Not to start the great debate over financing or not, but everyone's circumstance is different, so depending on your particular circumstance, financing might not be as bad as it would otherwise seem. I will use my wife and me as the example. We did not intend to ever finance, but we ended up doing so, on 2 separate purchases, and we are very glad we did. A big factor not mentioned as much is with looking at financing (and "throwing away money on interest") is how long it will likely take to save the money and the two important factors - (1) what the prices of points will do during that time, and (2) whether and to what extent you will take WDW vacations in the interim.
Now, the first question is obviously a hot topic of debate on these boards (with multiple threads), so I won't get into that, but will just use several examples. I will also avoid the debate as to direct vs. resale and will just use a few examples from each, and specifically our example purchasing direct.
So, first, I'll look at direct for examples, since that's actually the easier one to evaluate. I think there's very little question that direct prices will continue to increase. Obviously things could dip a bit and
DVC could offer some better incentives, but for the most part, the price per point from DVC directly will increase. So, depending on how long it will take to save to purchase such a contract, a strong consideration between financing or not is what the prices will do during that time. If someone can save up in a year to buy it, probably not a big deal. Five years, however, could have a much larger impact. For example, if it takes five years to save the money to purchase, how much is really being saved on interest if you're paying more for the points. It's likely there's still some savings, but it might not be as much as it appears on its face.
Our 2nd, add on contract is an example of this math (not a great example of the actual price changes since we took advantage of unusually generous incentives - more in a second). We bought our first contract (118 point Guaranteed Week at Copper Creek) in spring 2019. We quickly realized we wanted to add more points (which we knew we would eventually anyway, it just hits quicker than you'd think), but we wanted to wait and pay off or substantially pay down the first contract, which we intended to do within a few years - certainly not the 10 year financing term. However, we decided to add a 200-point contract (Riviera) in August 2020 because the incentives were so good, and we were able to get it for $160/pt. Our loan is for 8.9%. This second loan obviously has caused us to slow down on paying off the first one, but at our current rate of extra payments, that should be done by next year. Nevertheless, I anticipate we pay off this second loan in 5 or 6 years total, especially once Loan #1 is paid off. I'll use the 6 year figure (and will use rough estimates). In this example, if we paid it off in 6 years, we'll likely pay about $9k in interest (probably a bit higher because of the initial 10 year amortization, but for simplicity). Even if we looked at current prices, with incentives, for the same contract, that contract would cost $8,200 more. So, for this specific example, it's actually not as substantial a difference as it might otherwise seem. Plus, we've been able to use 800 points for vacations since that time (through our '22 Use Year points - so we have a trip in 2 months that use them). This is likely a more extreme example, but it's an easier one to look at.
Resale, for factor #1 is a little harder to evaluate, given the current uncertainty over resale prices. It could end up being that waiting will save money, thus, all the more reason not to spend money on interest.
That leads to factor #2 - what will you do in the mean time. For us, while we would not have traveled to WDW as much as we have with the points at our disposal, we certainly would have still gone at least once a year and still would have stayed in a Deluxe. So depending whether someone would be going on WDW trips anyway during the time of saving towards the DVC purchase makes a big difference. Rather than pay for hotel rooms during this time, we've been able to use the points we purchased, so have saved money, to some degree, on the trips themselves.
Again, everyone's circumstances are different, but I just wanted to illustrate (and to some degree defend our own personal decision to buck common financial advice) that there are scenarios in which financing may not be as bad as it seems at first blush. For us - we knew we were going to buy DVC, we knew we were going to continue taking trips to WDW regardless of when we purchased, we had specific resorts and contracts we wanted, we could afford the monthly payments as well as additional principal payments, but it would take us at least several years to save for an all cash purchase (especially with paying for cash vacations in the interim).
