So Much for the Magic

[Don & June]

I just received a call from DVC advising me that our credit application had been turned down do to our credit report over the past 2 years. Here is the kicker .. we just purchased a house in July of 2001 and our credit was fine then. DVC advised me that since our credit was turned down that our application would be rejected .. UNLESS .. we decided to put down 30 percent .. vice the amount we originally put down .. so know my question is .. I take it my credit report is ok if I were to put the 30 percent down .. but not good enough if I chose to put anything less .. It won't hurt Disney or DVC .. but they just lost a would be yearly customer ..

So I say .. so much for the Magic ..

 

[Maistre Gracey]

I am sorry to hear the bad news
I just don't understand that. If payments are missed, they just don't have to let you stay there. It seems like the best colateral there is. Especially, when several payments would be collected prior to your first visit (probably enough to pay cash for your first visit).
It just makes no sense to me.
Personally, I would complete the purchase, but put the 30% down as a last resort.

 

[Terry S]

My parents had a problem also and had to put down the 30% also. They were a little upset at first, but they felt it was worth it so they put the extra 10% on their credit card. This was just their decision though, you have to do what is right for you. The thing that surprised me was they did not re-calculate their monthly payment based on the 30%, when my mom asked about that they told her the monthly amount would remain the same, it would just get paid off sooner than the original 10 years.

 

[KNWVIKING]

Part of a credit report is an income-vs-debt ratio. DVc's findings don't have to mean you have bad credit. You stated you just purchased a home,that's obviously a large debt. The additional DVC debt at only 10% down probably puts you outside a specific debt ration number DVC as well as other lenders use. This doesn't make you feel any better but deciding to never go to WDW is kinda like cutting your nose off to spite your face. Your right, WDW won't miss you, but if you were going to make the investment into DVC, then I think your going to miss WDW.

 

[Frank in WI]

All lenders, and since Disney is lending the money here I will assume them included, use a formula to figure out how much debt a particular person/family can have before they will deny credit. In most, not all, cases it's between 28 - 35% of your total monthly income. I think what they are trying to tell you is that your pretty close to your debt ceiling. By having you put more down, they can keep your debt below the ceiling and still give you the financing. This is standard operating practice for all lenders. I bet you get the same response from your bank if you were to try to use a loan from them.

I don't think anyone is trying to ruin the magic for you. I had to delay my purchase into DVC for 3 years so that I could better handle the payments.

Good luck to you.

 

[ffnole]

You can probably borrow what you need much easier from your existing bank with little if any closing costs, no money down at Prime +1-2 (interest only) ...in any event longer amortization (15-20 years) and much better rate than what you could get from Disney...plus its tax deductible. Generally you can borrow up to 100% of the value of your home. I know some don't like leveraging your house but for a financial institution it makes great sense because the historic default rate on home equity loans is very low...thus you get a willing lender and great terms! The consumer in term gets a loan they need at superior terms to what any third party would provide.

 

[RobDoc]

You might also want to check that credit report if you feel your credit rating is OK. Sometimes there are errors in those reports which would cause a lender to decline to offer credit under usual circumstances.

You are entitled to get a copy of the report from the company that prepared it and challenge any inaccuracies.

Good Luck!

 

[madcoco]

I take it my credit report is ok if I were to put the 30 percent down .. but not good enough if I chose to put anything less .

It is the same as a mortgage, a company is more willing to underwrite a loan with some dings in the credit with a larger down(like no mortgage insurance for 20% down) and the better one's credit is, usually qualifies them for the lowest interest rate.The underwriter may be taking into account a high debt ratio and that it is just too soon a time frame between your real estate purchases.I would request a latest credit report from one of the credit reporting companies and check for any errors.(Not positive on this, but I believe if turned down, you can receive a free copy of your report.)

 

[JudithM]

I would check with the three credit bureaus. If nothing else to check your credit to make sure everything is correct. I believe Maryland is a state that allows you to get one free credit report from each company once a year. DVC aside it is worth checking.

 

[Doctor P]

Since you have been turned down for credit, you can get a free report anyway. Disney is extremely lenient on credit applications--most lenders would turn you down outright rather than offering the altered terms. Hope things work out for you. Unfortunately, as the Chairman of the Board of the small financial institution I can understand the lender's perspective but I also understand your disappointment.

 

[Jon99]

Thanks for a great topic guys... As some may recall, our financial situation(I guess its my situation, not really hers) has had us on pins and needles lately trying to decide what we should do in regards to financing with DVC... About 4-5 years ago I became ill and did not work for about 5 months, bills became too much for me to take care of and I defaulted on my student loan and two credit cards.. I took a settlement with the two credit cards about 3 years ago and did a student loan rehabilitation program to bring my student loan current, which it FINALLY did about a year ago... The past 3 years my credit has been perfect and as soon as we were getting ready to attempt to finance, my job was eliminated a few weeks ago....

Anyway, between my wifes job as a teacher, my unemployment and a landscaping job I have been doing until I find an accounting job, our estimated income is about $5500 a month and our monthly debt payments are about $1700 (mortgage, two car payments, student loan and a credit card), which puts our debt ratio right around 31% (add $200 a month for a DVC and its very close to the 35%).... We are pretty frugal people and handle our current bills very easily while still socking away $400 a month into our IRA's and another couple hundred into our DVC savings, but until I find a "regular" job should we even bother looking into financing thru DVC???

 

[chris1gill]

Jon99, You're in a tough situation as well... You might find the exact same scenario, that DVC will require you to put down a great amount of down payment, so that they can lower your monthly payments so that you montly percentage falls below their requirements... It's always worth a shot to see what they will say/do....

I also wanted to say to the Original Poster, that it would be worth getting a copy of your credit reports, just so you know that there is nothing incorrect on them... .

 

[sgtpet]

I do not blame you for cancelling your purchase. As Webmaster Doc suggested get a copy of the credit report to assure your assumptions are correct. This board is extremely pro Disney. Don't be swayed, you made the right choice for yourself.

 

[Don & June]

One of the first things I did when I got off the phone with DVC was call and order the free credit report .. When we purchased out home in July of 01 we had to go through are credit report and fix all that was either old or needed to be updated .. I will do that again .. but will look else were for vacation options .. just don't under stand how my payments would have remained the same with the 30 percent down .. the same as what we orginally put down ... know I am just waiting to see how long it takes to get the money back that was put down and already taken out of my account ..

 

[yesdisneyfool]

Originally posted by chris1gill
I also wanted to say to the Original Poster, that it would be worth getting a copy of your credit reports, just so you know that there is nothing incorrect on them... .

As a note to everyone. I am a Credit Union Manager. You would not believe the number of people who apply for a loan and have no idea what is reported on their Credit Reports or think that something has been corrected and has not.

I recommend (and do myself) request a copy from all 3 reporting companies at least once a year. It is important to know that what is reported is correct and is yours. I believe the fee (free if turned down for a loan or employment) is about $8 (well worth protecting your credit).

Equifax 1-800-525-6285
Experian 1-888-397-3742
TransUnion 1-800-680-7289

 

[Stinson]

Perhaps this is more a reflection of Disney's financial problems than yours. Disney might be looking for any excuse to bring cash into the company more quickly. The parents of "Terry S" were asked for a larger downpayment AND an accelerated amortization schedule. It might be that Disney just needs the money. If you did not have a problem getting a mortgage and your finances have not changed, then your credit can't be that bad.

 

[Frank in WI]

Does anyone know for sure that Disney is the lender? Most companies use outside lending institutions for this type of financing. I know my company makes loans that appear we're the lender, but they are financed by SunTrust Bank. I'm curious to know what the actual situation is with their program.

If Disney is not the actual lender, the amortization and down payment don't change Disney's bottom line or cash flow at all. They get the same amount of money no matter how you pay for it.

 

[jennybobenny]

THanks for those phone numbers 'yesdisneyfool'. I've copied them down and plan to order reports from all 3. We've been pre-approved for a new mortgage (now we just need to find a house) so I don't think there's a problem, but I'm very curious as to what's on our report.

 

[Jon99]

Question for the lending people.. My wife has perfect credit, mine is perfect for the past 3 years (Excluding the student loan, which was in collections for a few years while I was in a loan rehabilitation program, now current for 12 months)... At what point in time will these past problems not hurt my chances to get financing for something like Disney???

It must be getting better because I had no problem getting a loan for my 2001 truck and Citibank keep increasing my limit on my Mastercard...

Sorry for all the questions, just don't want to get blind sided when we apply for financing.....

Thanks again, Jon

 

[Maistre Gracey]

Jon99, your percentages look okay. I am not a lending guru, but if you call DVC you can eventually talk with the credit department. This may take a few phone transfers, but I have done it, as I had a lending question. They can give you the exact scoop.