly the first week of December in a studio, why should we hesitate saying that financing should be looked at cautiously, especially leveraging your home to do so?