Resale Purchases - Pay In Full or Finance?

[Paul Stupin]

Of course circumstances were different than today, as were buy in costs. My point remains, what one considers the “right” way does not equate for everyone. Could I save for 3-5 years to pay in full? Yes. If I did that, would the prices be higher than buying right now? Almost certainly. Would the money I paid in interest to save on purchase price be more or less than waiting 5 years? Who knows? What I do know is that buying resale right now, at never before seen value and Disney not buying fire sale contracts, is a once in a lifetime opportunity. How I manage the details after buying add on points at ridiculously low buy in costs, I can manage in a way that best suits my situation. Long story short, to each their own. If you think financing is a horrible decision, don’t do it. Explain why that works for you and perhaps others will find guidance and follow your advice..perfect! But that solution and reasoning is not a “fits all” scenario. Would never be an option for me. Had I followed that advice, I’d have missed out on dozens of memories made with my young children (now adults) and a lost a very profitable ownership. In my case, even if I paid the full 10 years of interest on my current resale add on, I’d still be at a net plus monetarily over my entire DVC membership. Each of us has different ideas, situations and motivations on how we choose ownership, and all are justifiable imo

Hmmm. In this environment, buying contracts with money you don’t have, with the belief that there’s no downside, just doesn’t seem to me a good idea.

 

[KalamityJane]

Hmmm. In this environment, buying contracts with money you don’t have, with the belief that there’s no downside, just doesn’t seem to me a good idea.

It’s actually not great to have large amounts of cash just lying around (especially with inflation, you are literally losing money doing that). Most financially savvy people I know have their money working for them (CDs, stocks, etc) so it may not be money they don’t have, just not easily accessible.

 

[J-Dog]

Sure, but the other option was to stay at Dolphin, not don't vacation. I'd argue renting points or hotels can be the better mathematical choice even if you do have the cash.

But as I said, it's not all about math for everyone. The subjective factor of "I have these points so I had better use them" doesn't apply to Swolphin or rented points.

 

[Cfabar1]

Love reading through the ROFR threads and the Closing Time threads. I'm curious for those of you who are active on the resale market, are you purchasing these in full or are you financing a portion after a hearty deposit/down payment?

I'm evaluating a potential contract through resale versus VDH direct and debating how to make that purchase work. I'd love to pay in full but that's not realistic for me.

Thanks!

I’m going to speak to your questions.

I would personally consider financing through Disney. The interest rate is considerably lower, so even more expensive points, I’d rather pay less in interest.

I would not personally consider financing through something like Monera. The interest costs are too high. I would personally consider a balance transfer, liquidation of investments, etc. prior to making that decision given the high interest rates.

I’d also look carefully at how borrowing and banking of points might allow you to not need to purchase as many points as you think initially, thereby giving you maybe more time to buy those points later, rather than a loan. I’d also remind you once a member you can purchase up to 25 one time use points per year.

 

[Paul Stupin]

It’s actually not great to have large amounts of cash just lying around (especially with inflation, you are literally losing money doing that). Most financially savvy people I know have their money working for them (CDs, stocks, etc) so it may not be money they don’t have, just not easily accessible.

Agreed, but I think most financially savvy people would never regard a timeshare as an investment. DVC is great, but prepaying for pricey vacations is a luxury purchase. Of course this is just my opinion, though I believe it’s shared by many on these boards.

 

[KalamityJane]

Agreed, but I think most financially savvy people would never regard a timeshare as an investment. DVC is great, but prepaying for pricey vacations is a luxury purchase. Of course this is just my opinion, though I believe it’s shared by many on these boards.

Oh, I agree, it’s not an investment. That being said, I’m not going to pull money from stocks or CDs to pay it off when I know I can pay it in a few months with a short term loan and no prepayment penalties. I’d actually prefer to put it all on my credit card to get 3x points plus the fee free, no interest loan that it gives me.

 

[disney-inspired]

Oh, I agree, it’s not an investment. That being said, I’m not going to pull money from stocks or CDs to pay it off when I know I can pay it in a few months with a short term loan and no prepayment penalties. I’d actually prefer to put it all on my credit card to get 3x points plus the fee free, no interest loan that it gives me.

Exactly my thought. Love me some CC rewards.

 

[NY Pirate Princess]

I feel the emergency of a double point contract at a ridiculously low listing price this afternoon....Gah!

 

[disneyfan123]

Only reason I would consider financing is because resale is so low right now. If you have to finance, move heaven and earth to pay it off asap, otherwise it doesn’t make sense to purchase. If you had to borrow 10k at 15%, but paid it off in one year, you aren’t paying too much interest. When Disney starts to use ROFR again, prices will jump a lot and you could end up paying a lot more than the interest. But I wouldn’t recommend financing as a general rule.

 

[Epcot Forever Forever]

would personally consider financing through Disney. The interest rate is considerably lower, so even more expensive points, I’d rather pay less in interest.

Disney and Monera are both currently working with published rates ranges from 10% to 21%. Both have different structures for who gets what rate but in general most people will get 13-15% with either one.

 

[Paul Stupin]

Oh, I agree, it’s not an investment. That being said, I’m not going to pull money from stocks or CDs to pay it off when I know I can pay it in a few months with a short term loan and no prepayment penalties. I’d actually prefer to put it all on my credit card to get 3x points plus the fee free, no interest loan that it gives me.

Good point. Makes sense. I had longer term loans in mind.

 

[BlueIsis]

Disney and Monera are both currently working with published rates ranges from 10% to 21%. Both have different structures for who gets what rate but in general most people will get 13-15% with either one.

I looked into financing both direct and resale and Disney offered me 8% while Monera wanted 14%. Not sure if that spread is typical, but I found it significant.

 

[take36]

I looked into financing both direct and resale and Disney offered me 8% while Monera wanted 14%. Not sure if that spread is typical, but I found it significant.

Disney already making money on the dvc purchase, 8% is just delayed cherry on top for them. Monera needs 14% to pay the bills!

 

[sethschroeder]

But if you wait for 3 years to buy, there's also a risk that a lot can happen to resale DVC.

Here is the thing if you skip the more expensive WDW trip 1-2 times for some place less expensive, you are not paying the 10% or higher interest rate, and you save for it. Its likely then not 3 years and drops down to 2 or 1.5 years instead.

Additionally you can split your purchase up as well. If you need 300 points for that 2BR then buy 100 to start with cash, buy it loaded, and then borrow points to meet the vacation requirement you have. You can then add on over time as well then to get to the 300 points.


People don't like to hear it on this forum sometimes but skipping a single WDW trip can knock off a good portion of that DVC resale purchase likely between room, tickets, and food.

 

[sethschroeder]

It’s actually not great to have large amounts of cash just lying around (especially with inflation, you are literally losing money doing that). Most financially savvy people I know have their money working for them (CDs, stocks, etc) so it may not be money they don’t have, just not easily accessible.

Which is drastically different and doubtful to be the case for anyone asking a forum if they should borrow or not.

 

[sethschroeder]

I’d also look carefully at how borrowing and banking of points might allow you to not need to purchase as many points as you think initially, thereby giving you maybe more time to buy those points later, rather than a loan. I’d also remind you once a member you can purchase up to 25 one time use points per year.

100%

While small contracts might be a little more expensive do the math. If you can find a loaded contract for 50 points where you essentially have 150 points at your disposal for the first trip possibly go that route. Lots of people on this forum have slowly added on over time.

 

[thelionqueen]

This is math. Sure, when interest rates were low and DVC was taking off like a rocket, maybe you got a 3% HELOC. Sure, it wasn't a big deal. 3-5 years at current rates is a TON of money. It's not responsible to suggest resale can continue to appreciate at the crazy rates it did in the past (impossible I would argue), or to buy such a speculative "investment" at current rates.

What is the math you are referencing? I am financing my current contract until I can pay it off when my discrectionery income comes in. You mention it not being responsible to suggest resale can appreciate as it previously did, I respectfully disagree. At the price I got for my points, there’s almost zero chance it won’t appreciate in value. Or, if I chose to rent those points out, I’d have it paid off with zero of my own money, in 1.5 years. I won’t do that because I didn’t buy it as an investment, but definitely an option if needed. So you see, there are other ways folks leverage their ownership interest in DVC and each has benefits.

Who knows what the market or resale will do? Maybe Disney changes resale restrictions again and those who are grandfathered in have the sweetest deal of all time, maybe the opposite. There are a million "what ifs" that we could discuss but no one or nothing can determine what will happen this year, next year or in 10 years. I am 1000% confident in my decision to finance a contract that I want at a price I never thought I could get. It is my money, and I have no problem paying for a service that allows me the ability to buy what I couldn't have without it. So, to you, it isn't an option, for me it is. I don't see the issue with either viewpoint

 

[thelionqueen]

Hmmm. In this environment, buying contracts with money you don’t have, with the belief that there’s no downside, just doesn’t seem to me a good idea.

That is your opinion, to which everyone is entitled to. I find it odd that you assume it is money I don't have and that I have suggested there is no down side. There are positives and negatives to every situation including financing DVC or not. It's pretty simple imo, each and everyone of us has a situation different from everyone else. I don't criticize others if they choose to pay cash.. great, you do you. I see much more judgment, assumptions and criticism for those who have the gall to have to finance a purchase. We're not uneducated, losers or poor.. it's simply our choice. There are many sides to this debate, I'm simply suggesting there is not a "one size fits all" scenario for everyone. We all need to do what works for our own situation and respect opinions opposite of our own.

 

[Sandisw]

That is your opinion, to which everyone is entitled to. I find it odd that you assume it is money I don't have and that I have suggested there is no down side. There are positives and negatives to every situation including financing DVC or not. It's pretty simple imo, each and everyone of us has a situation different from everyone else. I don't criticize others if they choose to pay cash.. great, you do you. I see much more judgment, assumptions and criticism for those who have the gall to have to finance a purchase. We're not uneducated, losers or poor.. it's simply our choice. There are many sides to this debate, I'm simply suggesting there is not a "one size fits all" scenario for everyone. We all need to do what works for our own situation and respect opinions opposite of our own.

I happen to agree with you. When we started looking at DVC, we spent about $1500 to $1600 a year for our room at the CR as part of our yearly vacation…which we paid for in cash.

When we looked at financing, we decided that as long as our costs for DVC…monthly payment and dues did not exceed that $1600, it made sense and that after we paid it off…had figured no more than 5 years, then we would begin to pay less for our yearly vacations.

In that sense, we were fine with it because that money would be for a cash stay or a DVC loan payment…but, it would get spent either way…at least with DVC, we had something that eventually would save us money.

We didn’t end up needing to finance due to some circumstances that happened, but we were okay. I think as long as one understands it all, then It’s an individual choice and no right or wrong way to buy DVC.

 

[thelionqueen]

I happen to agree with you. When we started looking at DVC, we spent about $1500 to $1600 a year for our room at the CR as part of our yearly vacation…which we paid for in cash.

When we looked at financing, we decided that as long as our costs for DVC…monthly payment and dues did not exceed that $1600, it made sense and that after we paid it off…had figured no more than 5 years, then we would begin to pay less for our yearly vacations.

In that sense, we were fine with it because that money would be for a cash stay or a DVC loan payment…but, it would get spent either way…at least with DVC, we had something that eventually would save us money.

We didn’t end up needing to finance due to some circumstances that happened, but we were okay. I think as long as one understands it all, then It’s an individual choice and no right or wrong way to buy DVC.

Perfectly explains what I was thinking, thank you for explaining it better than I did.

The money I’m spending on DVC goes to Disney regardless of what form it takes. What you did and your rationale, is similar to my situation. The amount I’m spending is within my Vacation budget, so it makes sense for me. I get a guaranteed bonus & equity award annually, which I will use to pay off my DVC loan and lump sum dues, so, ultimately it’s “extra” money that I give to Disney. Who am I kidding, all my discretionary funds go to the mouse

That line of thinking is likely not the best choice mathematically, and will cost me a bit of interest, which I’d agree is not ideal but I’m completely ok with it and excited to take advantage of the current DVC market