Why is financing so disfavored for DVC on the boards. . . and for that matter, why do so many judge those who use it

[cw62803]

We are all free to do what we want with the money we earn. I walk around a community college and see numerous young people who live in poverty - squeezing into apartments in dangerous neighborhoods - but have money for the latest iPhones with unlimited data plans. Personally, I think there priorities are out of alignment. I feel similarly about borrowing money to finance vacations.

 

[Mickey of the Villages]

We are all free to do what we want with the money we earn. I walk around a community college and see numerous young people who live in poverty - squeezing into apartments in dangerous neighborhoods - but have money for the latest iPhones with unlimited data plans. Personally, I think there priorities are out of alignment. I feel similarly about borrowing money to finance vacations.

You may be right. But just playing Devil's Advocate . . . I bet the folks you see live on their phones. It's their tv, their phone, their internet, their friends, and so on. Per dollar spent it brings them more joy than many other things.

Does judgement about debt in this instance speak to issues of social class?

 

[_auroraborealis_]

You may be right. But just playing Devil's Advocate . . . I bet the folks you see live on their phones. It's their tv, their phone, their internet, their friends, and so on. Per dollar spent it brings them more joy than many other things.

Does judgement about debt in this instance speak to issues of social class?

Or their grandmother is paying for the phone. Sometimes, the gift you get from family is what it is and you can't ask for the funds to go elsewhere. They're on the family plan, or similar.

 

[cvjw]

I just wonder if people who finance their dvc contract, do they really have the money needed to pay for all the extra costs associated with dvc ownership?

We bought 800+ points resale in the span of one year about 10 years ago. Paid cash for all of the points. We purchased not really thinking about all of the “extra” money needed to actually use those points!

We ended up spending an additional $10,000+ per year on maintenance fees, annual passes, dining plans, etc that were needed to actually use the points.

Dvc can actually be an expensive money saver!

 

[sethschroeder]

Personally I think saying no to finance is more of a general statement that is good for everyone if they follow it. Saying yes to finance is more selective and is case by case as to being a good/okay decision for you personally.

I would rather have people warning me about potential pitfalls. That being said some are a little over the top with their opinion (I know I can be with other topics at times).

Still better than financing an increasingly expensive vacation every year on a credit card, which is where most people are.

Except that is not the other answer when people are saying no to financing from what I have read around this forum.

I am just pondering if it is worth the paperwork if we plan on it being paid off in 2-3 years at this point.

See I have used financing at times like this except on an even faster payoff schedule of 3 to 6 months.

If I had waited 3 years paying myself that interest and then bought VGF after 3 years, I would not have had enough money because prices shot up to much and outpaced my interest.

Like you somewhat stated as well this is more of an exception though. It's just as likely that in the next 3 years we will have had a recession, Disney (tickets/food) will be even more expensive, interest rates will be higher, and more restrictions will be put on resale. This could cause a downturn in the DVC resale market.

 

[Shellybird]

If people ask for the pros and cons of financing, then common courtesy would dictate responders provide their advice straightforwardly, without making assumptions and judgements about a person’s decisions. Telling somebody they shouldn’t have done something isn’t helpful. To feel compelled to judge, scold or lecture in the name of “helping” the poster or for the good of society is just rude and says more about the poster than the person seeking answers. And how a reader would immediately jump from a specific financing decision to assumptions of bankruptcy or other problems is beyond me. If you wouldn’t have done that, that’s fine. But you can say that in a way that isn’t judgmental.

 

[Mickey of the Villages]

I just wonder if people who finance their dvc contract, do they really have the money needed to pay for all the extra costs associated with dvc ownership?

We bought 800+ points resale in the span of one year about 10 years ago. Paid cash for all of the points. We purchased not really thinking about all of the “extra” money needed to actually use those points!

We ended up spending an additional $10,000+ per year on maintenance fees, annual passes, dining plans, etc that were needed to actually use the points.

Dvc can actually be an expensive money saver!

This is a fair point. But do people consider all of the costs of home ownership when they purchase a home? I certainly didn't when I bought my first home. How many of us consider all of the costs in life of everything we do?

 

[Disney Dad ADL]

You may be right. But just playing Devil's Advocate . . . I bet the folks you see live on their phones. It's their tv, their phone, their internet, their friends, and so on. Per dollar spent it brings them more joy than many other things.

Does judgement about debt in this instance speak to issues of social class?

I think judgement about debt mainly comes from the fact that financial literacy is pretty poor in the US, independent of how much money you make. We are particularly bad at understanding risk, in terms of how frequently something bad can happen and how severe the consequences can be if things go bad. I believe the default position should generally be not to go into debt. You should have a good/valid reason to take on debt and good reasoning to do so.

This is a fair point. But do people consider all of the costs of home ownership when they purchase a home? I certainly didn't when I bought my first home. How many of us consider all of the costs in life of everything we do?

They absolutely don’t, but they should. This comes up all the time when discussing renting vs buying a house. If you go to a finance oriented website, you will definitely hear it, and you will find that they are generally less pro-buying a house then the general public. (For the exact reason you stated, there are a lot of costs associated with home ownership people don't realize).

If people ask for the pros and cons of financing, then common courtesy would dictate responders provide their advice straightforwardly, without making assumptions and judgements about a person’s decisions. Telling somebody they shouldn’t have done something isn’t helpful. To feel compelled to judge, scold or lecture in the name of “helping” the poster or for the good of society is just rude and says more about the poster than the person seeking answers. And how a reader would immediately jump from a specific financing decision to assumptions of bankruptcy or other problems is beyond me. If you wouldn’t have done that, that’s fine. But you can say that in a way that isn’t judgmental.

Agree for the most part. If it’s something that’s happened in the past, I feel that it’s not helpful to scold them for doing something that is already done.

However, if a poster is asking about which DVC resort to buy and looking at 20% interest rates, I don’t think it’s completely unreasonable to at least mention “maybe you should rethink this idea?” as nicely as possible before answering their actual question. Personally I always try to answer the actual question being asked rather than just saying financing is bad.

 

[Shellybird]

Agreed. Give good advice when asked. Just don’t do it in a way that’s designed to be insulting.

 

[Pyotr]

We are all free to do what we want with the money we earn. I walk around a community college and see numerous young people who live in poverty - squeezing into apartments in dangerous neighborhoods - but have money for the latest iPhones with unlimited data plans. Personally, I think there priorities are out of alignment. I feel similarly about borrowing money to finance vacations.

You can tell by just looking at them their socioeconomic background and what data plans they have in their phones?

My wife and in April financed a smaller (125 point) contract at CCV. It made sense for us at the time. We will have it paid off by the end of the year. We could have paid cash but I’d rather not tap into our reserves or cash out our investments.

 

[gillep]

I just wonder if people who finance their dvc contract, do they really have the money needed to pay for all the extra costs associated with dvc ownership?

We bought 800+ points resale in the span of one year about 10 years ago. Paid cash for all of the points. We purchased not really thinking about all of the “extra” money needed to actually use those points!

We ended up spending an additional $10,000+ per year on maintenance fees, annual passes, dining plans, etc that were needed to actually use the points.

Dvc can actually be an expensive money saver!

Can't speak for everyone, but for us, YES we did. We financed our first contract, and paid it off within just a couple years, then about 6 years after the initial purchase, we purchased a second contract, all cash. During those 6 years we went from once a year trips to 3x per year trips, and even went 4 times in 2018 because it was our anniversary and we had the SW companion pass. We bought APs every year, and airfare went up significantly when we moved from the East Coast to the West Coast over that time period, but we had no issue paying 'cash' for any of those vacation expenses it was just that initial outlay that we wanted to finance for a variety of reasons. We have never looked at DVC as a money saver, we looked at it as a way to force ourselves to take regular vacations since before we purchased we had been together 5+ years and never once went on a vacation, it has definitely changed our vacation pattern, and cost us a lot of money, but we always say that first contract was our best purchase to date!

 

[Dean Marino]

Perhaps a better way of putting the "financing" issue?

I also routinely advise folks to AVOID DVC Financing. It's not to look down on them - it's to warn 'em about the rates .

In the end? Every family needs to make their own choices, based on THEIR financial situation.

I confess, my BIGGEST concern about DVC Financing is that it is very different than a typical "Condo in FL". As there is no real property interest? There is only one place to go for Financing, at unsecured loan rates .

 

[MickyLynn]

We are all free to do what we want with the money we earn. I walk around a community college and see numerous young people who live in poverty - squeezing into apartments in dangerous neighborhoods - but have money for the latest iPhones with unlimited data plans. Personally, I think there priorities are out of alignment. I feel similarly about borrowing money to finance vacations.

The $50 phone bill isn't the reason they can't afford rent, and it isn't a luxury anymore. Reliable internet is necessary if you want to engage in any kind of job hunting, time management, or benefit management.

I just wonder if people who finance their dvc contract, do they really have the money needed to pay for all the extra costs associated with dvc ownership?

Yes, you have MFs, but you don't have to buy APs, or TIW, or dining plans, or collector edition magic bands, or whatever. You can choose to just pay to get yourself there, and minimize other costs.

 

[vacationer1954]

If someone posts a question on a message board, they should expect a variety of responses to it.

Yes they should. However, the variety should be between the different answers to the question that they asked, not an attack on the question. The problem with people posting attacks on the question is that they can discourage other responders from providing a helpful answer to the question originally asked. If someone is asking about the best way to do something and then someone posts an attack on doing that something, then that discourages other people from providing their opinion about how to do that something.

I agree that financing vacations is a bad thing. If someone asks whether they should, I'd be the first to say no. But if they weren't asking whether they should or not, but just asking about how to do it, then I'll keep my mouth shut.

 

[Ben E N]

Yes, you have MFs, but you don't have to buy APs, or TIW, or dining plans, or collector edition magic bands, or whatever. You can choose to just pay to get yourself there, and minimize other costs.

But why would it be advisable to spend all of your money on financing a deal to go to Disney, staying at deluxe resorts, only to not take advantage of what offerings are available to you?
That's where just going yearly and staying at a moderate, or renting points, and paying as you go, makes so much more sense.

 

[buzznina]

That said, dvc typically is 8-14% interest. At that rate, your ROI/time to break even extends considerably.

I do see people figure ROI based on sales price and exclude the interest. On a 15000$ contract, the interest is not minimal.

This
Financing a timeshare is nothing like a mortgage or auto loan, I am not going to criticize anyone for doing it, but it's just a very poor financial decision. When we looked into DVC our break even point (without financing) was about 12+ years.

 

[MickyLynn]

I feel like we're veering into 'Are the perks worth buying DVC for?' If you only go once a year, an AP might not be worth it. Maybe you like to grill, or need a specific diet. Each of those expenses is a separate calculation. Also, if you financed, you probably didn't spend your cash reserves if any.

 

[Shellybird]

If someone posts a question on a message board, they should expect a variety of responses to it. That's the nature of internet chat forums. Disboards is much more polite than many others that I have read.

As for why there is an essentially overwhelming advice being given against financing, it is being done in an attempt to help the potential purchaser.
DVC ownership is expensive, from annual dues, to wanting to buy APs, to flights or drives to and from Orlando. It all adds up quickly. If you do not already have the financial discipline to save enough for DVC, then all these extra expenses, plus interest payments, may come as quite an unpleasant shock. Its just not something that is needed for what is 100% a luxury purchase. Save financing for a car and house, and save for the rest of the things you don't need. There's nothing wrong with going to Disney once every 3 years, and staying at Pop Century when you do go

And comparing people who finance Disney to those who go into credit card debt to pay for their vacations is a foolish way to go. The idea is not to race to the bottom, but rather to put yourself in as good of a position to enjoy life as possible.

I agree with you in concept, but the question wasn’t about whether to finance. It was about what options are available if the poster has decided she didn’t have the time to spend at WDW anymore. Nothing about financing, but that’s what she got back from some.

 

[brertoad]

We bought ours using cash in 2012, but I've always said if I knew about DVC when it started, I would have definitely financed, I would have been about 18 at that time. It would have been worth every penny, including the interest cost to me to take some family vacations on my dime (plus from what I hear the perks back then were amazing).

If I couldn't use my points for some reason, I would rent them out until I was able to use them again. I don't think people should relinquish their contracts to Disney after plunking down a chunk of money on them. (OP had mentioned a buyer who was willing to give up a contract to Disney after only 3 years).

I'm sure some people do use financing in a useful and mindful way, you can't always assume someone is getting in over their head. Sometimes financing something now means saving money later down the road, or sometimes even saving money in the short term, just look at the costs of deluxe rooms at WDW. If we didn't have DVC I would never have been able to share our membership with friends and family.

 

[Ben E N]

I agree with you in concept, but the question wasn’t about whether to finance. It was about what options are available if the poster has decided she didn’t have the time to spend at WDW anymore. Nothing about financing, but that’s what she got back from some.

You'll notice in that thread that I immediately brought up the option of renting out points until they could be used again.
I agree that some people in that thread got a little carried away about financing. However, we are all just voices on the internet that can be easily turned off and ignored.