To finance or not to finance

[jerseyduke]

THANK YOU, everyone for your input. i do need to look into renting points or resale. i'm also looking at aulani as my 'home' resort.

what is a good website for resales? i saw that there is a forum here for renting/trading points as well.

my questions about resale though...what benefits do i lose if i buy resale? can i still take advantage of adventures by disney or the disney cruise line?

You can not use resale points to go on a cruise, or adventures by disney, or convert to a regular hotel stay.

HOWEVER...if you look at places that rent points, they will tell you what they will pay you for yours. Then look at how many points a Dinsey cruise is.
You will quickly see, that if you rent out that same number of points, and then pay cash for that same cruise, you will actually have money left over!

But, lets say disney made the cruises point cheaper and that was not the case. Let's go on to say that, you would have to rent your points out, and then still pay 1000$ for that cruise.....if you save 10K on the resale market, you can do that 10 times and break even. And the idea that disney lowers the points per cruise price to such a level is a virtual absurdity.

As long as you would be comfortable using a broker to rent out your points, you lose nothing of value buying resale.

Using the April 3rd sailing of the Disney Magic, a 7 day Caribbean cruise:
An inside stateroom, for 2 people is 3232$ Including Tax.

The same room via points ranges from 172-192 per person. Let's use 172. That is 344 points required for 2 people.

One of the major point rental brokers will pay 11.30 per point for non premium points (even more if they are premium), so, if you rented out those 344 points, you would get 3887$ (If not more if you have premium points)

Now go pay cash for that cruise, and you are left with 655$ in your pocket.

That is what you lose by buying resale. The ability to overpay 655$ for a cruise.....

 

[DisDadDVC]

You can not use resale points to go on a cruise, or adventures by disney, or convert to a regular hotel stay.

HOWEVER...if you look at places that rent points, they will tell you what they will pay you for yours. Then look at how many points a Dinsey cruise is.
You will quickly see, that if you rent out that same number of points, and then pay cash for that same cruise, you will actually have money left over!

But, lets say disney made the cruises point cheaper and that was not the case. Let's go on to say that, you would have to rent your points out, and then still pay 1000$ for that cruise.....if you save 10K on the resale market, you can do that 10 times and break even. And the idea that disney lowers the points per cruise price to such a level is a virtual absurdity.

As long as you would be comfortable using a broker to rent out your points, you lose nothing of value buying resale.

Using the April 3rd sailing of the Disney Magic, a 7 day Caribbean cruise:
An inside stateroom, for 2 people is 3232$ Including Tax.

The same room via points ranges from 172-192 per person. Let's use 172. That is 344 points required for 2 people.

One of the major point rental brokers will pay 11.30 per point for non premium points (even more if they are premium), so, if you rented out those 344 points, you would get 3887$ (If not more if you have premium points)

Now go pay cash for that cruise, and you are left with 655$ in your pocket.

That is what you lose by buying resale. The ability to overpay 655$ for a cruise.....

Yes, they are doing resale buyers a favor with these restrictions IMO.

 

[northshoremama]

I'd recommend the sponsor of this board, TTS. We had a great experience with them. They were responsive, timely, kept us updated through every step of the process, and even sent reminder emails to both sides. We closed before the contract's date and now we're just waiting for our membership number!

Best of all, we paid much less for a loaded 100 point contract at BLT than we would've paid for the same amount of points at Poly. The benefits of buying direct (using points for cruises, Adventures by Disney, non-DVC Disney hotels, etc) just weren't worth the $168/point for us.

TTS...great! I'll look into them! Thank you!

You don't really lose any benefits. Renting out your points and paying cash for the cruises or adventures or concierge is a better deal for your pocketbook.

Most ppl that I know who have bought direct have never used the their points for non dvc options. They actually need more points than they have, so they don't rent out either.

I aldo concur with the general consensus about financing... It's ill advised. Renting or buying a smaller resale contract is a better option.

Curious-- why aulani over BLT?

I am originally from Hawaii and we visit home once a year. We've only been to Aulani once and immediately fell in love. We haven't been to WDW yet, that's hopefully in the next couple of years, but we have been to DL at least once a year as well since 2008. I imagine we'd be in HI at least once a rather than visiting WDW once a year. I hope that makes sense

 

[northshoremama]

i guess i should confirm....TTS....The Timeshare Store??

 

[KAT4DISNEY]

i guess i should confirm....TTS....The Timeshare Store??

http://www.dvc-resales.com

 

[northshoremama]

http://www.dvc-resales.com

Thank you, Kathy!

 

[pmaurer74]

We bought a 210 point resale contract for 17k. We financed for 5 months with a home equity loan and paid it off.

 

[northshoremama]

We bought a 210 point resale contract for 17k. We financed for 5 months with a home equity loan and paid it off.

that's awesome! i started looking at resales and have seen a lot of great deals.

 

[bumbershoot]

We financed. The full 160 points,through Disney.

Now, our situation was....we were paying big bucks to stay at Disneyland. We intended to do the same for WDW once we got there. We did NOT have the money or the patience to pay it all up front, even for resale. I had a weird sense of perceived value (snobbiness) about buying direct. (this is the fullest and most honest answer I've given here). I wanted it NOW like what's her face from Willy Wonka. As did DH. He was worse than I was about now now now.

At the time we had a car loan that was when DH had "neutral credit", and the interest rate on that was 25%. 25%. Thanks, Chase. Let me say that again. Car loan. 25%. Oh and I should mention that it was a USED car.

So the percentage rate of DVC was low low low *for us* at that time. It was also the same rate as the credit union CC we got at the same time. (now that is lower) (and the car loan is LONG gone)

I had full intentions of putting the car payment (once the loan was gone) towards DVC. It didn't happen. We'll be done before the full financing time, but nowhere near the timeframe I'd originally set.

DVC loan helped us see how close to the edge we were. It was a high interest (not that we felt that way then), we were going with the "we can afford the monthly payment" route of figuring out if we could afford it. We had no savings. We passed the recission period and DH was laid off. AWESOME. It truly showed us the razor's edge we were on and made us better in the end.

Would it work that way for another person? Who knows? It was only chance that it actually worked out for us.

Don't do it. Once we're done I'll figure out the amount of interest we paid and I'll probably put it in my signature. It's what we've paid and I own that. It was a decision we made as eyes-open as we could do at the time, we knew we would be paying more. And it's OK. For us. In the end. Thanks to pure chance.

Oh, and they've been dumping money into Disney hotel stays all these years in the meantime.

Definitely part of our reasoning.

The only reason to buy DVC is to save money for people who vacation at Disney at least every 2 years and who stay at deluxe resorts.

OK even if we had saved up to buy it outright, direct or resale, I would never agree with THAT.

can i still take advantage of adventures by disney or the disney cruise line?

No, but I am not quite sure what the value of Adventures is, and BUYING points in order to use them for DCL is such a money-losing idea it's hard to understand. (and see that I can understand quite confusing things in finance, like saying "I can afford 226.92/month therefore I can finance DVC", LOL) Don't buy in *in order to use it for cruises*. If every so often you have a large number of points that you won't otherwise use, OK, cruise with it, but don't buy in order to use them to cruise.

 

[crisi]

The wisdom of financing - whether it be resale or direct - has a lot to do with your personal situation. Do you have savings you don't want to dip into? An emergency fund? Some stocks? That makes it make more sense than someone who has very little in the way of assets. Can you pay the loan off quickly? - The cash isn't in hand right now, but you have a reasonable plan to pay it off over a year or less - and you do have some savings in case of an emergency.

Where people get into trouble is when they finance over a long term without any assets to fall back on in case of an emergency. A job loss, a divorce, illness - and they can suddenly need to sell DVC, taking a loss if the loan isn't paid off yet.

 

[Dean]

The wisdom of financing - whether it be resale or direct - has a lot to do with your personal situation. Do you have savings you don't want to dip into? An emergency fund? Some stocks? That makes it make more sense than someone who has very little in the way of assets. Can you pay the loan off quickly? - The cash isn't in hand right now, but you have a reasonable plan to pay it off over a year or less - and you do have some savings in case of an emergency.

Where people get into trouble is when they finance over a long term without any assets to fall back on in case of an emergency. A job loss, a divorce, illness - and they can suddenly need to sell DVC, taking a loss if the loan isn't paid off yet.

I would look at it possibly slightly differently. Where people tend to get in trouble are 2 areas. Where they simply stretch themselves too thin and truly couldn't afford the payments to start with but likely a larger % of people are those where they finance and then life happens as you mention. Debt represents risk, no matter how low the interest rate or how easily one can afford the payments today.

Bumbershoot, I'm glad things are working out and that you realize now the situation you put yourself in. I think your experience is far too common. If one has a car loan or a CC balance, going on vacation is the same as financing that vacation even if one thinks they're cash flowing it. Not paying the loan off as expected is the norm nationally one of the reasons why I feel that personal finance is mostly psychology and relatively little actual math.

 

[Whitters87]

I just want to address something that seems to be ignored in a lot of these financing threads.

When it all comes down to it, almost everyone is technically financing their DVC at the rate of their highest held debt. Because they could have used their cash to pay down their highest interest debt. So if you have 20k in credit card debt with 20% interest and you choose to buy DVC for 20k, you effectively purchased DVC at a 20% interest rate.

No one can tell you if DVC is a good idea without looking at all of your finances. But I'm going to say 99.9% of the time financing DVC through Disney is a bad idea. I could see more cases where people used a home equity line of credit at a much lower interest rate where it might be worth it for them.

My husband and I might use our home equity line of credit to buy ours initially, since we have a home renovation coming up this summer and prefer to keep a bunch of cash on hand just in case. But it will entirely be paid off in September when some of our stocks reach long term status (so lower tax rate on gains). So for us financing makes sense, if we decide to buy before September. But even then I may hold off on the purchase until we have cash.

 

[jlovesee]

Do you have to buy 200 points right now? Can you maybe buy 50 points to start, (using bank and borrow and use them every 2-3 years) and then add on in cash when you can buy more? This is how we did it, and now we have 213 points. Bought 25 in 2007, 25 in 2008, 50 in 2009, (BLT), 30 in 2010, 36 in 2011, and 50 in 2014.

Just something to think about.

Jennifer

 

[jlovesee]

The only reason to buy DVC is to save money for people who vacation at Disney at least every 2 years and who stay at deluxe resorts.

To compare if DVC is a cost savings you need to compare the DVC rented rate to your purchase cost, dues cost, and loan cost, minus what you might net if you sell later.

Bill

See I disagree with this, I'm not really saving money by buying DVC, its costing me about the same as a value or moderate that I would have been staying at otherwise. However, the way I look at it, is that I am a)guaranteeing myself a vacation (because I HAVE to use the points) and b)banking against the cost of inflation, though dues may go up, my points are already bought I don't have to worry if a room night goes from $99, to $125, to $180. I haven't even looked at moderate prices in YEARS, I don't even know how much they are anymore.

Jennifer

 

[Dean]

When it all comes down to it, almost everyone is technically financing their DVC at the rate of their highest held debt. Because they could have used their cash to pay down their highest interest debt. So if you have 20k in credit card debt with 20% interest and you choose to buy DVC for 20k, you effectively purchased DVC at a 20% interest rate.

That is one point I was making above. The exception is not having consumer debt which is the recommendation I've made for many years.

 

[npmadsen]

I agree I had monies I did not want to touch
I took a loan against myself it pays me back 4.5%, I had funds I could withdraw as a loan but all I am doing is paying myself back

 

[Dean]

I agree I had monies I did not want to touch
I took a loan against myself it pays me back 4.5%, I had funds I could withdraw as a loan but all I am doing is paying myself back

I assume this was a retirement account loan. The down sides there are that you lose out on the potential earnings in the interim and if something does happen (no longer employed) it is payable up front else it's counted as an early withdrawal with penalties and taxes.

 

[npmadsen]

I assume this was a retirement account loan. The down sides there are that you lose out on the potential earnings in the interim and if something does happen (no longer employed) it is payable up front else it's counted as an early withdrawal with penalties and taxes.

There is enough in there and very close to retirement not to be a problem and I have my other account to cover if the loss if it happens

 

[Dean]

There is enough in there and very close to retirement not to be a problem and I have my other account to cover if the loss if it happens

I suspected as much but wanted to get the point out there for others who might be looking at the same option.

 

[Lynne M]

The issue with financing for me, and why I think it's to be avoided where possible, is the impact of finance charges on the total cost of DVC. People tend to look at financed DVC purchases in one of two (bad) ways:

1.They say "My DVC contract cost $15000," and never look at the additional money paid out in finance charges. A $15K loan, paid over 10 years, at 9%, is saddling you with around $8K in interest. So, if you finance the whole thing and take the full 10 years to pay it off, your DVC purchase cost you $23000, not $15000.

2. Nowadays, many sellers of financed products, from car dealers to timeshare salesman, present the deal as "X dollars per month". The buyer says "wow, I can afford that!" and never considers what they're really paying (see above).

At some point, the finance charges can drive the cost high enough that it's no longer the good value the buyer first thought it was.