Quick poll: Paying for DVC?

How you pay for DVC:

  • Paid for as a lump sum (i.e. Using disposable income, saving-up money, etc.)

    Votes: 148 71.8%
  • Paid for using timeshare financing (i.e. DVD direct financing, Monera, etc.)

    Votes: 37 18.0%
  • Paid for some other way (i.e. Credit card, personal loan, big insurance settlement, etc.)

    Votes: 21 10.2%

  • Total voters
    206

J-Dog

A Nobody
Joined
Sep 4, 2016
Recently, in doing research for my family on purchasing DVC, I've run across multiple posts stating that DVC should not be purchased using financing. In other words, if you need to purchase using financing, you are probably better-off staying at a Value resort or off-site, rather than buying-in.

Now, obviously I can't speak for anyone else, but we are (I think) a typical middle-class family with both parents working decent jobs. But there is no way we have $40-$50K laying around to pay-off our purchase as a lump sum. It seems like few people that I know would be able to do that either. In short, we have decided that we want to purchase DVC to ensure years of vacations to come with some amount of financial control over the accommodations. But are trying to decide if it's a good idea or not.

This poll should apply whether direct or resale.

I apologize if this is too personal of a question. Please don't answer if you feel uncomfortable. Thanks a lot!
 

Minniemoo15

DIS Veteran
Joined
Jan 27, 2016
We bought resale and paid for it upfront.

I can’t say whether it is a good idea or not to take out a loan as we didn’t look into it. We wouldn’t have done DVC had we needed a loan but that is more indicative of personal preference rather than if it still would make mathematical sense. Ie: we paid off our mortgage this year because we wanted to be truly debt free , even though the money would have likely made more being invested.

I will say that if you are happy staying value or offsite, the math likely won’t be on your side for DVC, financed or not.
 
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DonMacGregor

Sub Leader
Joined
May 13, 2021
I've known several people who used home equity loans to purchase DVC. They utilized a HELOC while refinancing to a lower interest rate on their mortgage, ending up still lowering their mortgage payments and taking out enough cash to buy the contract. Plus, they still retained equity. They, like many others today were never planning on paying off the mortgage on that particular home and knew they would be moving long before the mortgage hit zero (who stays in the same home for 30 years anymore).

Obviously NOT ideal for everyone, but just shows there are other financing options out there.
 

TonyCnLV

Disney Fanatic since '86
Joined
Jul 15, 2020
Recently, in doing research for my family on purchasing DVC, I've run across multiple posts stating that DVC should not be purchased using financing. In other words, if you need to purchase using financing, you are probably better-off staying at a Value resort or off-site, rather than buying-in.

Now, obviously I can't speak for anyone else, but we are (I think) a typical middle-class family with both parents working decent jobs. But there is no way we have $40-$50K laying around to pay-off our purchase as a lump sum. It seems like few people that I know would be able to do that either. In short, we have decided that we want to purchase DVC to ensure years of vacations to come with some amount of financial control over the accommodations. But are trying to decide if it's a good idea or not.

This poll should apply whether direct or resale.

I apologize if this is too personal of a question. Please don't answer if you feel uncomfortable. Thanks a lot!
I did both actually. For my first contract I paid up front in cash which was a lot to leave my account at once Haha. For my second contract I used financing mostly becuase I didn’t wanna drop that much cash a second time, but I plan to pay it off way before the terms I agreed to, but I wanted to secure the contract I saw at the time I saw it. I just closed on my second contract in a lot shorter time frame than my first so time to start paying it off quickly . I will say I’m single with no family so I’m in a lot different situation than most on here who own DVC I only have myself really to worry about
 

EYL

Mouseketeer
DVC Platinum
Joined
Dec 24, 2018
Paying cash is the best thing to do, obviously. But in the time that it might take for you to save the money, incentives might expire, price/point could increase, your favorite resort might sell out, and the minimum could increase again. All that would set you back to saving again. Also, the immediate memories that you can create with your family could be priceless.

In general, I advise to finance responsibly. Know that the interest of your loan goes against any savings you perceive. Know that a 10-year loan of $10,000 at 10% interest (a typical Disney loan) means that after the whole term, you would have paid over $5800 in interest. Know that if you add an extra 10% to your monthly payment for that same loan, you will save close to $1000 in interest after the whole term. Know that you can take out a personal loan, or use a home equity loan to save significantly on interest. After considering all that, if the value of that additional expenditure is in your benefit, then I say "go for it"!

When I purchased resale, I took out a personal loan with Lightstream (much lower interest than Disney) that I returned quickly thereafter. Good thing I did, because I had put in an offer before Disney announced the resale restrictions and the contract went into ROFR before the January 19, 2019 deadline. Had I waited until I had all the cash in hand, my resale points would have been restricted to the O14 only. The extra interest that I paid, allows me to use my points at Riviera and at all future resorts, so it was definitely worth it to me. Also, because of that, we were able to reserve a trip with my parents to their dream resort - PVB. Good thing we made those memories, because the pandemic came a few months after and we don't foresee travelling with them for awhile, especially with my parents' health declining.
 

What-r-ya Goofy?

Mouseketeer
Joined
Oct 24, 2007
Obviously everyone's situation is unique, but if it will take a family 5-10 years to save up the money to buy with cash, that's 5-10 years worth of trips missed out on in the life of that contract. Additionally, the purchase cost of the contract will have increased significantly as well over that 5-10 year period.

I wouldn't recommend a 10 year loan at 12%. That's a big hole to dig out of. But if a person is able to get a short term personal loan at half that rate, I think the math makes more sense. There is value in buying in early.
 

Sandisw

DVC Forums
Moderator
Joined
Nov 15, 2008
We did a little of it all. When buying direct, we used our credit card to spread the payments out as we were waiting for the sale of a DVc contract we were selling to close.

One time, I took a bridge loan from Lightstream and kept it for about a year to cover some of the cost,

Other times, we just paid it directly…when the amount for small. Our first contract in 2009 was about $5k.

When we first debated, we did consider what we were paying for the cash stays on the room only at the Contemporary for our normal 5 or 6 night stay. It was about $1500 to $1800 a year, which did include room only discounts.

We realized that even with financing via Disney for the 10 years, and the annual MFs we would pay to buy in at BLT when it opened, it wasn’t going to be more than that $1500. In our eyes, we felt it was the same and that after 10 years, we’d be saving.

It turned out that we didn’t need to go that route. But, I think everyone has to decide on what makes sense for their own situation. The one big thing we did consider was if we could absorb any part of the loan if we had to sell after a few years and could not get enough to pay the balance. We had those funds without an issue so we were comfortable potentially taking on the loan.
 

npatellye

DIS Veteran
Joined
Dec 30, 2019
We used a credit card to spread out our payments. We first charged the max amount to our Disney Visa and paid it off a week later. Then, we charged the max amount to the Disney Visa again for 6 months at 0%. We put the rest on a credit card that had 0% for 12-18 months (18 months with the first purchase and 12 months with the second). I wasn’t comfortable draining our emergency savings for DVC because I always worry about the what ifs and like to have a cushion for emergencies.
 

J-Dog

A Nobody
Joined
Sep 4, 2016
Thanks so much for the replies! Based on the poll, I actually am surprised that so many people just paid off their purchase right away.

I've known several people who used home equity loans to purchase DVC. They utilized a HELOC while refinancing to a lower interest rate on their mortgage, ending up still lowering their mortgage payments and taking out enough cash to buy the contract. Plus, they still retained equity. They, like many others today were never planning on paying off the mortgage on that particular home and knew they would be moving long before the mortgage hit zero (who stays in the same home for 30 years anymore).

Obviously NOT ideal for everyone, but just shows there are other financing options out there.
This is similar to our plan. We plan to pay a "down payment" and then finance with a HELOC that is lower interest than Monera. We are planning on using a HELOC for some major home improvements anyway - just afraid of racking-up too much debt on the HELOC on top of everything else.
 

RoseGold

DIS Veteran
Joined
Jan 21, 2020
Financing carries upfront costs and ongoing expense. Some of them are so expensive I would call them predatory. Even with generally favorable math for buying DVC, I find it hard to overcome that math flip. I guess it is possible, especially with cheaper loans, like a HELOC.

Reality is plenty of people get DVC foreclosed by their financing company, and plenty of those bit off more than they could chew.

Renting points is currently very close to buying resale mathematically. It's possible that financing flips the math to make renting cheaper.
 

BamaGuy44

Mouseketeer
Joined
Mar 28, 2014
A short term loan, with a decent interest rate is a great way to go IMO. In fact that's what I'm doing with my first contract that I'm currently in the process of buying (resale). Like others said, 10% for 10 years is very expensive. But 4.98% for 3 years is worth it to me. If I waited 2-3 years until I have the money in one lump, prices will be higher and there will be 3 years of DVC stays with my family I could never get back. And the resorts will be 3 years closer to expiration. The ~$1300 I'll pay in interest is a cost I'm willing to absorb to get in earlier. YMMV of course.

I don't have tens of thousands sitting in cash, and I don't want to sell investments that are earning more than the interest rate I'm paying. Maybe I'll get scolded by the "If you are financing it you can't afford it" crowd, but that's ok, I promise I'll only waste my money and not theirs :)
 

J-Dog

A Nobody
Joined
Sep 4, 2016
Financing carries upfront costs and ongoing expense. Some of them are so expensive I would call them predatory. Even with generally favorable math for buying DVC, I find it hard to overcome that math flip. I guess it is possible, especially with cheaper loans, like a HELOC.

Reality is plenty of people get DVC foreclosed by their financing company, and plenty of those bit off more than they could chew.

Renting points is currently very close to buying resale mathematically. It's possible that financing flips the math to make renting cheaper.
Yes, that makes sense, thanks! But I don't really see renting points as any different than staying off-site - there's no potential long-term financial advantage, since the per-point cost is almost certainly going to increase over time.
 

RoseGold

DIS Veteran
Joined
Jan 21, 2020
there's no potential long-term financial advantage, since the per-point cost is almost certainly going to increase over time.
Contracts are decaying, time-limited assets. There will be a point at which they start to decline. We haven't seen it yet, but it is a mathematical certainty. I doubt anyone here would tell you to buy DVC for long-term financial advantage. The historic rate of increase is unlikely.

If you really want the DVC experience, you can get it without shelling out five figures and with much less commitment than buying a timeshare. It's not like the only choices are to stay at Springhill Marriott or buy a five figure timeshare.

There are many contracts which don't stack up to current rental pricing, even if you paid cash. Rental pricing is just low right now, that's just the current market. Using the board sponsor math, an average resale BW contract is about $14/point, assuming you paid cash. You can rent BW points right now for $18/point on these boards. Add in financing charges, and maybe renting is looking even better.

 

UrsulaWantsYourSoul

DIS Veteran
Joined
Jun 23, 2020
I'd second what @What-r-ya Goofy said. While you could save up for 5 years... that's 5 years you could have been enjoying points on amazing vacations and the cost of points going up over that time could negate a chunk of the interest.
And being able to hit a certainly threshold of points can give you a much better deal.
I'd suggest being able to put a chunk down (we usually put down like 20-40%) and financing for what's affordable but pay it back at a faster rate. We're planning to do a HELOC for our next purchase - much lower rate.
But yes consider that a lot of DVC owners on here are relatively wealthy and probably pay for their cars in cash. That's awesome for them - but not our reality.
 

J-Dog

A Nobody
Joined
Sep 4, 2016
Contracts are decaying, time-limited assets. There will be a point at which they start to decline. We haven't seen it yet, but it is a mathematical certainty. I doubt anyone here would tell you to buy DVC for long-term financial advantage. The historic rate of increase is unlikely.

If you really want the DVC experience, you can get it without shelling out five figures and with much less commitment than buying a timeshare. It's not like the only choices are to stay at Springhill Marriott or buy a five figure timeshare.

There are many contracts which don't stack up to current rental pricing, even if you paid cash. Rental pricing is just low right now, that's just the current market.
Thank you for the expert advice.

TBH, we are not really considering renting points for DVC, but the debate is mostly whether or not we want to shell-out the cost for DVC vs. just staying at a VRBO annually. You post is very informative, but doesn't really help that debate, LOL!
 

RoseGold

DIS Veteran
Joined
Jan 21, 2020
TBH, we are not really considering renting points for DVC, but the debate is mostly whether or not we want to shell-out the cost for DVC vs. just staying at a VRBO annually
Well, VRBO can either be a A LOT more expensive than DVC, or a lot cheaper... So, who knows?

I saw one that had a private lazy river pool or a Harry potter themed room with a dragon and custom lighting and painting. Nothing like that at DVC, for sure!
 

J-Dog

A Nobody
Joined
Sep 4, 2016
I'd second what @What-r-ya Goofy said. While you could save up for 5 years... that's 5 years you could have been enjoying points on amazing vacations and the cost of points going up over that time could negate a chunk of the interest.
And being able to hit a certainly threshold of points can give you a much better deal.
I'd suggest being able to put a chunk down (we usually put down like 20-40%) and financing for what's affordable but pay it back at a faster rate. We're planning to do a HELOC for our next purchase - much lower rate.
But yes consider that a lot of DVC owners on here are relatively wealthy and probably pay for their cars in cash. That's awesome for them - but not our reality.
Thanks! That not our situation, either.

Between kid's expenses, college loan payments, mortgage, etc, we just aren't "lump sum" kind of people. For us, the debate is whether we do this with some kind of financing, or we don't do it at all...
 

J-Dog

A Nobody
Joined
Sep 4, 2016
Well, VRBO can either be a A LOT more expensive than DVC, or a lot cheaper... So, who knows?

I saw one that had a private lazy river pool or a Harry potter themed room with a dragon and custom lighting and painting. Nothing like that at DVC, for sure!
Yes, makes sense. Thank you again!
 

UrsulaWantsYourSoul

DIS Veteran
Joined
Jun 23, 2020
Thanks! That not our situation, either.

Between kid's expenses, college loan payments, mortgage, etc, we just aren't "lump sum" kind of people. For us, the debate is whether we do this with some kind of financing, or we don't do it at all...
If you've already been going yearly / a couple times a year and have been staying at moderates or better, then perhaps.
If you haven't been going yearly (or at least every other year) and tend to do value and sometimes splurge for moderate, then probably not.
 

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