Timing for Financing a DVC Purchase?

[Yensid67]

Do I have to be pre-approved to finance a DVC purchase through the resale market or can I make an offer, have it accepted, and then go through the financing approval process?

Thanks in advance.

 

[Epcot Forever Forever]

Do I have to be pre-approved to finance a DVC purchase through the resale market or can I make an offer, have it accepted, and then go through the financing approval process?

Thanks in advance.

I assume you plan to use Monera? They’ll do whatever, they don’t even check your credit.

An unsecured personal loan may get you a better interest rate if your credit is good and your income is high.

And if your credit isn’t good or your income isn’t high, don’t finance a DVC purchase!!!!!!!!

Also, just in general, don’t finance a DVC purchase, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling.

 

[DannyV]

Do I have to be pre-approved to finance a DVC purchase through the resale market or can I make an offer, have it accepted, and then go through the financing approval process?

Thanks in advance.

You can make an offer and then get financing.

 

[DonMacGregor]

I assume you plan to use Monera? They’ll do whatever, they don’t even check your credit.

This.

 

[Yensid67]

Thank you all for the great information and advice. I really appreciate it.

 

[ilvdisny888]

Also, just in general, don’t finance a DVC purchase, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling.

What do you mean by "you'll lose all of your flexibility in canceling and scheduling"? I've fully calculated it out with maintenance dues, the actual cost of the loan, costing costs, etc., and in every trial I've run, you'd still save money by financing DVC over booking with cash. Just not as much as if you pay cash for DVC up front.

 

[kilik64]

What do you mean by "you'll lose all of your flexibility in canceling and scheduling"? I've fully calculated it out with maintenance dues, the actual cost of the loan, costing costs, etc., and in every trial I've run, you'd still save money by financing DVC over booking with cash. Just not as much as if you pay cash for DVC up front.

With cash you dont have the same restrictions for canceling (DVC if you cancel within 30 days points go into holding) and I doubt the cash side is booked up as much at 11 and 7 months so easier to get in where you want.

Also depends on your definition of cash, are you staying in deluxe resorts all the time already? If not, then dont compare to that, compare to what youd pick to stay at if you were not a dvc member to compare.

 

[DonMacGregor]

With cash you dont have the same restrictions for canceling (DVC if you cancel within 30 days points go into holding) and I doubt the cash side is booked up as much at 11 and 7 months so easier to get in where you want.

Also depends on your definition of cash, are you staying in deluxe resorts all the time already? If not, then dont compare to that, compare to what youd pick to stay at if you were not a dvc member to compare.

But what does that have to do with financing a contract? By that logic, your original comment should have read:

"Also, just in general, don’t make a DVC purchase at all, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling."

Because no matter how you buy it (outright, financed through Disney, personal loan, credit card), the restrictions are the same compared to a cash room reservation.

 

[kandlsutton]

We were planning on paying cash, but had some unexpected expenses (AC repair, car repair, etc.) between making the offer and passing ROFR. I got a approved with a good rate at www.lightstream.com the day we passed ROFR and had the funds in my checking account within 2 business days. Really, it was way too easy…

 

[Stargazer65]

If you have a pulse, you can get it financed immediately. If you don't have a pulse, probably allow an extra 5 minutes for a waiver.

 

[DonMacGregor]

If you have a pulse, you can get it financed immediately. If you don't have a pulse, probably allow an extra 5 minutes for a waiver.

As long as one hand can work the mouse for the DocuSign, you're golden.

 

[Epcot Forever Forever]

But what does that have to do with financing a contract? By that logic, your original comment should have read:

"Also, just in general, don’t make a DVC purchase at all, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling."

Because no matter how you buy it (outright, financed through Disney, personal loan, credit card), the restrictions are the same compared to a cash room reservation.

My original comment not theirs, my point is that DVC has serious trade offs that are not worth it if you’re not actually getting a value out of it. If one is doing the math on paying 15% interest while passing up quarterly 30% cash discounts and one still comes up with “I should do this”, I would posit one should consult a financial planner.

If you can pay cash for a loaded OKW 2057 contract at a little below current resale market price, you can get serious value! If you’re financing a stripped BCV resale contract that you paid $170 for, not only will you certainly come out behind in 20 years, you’ll have made your life harder in the process.

 

[kilik64]

But what does that have to do with financing a contract? By that logic, your original comment should have read:

"Also, just in general, don’t make a DVC purchase at all, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling."

Because no matter how you buy it (outright, financed through Disney, personal loan, credit card), the restrictions are the same compared to a cash room reservation.

I wasn’t the original poster was just giving examples…

 

[ilvdisny888]

My original comment not theirs, my point is that DVC has serious trade offs that are not worth it if you’re not actually getting a value out of it. If one is doing the math on paying 15% interest while passing up quarterly 30% cash discounts and one still comes up with “I should do this”, I would posit one should consult a financial planner.

If you can pay cash for a loaded OKW 2057 contract at a little below current resale market price, you can get serious value! If you’re financing a stripped BCV resale contract that you paid $170 for, not only will you certainly come out behind in 20 years, you’ll have made your life harder in the process.

I'm not disagreeing with you, I'm just trying to learn here. Let's take an example. I found a contract for OKW and ran the numbers with financing for down payment, closing costs, maintenance dues, and actual cost of the loan with interest. My calculations came out to costing about $17/point overall. Now, I know that paying with cash would make this much lower, probably closer to $9/point. Let's say I want to use my points to book a night in a one bedroom villa at OKW on January 16th. Based on 2022 point charts, this would set me back 23 points, coming out to $391 in value with my $17 cost per point calculation. The rate for this room to book non-DVC with cash has historically been $686 according to Mouse Savers. Even if there was a 30% discount, I would still be paying $480 and paying tax. Financing DVC would still save me at least $100 versus not having DVC. Let's say I wanted a one bedroom at OKW on New Year's Eve. This would be 40 points with DVC, or $680. That room would go for $1000 easily by booking with cash.
Of course, buying DVC with cash would save me significantly more, but I do think it depends on the situation. And maybe careful planning when it comes to choosing travel times, resorts, room types, etc. to make sure you're getting a good value.

 

[crisi]

But what does that have to do with financing a contract? By that logic, your original comment should have read:

"Also, just in general, don’t make a DVC purchase at all, you won’t wind up saving money over just booking with cash and you’ll lose all of your flexibility in canceling and scheduling."

Because no matter how you buy it (outright, financed through Disney, personal loan, credit card), the restrictions are the same compared to a cash room reservation.

I usually say if you HAVE to save money for DVC to work, then you aren't a good DVC candidate. People who have to finance it - well, lets say the Venn diagram for those people and the people who have to save money has at least SOME overlap. (Note that I financed my DVC purchase - for three weeks while my husband's bonus came in which allowed us to pay off the home equity loan we took out to finance. I finance things a lot - often because the interest rate is low and much of my money isn't liquid and is doing just fine where it is. That's different than needing to finance. Financing because you don't want to pay taxes on the sale of stock is not financing because you need to).

You MIGHT save money. There are a lot of reasons why you might not. It might change your travel patterns (it does for a lot of members). You might end up booking one or two bedrooms when you would have only stayed in a single hotel room. You might decide "we have points, let's invite my sister!" You might just spend more because you don't have an immediate hotel bill. Always remember, Disney sells DVC because its a good deal for them...they think they make more money or they wouldn't sell it.

But DVC is also a commitment in a way regular cash reservations aren't. You must be able to cancel 30 days in advance, or points go into holding, which are not flexible - and your chances of just losing those points is much higher than zero. You must pay dues - even the year the furnace and the roof need to be replaced the same year. It is likely that over the years of your ownership, at some point you will waste points. It happens.

But DVC is about more than just saving money - for us, we spent a LOT more on Disney vacations with DVC - but we got to take friends and family that we would have never done on cash. We got to stay in units that had our kids in a whole different room - making evenings and mornings much more pleasant. We had in room laundry.

Always remember that Disney the Corporations first job is to extract more money from the pockets of its customers. That's why corporations exist. If they thought Disney customers would really "save money" over the long term with DVC, they'd never have built OKW. They are betting that more of your money will end up in their pockets.

 

[Epcot Forever Forever]

And maybe careful planning when it comes to choosing travel times, resorts, room types, etc. to make sure you're getting a good value.

Ok well that’s basically my point though. I’m sure if you work hard enough you can find dates and room combinations where you save money if you ignore inflation and savings rates. But why put yourself through all of that to save a few dollars by traveling at potentially inconvenient times that, even if they work now, may not make sense for you anymore in 5 years?

Again, DVC still comes with so many drawbacks vs paying cash, especially around changes and cancellations. AND if something changes unexpectedly in your life over the next few years you’re holding a giant unsecured loan that you have to keep making payments on, a loan on a contract that that even in the best market still takes 2-3 months (and 2-3 payments) to unload on the resale market because Disney takes their sweet time processing it.

I dunno. I planned on financing initially too and I wound up deciding that not only was it wrong for me, it’s just generally wrong for virtually everyone, particularly with even cash prices barely (or not even!) breaking even at many resorts if you calculate it like a finance department of a business would.

 

[crisi]

That is a good point. DVC is not a liquid asset. You can sell, but especially if you finance, if you need to sell soon after buying, you may end up selling and owning money on the contract. There have been times DVC prices have dropped fairly dramatically, leaving anyone with a loan and a need to sell in a tenuous position. And you are right, if you need the cash fast, its two months or longer between deciding to sell and having a check in hand. Two months can be a long time when you need the money quickly.

In addition to DVC working best for those that don't HAVE to save money, it also works best for people with the luxury to spend whatever their initial purchase price is and think of it as a sunk cost where they could walk away and leave the purchase price on the table without hardship. Its unlikely you won't get at least half your money back. And for the past decade you are even likely to walk away having made money if you need to walk. But those aren't guarantees.

 

[DLgal]

Side question: how does Monera secure the loan? Do you have to give them the rights to your house or car or some other asset?

 

[DonMacGregor]

Side question: how does Monera secure the loan? Do you have to give them the rights to your house or car or some other asset?

The ownership interest of the contract collateralizes the loan, just like any other real estate financing.

 

[DLgal]

The ownership interest of the contract collateralizes the loan, just like any other real estate financing.

I don't know what that means. I've never financed any real estate.