Who actually financed their DVC purchase?

[supersuperwendy]

I see sooo many posts about how it's better and makes more sense to purchase your DVC with cash upfront. For us that just wouldn't be possible. We would have to finance the purchase. Is that uncommon or unwise? Thanks!

 

[vicki_c]

Uncommon, probably not.

Unwise -- ??. It's like paying for your vacation with credit vs. cash. So I guess it depends on how you feel about that.

It also will stretch out your break-even time by quite a bit.

 

[Quiksilvr]

We financed and had no problem with it. We could pay it off tomorrow if we really wanted to but we have other priorities for our larger sums of ready cash. As it is it barely makes a blip in our bank account each month. We kind of look at it as a car payment. We own our one car completely so we figure it's about the same. We'll probably pay off the principal one of these months but we've got some other fish to fry first.

 

[kdepot]

We put down a good down payment and plan to add payments on principal when we have extra cash on hand. IE income tax return

We will probably pay it off in 3-5 years

 

[jdb1232]

We took a home equity loan for half, paid the other in cash. At least your writing off the interest on a home equity loan. Paying up front in cash is great if you can swing it but, that's a lot of nickels to put together up front...

 

[florep1]

We financed our when we bought in July of last year but plan on paying it off as we get the mortgage paid off in February. Adding on points sounds so tempting, but we gotta get ready for sending the kids off to college in 2 years so addonitis will have to wait till then.

 

[ladycop67]

We financed. We got 200 points, payment with dues is around $300.00. Interest rate is roughly 10.5% and took out loan for 10 years but can pay off before that if we can. Also the interest can be used on your taxes.

 

[TyRy]

We financed after putting down a decent down payment...also looking at it like a small car payment, and we will (hopefully) pay it off sooner.

 

[pnyltwk]

I see sooo many posts about how it's better and makes more sense to purchase your DVC with cash upfront. For us that just wouldn't be possible. We would have to finance the purchase. Is that uncommon or unwise? Thanks!

We financed our purchase through a home equity loan in 2004 and paid off the loan right at two years. I receive an annual bonus from my company and I combined that with our tax return. Likewise we have added on points twice and paid for those with cash. This is definitely the best investment that I have ever made and would encourage anyone that can afford it to go for it. We have taken 4 DVC trips in the past 4 years and already have our next two vacations planned.

 

[pearlieq]

We would have to finance the purchase. Is that uncommon or unwise? Thanks!

Uncommon? Certainly not. Plenty of people do it every day.

Unwise? This may not be a popular opinion, but I would say usually yes.

It costs more--sometimes LOT more--to finance. But the more important thing is that, chances are, if you don't have the cash to buy your DVC membership upfront, there's probably something better you could be doing with your money.

Do you have other debts that could be paid down? Do you have an emergency fund? Are your retirement savings on track? Do you have adequate college funds if needed? It's not nearly as much fun as DVC, but these things ideally should be squared away before you make a luxury purchase like a timeshare.

With that being said, say you weren't carrying any high-interest debt, and you had a little safety net in the bank. You're on track with your other savings goals, but you just don't happen to have an extra 15k laying around liquid.

In that case, say you bought and financed. You took a 15k loan on a 10 year term with 10% interest. Assuming you don't make extra payments, the interest on that loan is going to cost you just under $8,800.

With that, you need to ask yourself a couple of questions:

1.) Is having DVC now instead of waiting and saving up worth an extra $8,800?

2.) What else would you have done with that money? Is it worth giving up to make DVC payments?

Assuming that you're financially on track, the answer to those questions could be yes. Maybe you're willing to trim some of your discretionary expenses like going out, clothes shopping, or "toys" in order to accomodate paying extra for financing your DVC purchase. In that case, financing is not really a "bad" choice, just one of many choices you choose to make with your disposable income.

So, I guess the point of this really long answer , is that if you're financing DVC, but you're doing it with disposable income (not money that really needs to be spent paying down your credit cards or beefing up your 401k) it's not the end of the world at all. But it's still always going to be cheaper to save up and pay cash.

Good luck with whatever you decide!

 

[Hibernians]

I financed my DVC purchase through Disney and have no regrets.

I see nothing wrong with financing some purchases. Its really up to you and the value you place on a DV membership.

I placed a lot of value on a DVC membership and that's why I thought it was worth the extra cost of financing it.

 

[supersuperwendy]

Wow guys! Thanks you all for your respones!

We had a lengthy discussion about whether to buy or not last night. We know that there is no way we can scrap together the full payment at once. We have already started planning our vacation next year to WDW and it's gonna run around $8,000(room, passes, dining plan). We are a group of 6 so whether I buy a larger share of points to stay in 2 bedroom villas all the time or book a deluxe resort vacation it's going to cost me plenty of $$$! Our vacation that starts in 77 days has costed $3800 just for the accomodations! Just those amounts could be a nice down payment for a DVC purchase, right? I think I've already convinced myself that it's the way to go. I am trying to get DH to think the same way. We are very close to paying off both of our vehicles since they were purchases just months apart. Once they are done that will free up $800 a month! I think we could pay down the DVC debt rather quickly! I am always dedicated to Disney World and do what I have to in order to get us there! If I can get the money together for an expensive package then I should be able to do the same for the DVC! Luckily we don't have any credit card debt to worry about! I think we should do it!

 

[solgent]

We financed for a period of one year. You get the lowest interest rate that way. The payments were very manageable, and they've been over for a while. I think we paid somewhere between $300-$400 in interest and that was OK with us.

 

[dunkie7557]

Get a home equity loan vs using Disney's finance. Their rates are sky high costing you more interest. Then try to pay it off. Pearlieq did a great post about whether you finance or pay cash. Remember financing will make the cost of the DVC purchase higher in the long run because of the interest charges on the loan. Then it may have not been a worthwhile investment. You won't get back that interest cost when you go to sell one day. Also some people do not like to constantly being responsible for loans. So you pay off one thing but have now taken on a new loan and so the cycle continues. Can you live with the thought of having another long term loan?

 

[mom2rb]

I financed through Disney. I wrote all of the interest off on my taxes. I did pay it off early ( 3 years instead of 5 ).

 

[tjkraz]

I can completely understand the reasons against financing, but I think there are at least a couple of factors that make financing a little more palatable:

1. Consider vacation habits and long-term benefits. While someone may not have $20,000 in disposable income sitting around for a timeshare, they may easily be able to come up with $3000 annually for a Disney vacation.

In that situation, I think it's a little silly to continue paying $3K per year for cash trips when DVC can be used as a means of making the accommodations (and APs) more economical in the long run.

2. The resale values of DVC are so good that it's a pretty low risk proposition. No, I wouldn't recommend it to someone whose company is in the process of downsizing but even those who have to sell should be able to recoup their investment after 3-4 years of ownership.

Financing over 10 years with the intent of trying to scrape together money for park tickets, food, etc. is not a great plan. But if one's budget is still healthy with the added DVC payments, and there is a desire to pay things off as early as possible, financing can still be justified IMO.

 

[Kathi OD]

I won't ever claim to be the voice of fiscal responsibility, so DH and I financed our purchase. It cost us all of $102/month. We figured we easily fritter away that much money every month and so why not put some of it toward something we would really enjoy and get use out of every year?

At the time we didn't want to deplete our savings. We also know that we probably wouldn't be saving the interest that we're paying each month, so it doesn't matter to us that our purchase is costing us more in the long run.

 

[cobbler]

We financed with Disney financing. We did the 10 year plan but will pay it off in about 10 months. That means it will have taken us 3.5 years to pay it off.

 

[moredisneyplease]

Both of my contracts were initially financed through DVC.

1) SSR 150 was financed through DVC at 9.9% for 10 years. When I rec'd the first payment and paid off the balance w/ a Disney VISA convenience check at 3.9% for the life of the loan. In stead of paying it off in 10 years I ended up having it done in under 2.5 years!! So then..........

2) I bought 160 at AK through DVC w/ 10.9%. This just happened and when I recieve my first payment I'll pay it off again with a Disney Visa convenience check at 2.9% for the life of the loan!! Wooohooo I'm hoping to be done in under 3 years.

I decided NOT to wait to collect the money and pay cash because then I felt like I'd be wasting years of point use. Sure I'm paying a bit of interest (2.9 and 3.9 is wAAAYYY better than 9.9 and 10.9!) but oh well!!

I think it is common for people to finance but if you do just shop around for a great rate because DVC doesnt have them!!

 

[supersuperwendy]

For a few years we have seriously thought about buying an RV. I thought it would be fun for the kids, but then gas prices soared. Also, when it really comes down to it Disney is the only place I want to go! It's always been that way! I figure if we were comfortable with spending a few hundred dollars a month on an RV then doing the DVC instead should be ok too! We had another discussion about it this morning. I said to him..if we financed an RV the total purchase price would be so similar to buying DVC. Also, the RV itself wouldn't last until 2054! We would wind up trading it for another model every so many years. I have seen a lot of posts regarding buying the DVC as an investment and how hard or easy it could be to sell down the road. If I buy DVC I have no intention to ever sell it. I want it for the rest of my life! I think we are going to skip putting down the deposit next month for our 2009 vacation. Once we get our tax return we will have a decent amount to put down! I can't wait..!!!!! So hopefully I will be hearing "Welcome Home" before the end of 2009!