What is the flaw in this plan?

[Sheriff Woody]

I'm sure there's a flaw. Probably many flaws. But this just occurred to me.

I'm trying to figure out a way to get a DCL Med cruise this summer or next. After that the kids will be too old to want to vacation with us, or will be too busy with their own lives so it is important that this cruise be soon. I can't conceive of a way to save enough in this short period of time.

Therefore, please tell me why this won't work. I could buy a large, or several small, DVC contracts. Then, through banking and borrowing could use the points to cruise this year or next. Then, after the cruise, sell the contracts. I anticipate losing some money on this transaction due to closing costs but probably not as much as the cruise would cost if I paid cash.

Thoughts?

 

[loyal2mouse]

I think it would be more cost than what it is worth in both the cruise and the headaches. Just my thoughts

 

[Msmithmd]

To "only" lose the 10% brokers commission (plus closing costs both coming and going), you would have to sell resale a contract that you had purchased retail for the same price. To assume you would be able to do that implies that you expect DVC to raise their direct price significantly enough over that period of time, that you would be able to get the same price on the resale market as you had paid originally via retail.

The only resort that has any chance at all of that occurring is VGF, and I wouldn't be very optimistic that VGF resale will be trading hands for the current retail prices in just a couple years. It could theoretically happen, but just as easily it could be much lower.

Not to mention the massive amount of money you would have to spend in order to purchase the kind of DVC points required to book the cruise. Looking briefly at the point charts, this could easily run you over 800 points for a family of four in one room for one cruise. Cruise pricing is per-person, not per-room. Buying 400 points at VGF, to combine two years worth to reach the needed 800, would set you back $62,000 using today's prices. That would make your broker fee $6200, if you were actually able to re-sell the contracts at par. Then, add two years worth of maintenance fees on the points, say ballpark another $4400 on the 800 points you had used.

Huge investment, huge risk, huge effort in buying and selling, all to likely not actually save any money over simply paying for the cruise with cash in the first place.

Other than all this, it's a great idea.

Seriously though, buy DVC to stay at DVC resorts. Use money (cash) to pay for cruises. Use money or other timeshares to stay outside the DVC system at other lodgings. You will be better off from both a financial and effort perspective.

 

[Minniesgal]

I'm sure there's a flaw. Probably many flaws. But this just occurred to me. I'm trying to figure out a way to get a DCL Med cruise this summer or next. After that the kids will be too old to want to vacation with us, or will be too busy with their own lives so it is important that this cruise be soon. I can't conceive of a way to save enough in this short period of time. Therefore, please tell me why this won't work. I could buy a large, or several small, DVC contracts. Then, through banking and borrowing could use the points to cruise this year or next. Then, after the cruise, sell the contracts. I anticipate losing some money on this transaction due to closing costs but probably not as much as the cruise would cost if I paid cash. Thoughts?

I think you would lose a lot more on the sale than you anticipate. Presumably you are going to finance as if you had the cash to pay for the points you would have the cash to pay for the cruise so you would end up having to find a potentially substantial lump sum to cover the shortfall in the loan.

 

[disneynutz]

If it was a good idea, others would be doing it and you would see posts on the subject.

Bill

 

[TSMMANIAC]

I found as long as we cruise and we pay for it, my kids are never too old to join us. Their ages 27, 24 and 18. I would save the money needed and book it for cash. We did the 11 night Med cruise in 07 and the 12 night Baltic cruise in 2010. They loved those cruises and wouldn't hesitate to go on another.