Probably a stupid question

[BestDadEver]

Yes disney will finance the purchase , the rate is really not bad , or good , its on par for the going rate on personal loans . They also state that they don't report the debt , and it wont show on your credit report . At least that's what I was told , I really don't belive it though .

 

[Dean]

Yes disney will finance the purchase , the rate is really not bad , or good , its on par for the going rate on personal loans . They also state that they don't report the debt , and it wont show on your credit report . At least that's what I was told , I really don't belive it though .

Signature loans are always a bad deal financially. The rate at my local CU is 11-18%. Given that DVC loans are actually secured, the rates are horrible IMO.

 

[z28wiz]

Your correct it doesnt show on your credit report.

Yes disney will finance the purchase , the rate is really not bad , or good , its on par for the going rate on personal loans . They also state that they don't report the debt , and it wont show on your credit report . At least that's what I was told , I really don't belive it though .

 

[Dean]

Your correct it doesnt show on your credit report.

They apparently haven't reported it historically but they could going forward. Likely not a risk unless the loan is not performing.

 

[BestDadEver]

Signature loans are always a bad deal financially. The rate at my local CU is 11-18%. Given that DVC loans are actually secured, the rates are horrible IMO.

You would have to take a personal loan to get dvc , and with your numbers you prove my point . Its the going rate why would they charge less .

 

[ELMC]

Signature loans are always a bad deal financially. The rate at my local CU is 11-18%. Given that DVC loans are actually secured, the rates are horrible IMO.

You would have to take a personal loan to get dvc , and with your numbers you prove my point . Its the going rate why would they charge less .

What Dean is saying is that it's not the going rate. A personal loan (or signature loan) is simply you walking into the bank and asking to borrow money. There's no collateral to back it up. It's a risky proposition for the bank because they have no real guarantee that they will get paid back and as such, they charge a higher rate to compensate themselves for that risk.

DVC loans are secured by the DVC contract itself. So there is very little risk to DVD. If someone defaults on their loan, they simply take back the points and sell them to someone else (at a higher price). Given that, the rate of 11-14% that DVD charges is exorbitant. By comparison, other types of secured loans such as mortgages, HELOCs and auto loans are in typically in the 3-8% range, assuming good credit. DVC is an emotional purchase and they know this. So for many the interest rate is irrelevant (as we have read on here many times). DVD will charge as much as they think they can get away with, but that doesn't make fair, reasonable or a good deal.

 

[BestDadEver]

What Dean is saying is that it's not the going rate. A personal loan (or signature loan) is simply you walking into the bank and asking to borrow money. There's no collateral to back it up. It's a risky proposition for the bank because they have no real guarantee that they will get paid back and as such, they charge a higher rate to compensate themselves for that risk.

DVC loans are secured by the DVC contract itself. So there is very little risk to DVD. If someone defaults on their loan, they simply take back the points and sell them to someone else (at a higher price). Given that, the rate of 11-14% that DVD charges is exorbitant. By comparison, other types of secured loans such as mortgages, HELOCs and auto loans are in typically in the 3-8% range, assuming good credit. DVC is an emotional purchase and they know this. So for many the interest rate is irrelevant (as we have read on here many times). DVD will charge as much as they think they can get away with, but that doesn't make fair, reasonable or a good deal.

I know what hes saying, but the only other real life , option to finance a purchase like this , unless you want to put your home up for collateral , is a personal loan . Then its on par .

 

[Dean]

I know what hes saying, but the only other real life , option to finance a purchase like this , unless you want to put your home up for collateral , is a personal loan . Then its on par .

That's not accurate and once again you're limiting choices far more than you need to. There are always other choices First and foremost is the question whether to finance or not. There may be some quirky situation that's an exception like a DVC special that's expiring with a lump sum of guaranteed money on the way, but excluding that it's never a good idea to finance such a luxury purchase. Many do it and that's their decision but it's not a good choice.

However, IF one decides to purchase, there are other choices besides DVC financing or an unsecured signature loan. Some of them are even worse choices IMO but I'll give you a list of ones that come to mind, I'm sure others will be able to add to the list. Finance DVC, signature loan bank/CU, CC (interest free?), HELOC or second mortgage, Timesharelending.net, other secured loan such as against a CD or other financial account, or relatives. Some with higher costs, some with lower/higher interest, some with more risk but ALL add both risk and cost to the purchase. I know some will cringe but philosophically I'm not sure it's reasonable to go on vacation if one has to finance it including a CC that one can't pay off on returning home.

 

[DougEMG]

I know some will cringe but philosophically I'm not sure it's reasonable to go on vacation if one has to finance it including a CC that one can't pay off on returning home.

I'd never go on vacation if I didn't have the cash on hand to pay for it. Consumer debt is one of the worst things you can do to yourself financially. No matter how good the deal, the magic of compounding interest is going to kill you if you have a loan for very long.

 

[tjcat]

We have visited Disney for the last 6 years and stayed at the Fort Wilderness cabins, before that we were there in 2003 and 2005 so it made sense to buy into DVC since we have paid in at least $10,000 to stay in Disney we should have bought long ago! I agree with Doug EMG, we would not buy DVC if we had credit card debt, we would rather pay in cash but that is jmo!
meDHDD 13

Polynesian 77' Contemporary 80' Royal Plaza 82' Royal Plaza 87' Off Site 89' Carribean Beach 98' French Quarter 03' Riverside 05' Fort Wilderness cabins 07' 08' 09' 10' 11'& 12'!

 

[JimMIA]

I know what hes saying, but the only other real life , option to finance a purchase like this , unless you want to put your home up for collateral , is a personal loan . Then its on par .

No offense, but you're really missing the mark here, Dad. Seriously.

Disney's rates for a mortgage secured by real property are 11+% (which few get) and 14.75% (which is the REAL number). 14.75% for a mortgage (when other mortgages go for <4%) is truly "obscene," as someone perfectly described it earlier in this thread.

AND...not for nothin'...it's an obscene interest rate on top of paying a hugely inflated purchase price!

Comparing interest rates on a real estate mortgage to a personal loan is just plain silly -- and more important, it's UNhelpful to prospective buyers trying to analyze a complex transaction.

 

[BestDadEver]

No offense, but you're really missing the mark here, Dad. Seriously.

Disney's rates for a mortgage secured by real property are 11+% (which few get) and 14.75% (which is the REAL number). 14.75% for a mortgage (when other mortgages go for <4%) is truly "obscene," as someone perfectly described it earlier in this thread.

AND...not for nothin'...it's an obscene interest rate on top of paying a hugely inflated purchase price!

Comparing interest rates on a real estate mortgage to a personal loan is just plain silly -- and more important, it's UNhelpful to prospective buyers trying to analyze a complex transaction.

If you can go to any bank and get a morgage to pay for your timeshare . Your statement would make sence . But you can't ! I am taking real life options , not this made up crap that dosen't exist .

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

I got the lowest rate . Its not that difficult if you have good credit . I would assume someone in position to buy a ts would have good credit .

 

[ELMC]

If you can go to any bank and get a morgage to pay for your timeshare . Your statement would make sence . But you can't ! I am taking real life options , not this made up crap that dosen't exist .

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

I got the lowest rate . Its not that difficult if you have good credit . I would assume someone in position to buy a ts would have good credit .

There is another option that you are forgetting....don't finance. Timeshare financing is a rigged game. But just like a lot of casino games with RIDICULOUS house advantages, people throw their money at it willingly. If it makes you happy, great. If it helps you get into DVC when you otherwise wouldn't have been able to, great. I'm not here to tell anybody how to live their lives. But I will say honestly that I wouldn't do it and I certainly wouldn't recommend that others do it as well. If you financed and it is making you happy then that's a wonderful thing. But I have a hard time buying the justifications that financing (over the full term) is a good deal simply because of a lack of viable options.

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest. So how to they justify the extra 7%? Timeshare loans have all the features of a secured loan but it charges unsecured loan prices. I'm glad that you got the best rate, but what was that...10.99%?

 

[JimMIA]

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest.

I would argue that the real math is as follows:

House purchased at market price, financed @ 4% interest

vs.

Timeshare purchased at 2X market price because the purchaser could not pay cash, financed @ 14.75% interest for most buyers.

(And even 11% is nuts.)

Obviously, this is only my opinion -- YMMV.

 

[Dean]

Also dean I referenced home equity options in my post . I dont understand you stating diffrent ways of using that equity .

You did, you mentioned 2 of several, but as I and others have stated, the first question and the best option for most is to not finance. Not only does financing cost you money, also if it pushes you to buy retail, it forces you to pay significantly more up front thus compounding your costs and your risk. All for an option that currently, and almost certainly in the future, gives you no additional benefits that are of value over buying less points and paying the difference. There are a few options where buying retail makes sense but very few. Mostly smaller contracts and brand new resorts but certainly not for the option to finance nor for the cash type exchange options.

 

[ELMC]

You did, you mentioned 2 of several, but as I and others have stated, the first question and the best option for most is to not finance. Not only does financing cost you money, also if it pushes you to buy retail, it forces you to pay significantly more up front thus compounding your costs and your risk. All for an option that currently, and almost certainly in the future, gives you no additional benefits that are of value over buying less points and paying the difference. There are a few options where buying retail makes sense but very few. Mostly smaller contracts and brand new resorts but certainly not for the option to finance nor for the cash type exchange options.

I agree, but would also suggest that the "value" that could be had by buying an initial offering at a resort is most likely a thing of the past. We'll see if I'm right when VGF announces its pricing.

 

[BestDadEver]

There is another option that you are forgetting....don't finance. Timeshare financing is a rigged game. But just like a lot of casino games with RIDICULOUS house advantages, people throw their money at it willingly. If it makes you happy, great. If it helps you get into DVC when you otherwise wouldn't have been able to, great. I'm not here to tell anybody how to live their lives. But I will say honestly that I wouldn't do it and I certainly wouldn't recommend that others do it as well. If you financed and it is making you happy then that's a wonderful thing. But I have a hard time buying the justifications that financing (over the full term) is a good deal simply because of a lack of viable options.

As far as Jim's comments, I have to agree and I'm sorry to say that you are still missing the point. Mortgage for a house, 4%. Mortgage for a timeshare 11%. It's the same thing, a loan secured by a real estate interest. So how to they justify the extra 7%? Timeshare loans have all the features of a secured loan but it charges unsecured loan prices. I'm glad that you got the best rate, but what was that...10.99%?

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I am guessing none if you ever bought a brand new car either.

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

 

[Dean]

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I am guessing none if you ever bought a brand new car either.

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

I haven't had a car payment in 24 years, I practice what I preach and I would make the same points about buying cars and especially leasing them or trading every few years. buying a new car doesn't necessarily require financing either but the rates there are MUCH lower than we're discussing for most people The reality is that there ARE ways to get a lower interest rate for many people, esp if they have good credit. They're still not reasonable choices but they are choices. I'd agree they charge what they charge and that many people will be led like sheep to the slaughter directly to their financing. That only makes it good for DVD and the finance company.

 

[ELMC]

No you are missing the point . There are no other options . I agree with your point . But the fact remains that disney is smart, and know that no one is going to finance potential buyer for less . So they charge what they charge .

I agree and disagree. I agree that there are no directly comparable options for securing a loan specifically to purchase a timeshare. But there is the option to use a HELOC at around 3% and there is the option to not purchase using financing. But Disney's (and other timeshare companies) willingness to charge such a ridiculous rate is not just about opportunity. Timeshare financing is a risky proposition with a high rate of default (recently as high as 10%). And when you think about it, it makes sense. It's an emotional purchase made on the spot with little to no research and a long term (or even lifetime) commitment. Not everyone is willing or able to honor that commitment.

I am guessing none if you ever bought a brand new car either.

I have. And the rate was 7.9%, which I thought was a ripoff. So I agreed to the financing in order to receive a special incentive available only to people who financed, and then I paid it off in the second month (with no penalty). This is a very serious problem in this country that spans real estate, auto purchases, timeshares, etc. Unless you are leveraging debt to your advantage, paying interest is a financial back breaker and more often than not prevents people from achieving financial independence.

FYI I live my life in the now . And any interest payed is well worth the money vs the wait .

And that's what Disney is counting on. But I have to say that whether I agree with it or not, I respect the fact that you state this as your reason for financing. I don't have all the answers, I don't know the secret to happiness and I don't know the meaning of life. So if you're doing something that works for you, then it's not my place to judge. I'm thrilled that you are happy with your purchase and that you are getting good use out of it. I really, truly am. And I don't mean to make you feel badly by disagreeing with your decision. But the fact of the matter is that if you compare a resale purchase with a financed direct purchase, you are spending up to three times as much on the financed direct purchase. You choose to rationalize that purchase by saying that you live in the here and now, and I respect that. But personally, I just can't see any way to justify that. I think that this is just an agree to disagree type of conversation. But hopefully people who are considering direct financed purchases can read both sides of this debate and make an informed choice about their purchasing decision.

 

[BestDadEver]

I agree and disagree. I agree that there are no directly comparable options for securing a loan specifically to purchase a timeshare. But there is the option to use a HELOC at around 3% and there is the option to not purchase using financing. But Disney's (and other timeshare companies) willingness to charge such a ridiculous rate is not just about opportunity. Timeshare financing is a risky proposition with a high rate of default (recently as high as 10%). And when you think about it, it makes sense. It's an emotional purchase made on the spot with little to no research and a long term (or even lifetime) commitment. Not everyone is willing or able to honor that commitment.





I have. And the rate was 7.9%, which I thought was a ripoff. So I agreed to the financing in order to receive a special incentive available only to people who financed, and then I paid it off in the second month (with no penalty). This is a very serious problem in this country that spans real estate, auto purchases, timeshares, etc. Unless you are leveraging debt to your advantage, paying interest is a financial back breaker and more often than not prevents people from achieving financial independence.



And that's what Disney is counting on. But I have to say that whether I agree with it or not, I respect the fact that you state this as your reason for financing. I don't have all the answers, I don't know the secret to happiness and I don't know the meaning of life. So if you're doing something that works for you, then it's not my place to judge. I'm thrilled that you are happy with your purchase and that you are getting good use out of it. I really, truly am. And I don't mean to make you feel badly by disagreeing with your decision. But the fact of the matter is that if you compare a resale purchase with a financed direct purchase, you are spending up to three times as much on the financed direct purchase. You choose to rationalize that purchase by saying that you live in the here and now, and I respect that. But personally, I just can't see any way to justify that. I think that this is just an agree to disagree type of conversation. But hopefully people who are considering direct financed purchases can read both sides of this debate and make an informed choice about their purchasing decision.

I accualy finance everything . I never intend on going term , and never have . A good example was when I bought my house I got 100% financing . I didnt have 20%, and the money I had would only make a very small dent in the payment so I keept it to use for furnishing ect . Had I waited for the 20% I still wouldn't have a house and ilkely only have 10% . I am so glad I did it . I was not willing to wait ten years . Its just the way I think . I dont think that other ways are wrong .