The Price of Borrowing Money - DVC Direct Sales

[BamaGuy44]

Meh. DVC financing was already disgracefully high IMO. Small changes on other interest rates don't really matter.

If someone was already willing to take on a loan like that, instead of waiting a few years, they weren't looking at math anyway.

If anything, I guess it makes DVC loans kind of look more reasonable?

I don't know how many people there are who are ready to finance DVC at 9.9%, but would be scared off by 13% or whatever, but I'd wager the number is very low.

 

[bakerworld]

We own a 55 point contract which was specifically calculated to borrow every other year and then DVC chopped the borrow rate to half, which really damaged the use of that contract for over a year.

BTW, we're a couple of idiots that bought DVC direct and financed at 10.5% back in 2008. Without any justification, IMO if the amount we eventually purchased that 160 points is calculated against the current resale point costs we still are ahead. We left our savings intact and used future earnings to rent our little piece of DVC.

 

[RamblingMad]

I think, you'll also have more people opting to pay in cash.

The higher rates should put downward pressure on the price, especially if folks start defaulting on this debt. It's not like it's a must have like a home or vehicle to get to work.

 

[Matty B13]

We financed most of our resale contracts, but with very low interest rates, much lower than Disney's (3%). But we also paid them off in order 3 years.

 

[tatkins]

No one knows what the future will hold that’s a fact. If we look at the past financing DVC direct 10yrs ago would still be cheaper than buying today. Not saying it’s a smart play but it’s not as bad as it sounds. Plus they used those points to vacation with for 10yrs instead of renting a hotel room from Disney. I’m guessing some of these people are doing that math to justify.

 

[BamaGuy44]

We financed most of our resale contracts, but with very low interest rates, much lower than Disney's (3%). But we also paid them off in order 3 years.

At those rates you'll pay less in finance charges than you'd lose to price increases by waiting and saving up 3 years, or it will at least be close. And you've gotten 3 years of use out of it. Sadly those days are gone for the foreseeable future. I did similar to you. Yeah I "had" the money, but did I want to pull 30k out of the market at that time to avoid borrowing at 3%? Nah. Nobody will convince me it was some big mistake.

Getting this in before the inevitable "time value of money" debate starts up.

 

[RoseGold]

No one knows what the future will hold that’s a fact. If we look at the past financing DVC direct 10yrs ago would still be cheaper than buying today. Not saying it’s a smart play but it’s not as bad as it sounds. Plus they used those points to vacation with for 10yrs instead of renting a hotel room from Disney. I’m guessing some of these people are doing that math to justify.

Sure, as DVC's value took off crazy for years. Anyone suggesting DVC will do that now -- with how high current buy in is -- is really reaching. RIV and Aulani are half sold. There's a point where the prices stop going up at the crazy rate they have been.

There is no rush. DVC is going nowhere. You aren't going to get "priced out."

 

[Brian Noble]

Getting this in before the inevitable "time value of money" debate starts up.

I'm not sure why; I think you were on the right side of it (as in: you considered it.) The cost of borrowing at 3% was less than the forgone investment returns. Win!

 

[tatkins]

Just for the fun of it I ran numbers really quick. Total cost with interest per DVC site for 150 points at Riviera would be $55,130. That would make cost per point $16.20 with maint. fees for this year. A Sunday through Friday end of march stay at Animal Kingdom( less points I know) is 80 points or $1296. With current chase visa offer you can only stay at All Star resorts for that same money. Animal Kingdom with discount will still over $2,000 for the hotel room.

 

[BamaGuy44]

I'm not sure why; I think you were on the right side of it (as in: you considered it.) The cost of borrowing at 3% was less than the forgone investment returns. Win!

I just wanted to be the first one to mention time value of money (TVOM?), since we always debate it on these financing threads. I can mark it off my bingo card!

 

[Sandisw]

I think you make a good point here. Having to plunk down enough money (whether it's cash on hand or financed) to buy in at 150 points is a whole lot of dough.

The problem that seems to have occurred in the last 10 years when the lowered the minimum is put a much higher demand on studios.

So, it could end up being a catch 22 for owners when more have so few points that they buy just for that room size.

 

[BeachClub2014]

The problem that seems to have occurred in the last 10 years when the lowered the minimum is put a much higher demand on studios.

So, it could end up being a catch 22 for owners when more have so few points that they buy just for that room size.

Yep, I get that too. We pesky owners tend to want to have our cake and eat it too.

 

[DonMacGregor]

Getting this in before the inevitable "time value of money" debate starts up.

There comes a time when age and financial security allow you to place greater emphasis on the "value of my time in money" aspect of luxury/aspirational purchases.

 

[BamaGuy44]

There comes a time when age and financial security allow you to place greater emphasis on the "value of my time in money" aspect of luxury/aspirational purchases.

We’ll said. Like Morty Seinfeld said: “I’ve got a few good years left. If I want a Chip Ahoy I’m having it!”

 

[RichVIII]

Agree with OPs. The 150 min seems crazy at the buy-in but we just purchased a 50 pointer at a new resort and it is a total pain the butt to use effectively (total kudos to you that do). As a new buyer with less points I think overall satisfaction would be lower. We have been in for years and maximizing point usage is part art and science. It is so much easier with a bigger book of points.

But I also see one of those charts DVC puts out for monthly payments, it looks like just another car payment for most folks. With car loans getting even longer and most average cars now 30-50k, DVC markets itself well.

 

[DonMacGregor]

We’ll said. Like Morty Seinfeld said: “I’ve got a few good years left. If I want a Chip Ahoy I’m having it!”

As long as you keep them in the fridge...and I'm planning on at least 30 more good years.

 

[NVDISFamily]

I'll admit I'm one of the silly people who bought in and decided to finance about 50% of my purchase. I didn't want to cash out as big of a portion of my investments and decided to take some gains from some long term investments that I had done well on. I decided that having some great memories with my kids was worth the pain I'll deal with for a few years while I pay this off. I'm a big nerd and I spend way to much money on tech stuff. Now just no more spending on that for a while until I get this all paid off in a few years. The kids wont be this age forever.

Edit - here is my word offering for the finance discussion bingo card...... amortization.

 

[Robbie Cottam]

Right now that's the absolute minimum for Monera. And that's for 800+ credit score. My brother in law had literally 798 and they quoted him like 13.3 or something.

Monera tends to run a couple points higher than the other(s)

 

[🍀TwinsMom]

We financed both direct twice and paid it off within a year both times. I think the ease of doing it is just much easier. And I agree with NVDISfamily, our kids are only these young ages now, and before DVC we weren't making vacations a priority. Now we do and totally look forward to it.

 

[DonMacGregor]

And I agree with NVDISfamily, our kids are only these young ages now, and before DVC we weren't making vacations a priority. Now we do and totally look forward to it.

You mean you don’t want to wait until your princess, who practically wears her Elsa dress to bed every night, is now telling you she’s getting her 10th piercing and asking if she can bring her boyfriend Chad along?