Financing... Worth it to get in sooner, or wait it out while saving?

[BamaGuy44]

If you have to finance, I would just stay at Swolphin until you can afford it.

Yes, the last decade has been a rocketship. Yes, resale prices have gone through the roof recently. That's why I don't see the increase as sustainable. Financing this, and then prices staying flat would be particularly bad.

Modern DVC math often doesn't work against Swolphin or even against just renting points, and that's without financing. It's not the slam dunk it used to be. And some of these loans are just predatory.

To me, this is math. Buying a luxury asset that could easily be underwater in a couple years because of financing is not a choice I would make. I would just book at the Swolphin.

The math doesn’t work against the Holiday Inn in Kissimmee either but that’s not what I’m looking for. I love Swolfin we stayed there many times but if you want Disney transportation or Disney theming or to be on the monorail or the Skyliner or have a full kitchen or a grand villa or laundry in your room or whatever, Swolfin ain’t it. They have the friendship boats but the bus service is even worse than the normal Disney buses. Maybe those things don’t matter to you and that great. For you.

And I can sell my contract in 10 or 12 years and get most of my money back. Not guaranteed, but I like my chances. When you call Swolfin or the people you rented from over the last 10 years and ask for most of your money back, it will be an awkward conversation.

 

[buzlite]

Finance vs not financing doesn’t make sense to me. The question is whether the interest premium reduces any savings while also reducing flexibility and other things you give up for dvc. If you have a 0% financing program and can pay it off easily then do it. Just pay your monthly fee first before other expenses. If you are paying 10% then definitely don’t. That’s insane. Not worth it in any scenario. You could also partially pay cash and finance the last bit. That would be reasonable.
Figure out the financing available to you. After that spend 2-4 months not thinking about it. Not even bringing it up in conversation. Then make a decision if you are still excited. Hopefully you saved up at least a few payments.
Sometimes the more we think about something, the more we unconsciously exaggerate it’s importance.

 

[buzlite]

Finance vs not financing doesn’t make sense to me. The question is whether the interest premium reduces any savings while also reducing flexibility and other things you give up for dvc. If you have a 0% financing program and can pay it off easily then do it. Just pay your monthly fee first before other expenses. If you are paying 10% then definitely don’t. That’s insane. Not worth it in any scenario. You could also partially pay cash and finance the last bit. That would be reasonable.
Figure out the financing available to you. After that spend 2-4 months not thinking about it. Not even bringing it up in conversation. Then make a decision if you are still excited. Hopefully you saved up at least a few payments.
Sometimes the more we think about something, the more we unconsciously exaggerate it’s importance.

Also think about how you would feel if the price goes down more then up. With timeshares you should always expect the value to be 100% in the amount of stays and not in resale value. If you rely on resale value then you are in for a surprise. Can you handle a job loss, market crash etc with the payments. If the answer is no then you need to be very very careful. No one plans to go into default and it happens to good people every recession.

 

[jodifla]

Sooooo... I bought in 1996 and financed my "luxury purchase" through Disney at 10 percent or whatever it was. We aren't afraid to finance; we typically have one thing financed at a time. It is typically a car. That year, we just put off getting a car, and put the money toward DVC instead. We were already going there all the time, so we simply shifted the money that would go to vacations at Disney and put it toward paying off the 150 DVC points -- that were about $62 at the time. Later, when we came into a bit of money, we paid cash for BCV points.

We paid the loan off early -- it was only $150 a month or so. So, YES, we could have afforded it even if one of us lost our jobs. Once we put money into savings we tend to let it stay there and go, so we preferred just financing with the low payment. Yes, we paid interest. But we immediately got to use our DVC points and dramatically upgraded our experience. And the cost of DVC started climbing, and climbing, and climbing.

And I would routinely come to these boards to hear people lamenting that they wish they would have bought 5, 10, 20 years ago.

Every time I see "UP" I think of this. There can be a HUGE cost in constantly postponing life.

We are grateful we went against the standard advice every time we walk into our 1-bedroom OKW or BCV villa.

 

[Robbie Cottam]

Finance vs not financing doesn’t make sense to me. The question is whether the interest premium reduces any savings while also reducing flexibility and other things you give up for dvc. If you have a 0% financing program and can pay it off easily then do it. Just pay your monthly fee first before other expenses. If you are paying 10% then definitely don’t. That’s insane. Not worth it in any scenario. You could also partially pay cash and finance the last bit. That would be reasonable.
Figure out the financing available to you. After that spend 2-4 months not thinking about it. Not even bringing it up in conversation. Then make a decision if you are still excited. Hopefully you saved up at least a few payments.
Sometimes the more we think about something, the more we unconsciously exaggerate it’s importance.

In theory, if inflation was say 10 %. And your interest rate was say 10%. Wouldn’t that really make financing a wash? Yes, I know I’m assuming inflation stay at 10% for the life of the loan.
However, If it is going to cost you 10 percent more to purchase next year. You actually get this year vacation for free if you finance.

just another angle to look at it

 

[RaymOOOnd]

In theory, if inflation was say 10 %. And your interest rate was say 10%. Wouldn’t that really make financing a wash? Yes, I know I’m assuming inflation stay at 10% for the life of the loan.
However, If it is going to cost you 10 percent more to purchase next year. You actually get this year vacation for free if you finance.

just another angle to look at it

In fact if inflation is higher than 20% you may be looking at a positive relative return compared with cash!

I'm loading up on as much fixed interest debt as possible with inflation going all 1970s on us.

 

[Robbie Cottam]

In fact if inflation is higher than 20% you may be looking at a positive relative return compared with cash!

I'm loading up on as much fixed interest debt as possible with inflation going all 1970s on us.

Buy a few new houses too before the rates go back into the high teens like the 1980s

 

[buzlite]

In theory, if inflation was say 10 %. And your interest rate was say 10%. Wouldn’t that really make financing a wash? Yes, I know I’m assuming inflation stay at 10% for the life of the loan.
However, If it is going to cost you 10 percent more to purchase next year. You actually get this year vacation for free if you finance.

just another angle to look at it

Yes if inflation was 30% and your interest rate was 20% then congrats you made money.
However this is a horrible way to evaluate risk. I calculate inflation at 3% per year. I believe inflation will be higher but I can’t tell the future nor am I an economic forecaster.
If I’m wrong and inflation is higher then I’m okay. If it’s lower then I’m okay as well.
However if I take a high interest loan and inflation isn’t as high as I expect then I will be burned and lose a pile of money.
If inflation is 10% well then we are screwed anyways cuz Disney will be too expensive with all the other expenses. At least now I will have cash to still buy groceries.
If you want to hedge against inflation I recommend real estate or other financial instruments.
If you are investing in your retirement vacations then I recommend either a 1)low interest loan, 2) paying 60-75% in cash and borrow the rest short term or 3)save up in cash by investing yoy. Then take that cash and buy dvc when you have enough.
Anyone is obviously welcome to do whatever they wish. However a Disney vacation is not worth yearlong financial stress.
My philosophy is to plan for the worst and hope for the best.

 

[buzlite]

In fact if inflation is higher than 20% you may be looking at a positive relative return compared with cash!

I'm loading up on as much fixed interest debt as possible with inflation going all 1970s on us.

this could be a good plan as long as you have the appropriate cash flow. Hyper inflation could lead to other costs exploding too. If you have the cushion in your cash flow to afford your monthly payments then you are obviously going to do well.
However if your costs go up to high and you can’t make payments then you may struggle. Also high interest rates could cause prices to drop. Are you able to hold your assets until the market recovers? If so then bravo you have a knack for making money that most of us will never learn.
What actually convinced me to purchase dvc was that it would motivate me to put in much more overtime then if I simply thought I was padding my retirement account to be used decades from now.

 

[sndral]

…
With that said, I do not tend to finance items other than my house and my car and prefer to save and buy. My friend, who bought her many points cash and is also conservative financially, said to consider that the prices always climb, so there's a balance between waiting and saving and getting in with the points lower.
…

Except resale prices do not always climb. They have certainly been climbing for over the last decade, but following the housing crash 07/08 resale prices went down as well. I’d certainly start following the resale market - it appears that listings are trending up & theoretically more supply = downward pressure on prices, although it’s perhaps too early to declare a buyer’s market https://dvcnews.com/dvc-program/fin...00-for-all-walt-disney-world-resorts-combined
I paid cash for my contracts & am rather fiscally conservative, but the question to me seems to be WWYD during the time you were saving up to pay cash - if it’s stay at a Disney resort w/ a cash reservation (or renting points) one or more times will the cost of that reservation (minus the MFs you pay for any points you buy) be as much as any interest you might pay to buy DVC earlier, if so, it’s a wash in my mind - it’s money you’re going to spend on Disney either way.

 

[Brian Noble]

I would not want to finance a DVC purchase at the "regular" rate that DVC offers. It changes the math on the ROI substantially. If I was able to do a lower-rate personal loan from some other source that wasn't home equity or borrowing from a retirement vehicle, then maybe I'd feel a little better about it, but even then I'm dubious.

I can twist a financial analysis to give pretty much any answer I want by playing with the assumptions. That doesn't change the fact that I'd be borrowing for a luxury purchase, which just seems like a bad idea. There are plenty of ways to have great vacations--even Disney vacations--that are less expensive and will allow me to also save up the purchase price.

I think my current goal is to save enough to do 60-70% cash and finance the last 30-40%, with the plan to pay it down ASAP. I've never financed for "fun" and it makes me nervous to be honest.

This sounds like a responsible approach to me, especially if you can manage to float that last bit on e.g. a Disney Visa and pay it off in the six month window.

 

[J-Dog]

I started a similar thread with a poll about 6 months or so ago, and the results of the poll showed that 70% of responders paid cash. That go against the data that I've been told on other outlets, and might speak to the affluence of posters on the forum.

Anyway, we did finance our first contract after 30% down, using a HELOC loan at 3.25%. Still paying it down. I have no regrets whatsoever. The interest vs inflation (if I'd waited) is definitely in my favor, and the subjective factors make it an even better decision.

I have a long-hour-per-week job in the medical field, and it's easy for me to just forget everything and work my life away, but owning DVC kind of makes me want to take a vacation to justify the expense. If I'd just saved until I had enough cash to buy, I would have missed-out on multiple years of Disney vacations with my kids. And those kids will never be this age again.

No regrets.

 

[Robbie Cottam]

Yes if inflation was 30% and your interest rate was 20% then congrats you made money.
However this is a horrible way to evaluate risk. I calculate inflation at 3% per year. I believe inflation will be higher but I can’t tell the future nor am I an economic forecaster.
If I’m wrong and inflation is higher then I’m okay. If it’s lower then I’m okay as well.
However if I take a high interest loan and inflation isn’t as high as I expect then I will be burned and lose a pile of money.
If inflation is 10% well then we are screwed anyways cuz Disney will be too expensive with all the other expenses. At least now I will have cash to still buy groceries.
If you want to hedge against inflation I recommend real estate or other financial instruments.
If you are investing in your retirement vacations then I recommend either a 1)low interest loan, 2) paying 60-75% in cash and borrow the rest short term or 3)save up in cash by investing yoy. Then take that cash and buy dvc when you have enough.
Anyone is obviously welcome to do whatever they wish. However a Disney vacation is not worth yearlong financial stress.
My philosophy is to plan for the worst and hope for the best.

Inflation was 7.8 percent in 2020 and almost 9 last year… what do you think it will do for the next two?

i agree if you interest rate on a DVC purchase was 20 it would be a bad idea but direct It is 10 %…

So if you value the time you spend with you children while they are younger more than 2.2 per net interest…. They buy non

if you value money more than enjoying time with your family….. wait,

 

[aoconnor]

The truth is the math on financing is pretty brutal and at that point it’s cheaper to just rent points 99% of the time. That said - *hopefully* that amount that you’re “overpaying” to finance your points won’t really move the needle in your financial health long term. Maybe it doesn’t make sense on paper but if it makes you happy knowing you own sooner that could be worth it.

 

[Bellex917]

I started a similar thread with a poll about 6 months or so ago, and the results of the poll showed that 70% of responders paid cash. That go against the data that I've been told on other outlets, and might speak to the affluence of posters on the forum.

Anyway, we did finance our first contract after 30% down, using a HELOC loan at 3.25%. Still paying it down. I have no regrets whatsoever. The interest vs inflation (if I'd waited) is definitely in my favor, and the subjective factors make it an even better decision.

I have a long-hour-per-week job in the medical field, and it's easy for me to just forget everything and work my life away, but owning DVC kind of makes me want to take a vacation to justify the expense. If I'd just saved until I had enough cash to buy, I would have missed-out on multiple years of Disney vacations with my kids. And those kids will never be this age again.

No regrets.

Thanks for mentioning this, I've been reading the replies on your post since you mentioned it. Lots of good info there. I'm glad to hear you went with it and are happy.

 

[homey12]

While I had the cash, I used my skymiles card several times to pay for DVC. I think I made 3 charges on my skymiles over one month to close out the deal.

 

[Robbie Cottam]

The truth is the math on financing is pretty brutal and at that point it’s cheaper to just rent points 99% of the time. That said - *hopefully* that amount that you’re “overpaying” to finance your points won’t really move the needle in your financial health long term. Maybe it doesn’t make sense on paper but if it makes you happy knowing you own sooner that could be worth it.

We can agree to disagree.

 

[davidl81]

I started a similar thread with a poll about 6 months or so ago, and the results of the poll showed that 70% of responders paid cash. That go against the data that I've been told on other outlets, and might speak to the affluence of posters on the forum.

Anyway, we did finance our first contract after 30% down, using a HELOC loan at 3.25%. Still paying it down. I have no regrets whatsoever. The interest vs inflation (if I'd waited) is definitely in my favor, and the subjective factors make it an even better decision.

I have a long-hour-per-week job in the medical field, and it's easy for me to just forget everything and work my life away, but owning DVC kind of makes me want to take a vacation to justify the expense. If I'd just saved until I had enough cash to buy, I would have missed-out on multiple years of Disney vacations with my kids. And those kids will never be this age again.

No regrets.

That 70% is just a polling bias where it is seemed as people who say that paid cash are somehow buying DVC “better” than those who finance. So when a public poll is placed the people who paid cash tend to respond to the polls much more than people who finance.
The person who posted that 80% of DVC sales are financed sounds about right to me (especially on the direct side).
Resale may be different since rates are higher in general and DVC financing is super easy.
Honestly direct from DVC if paying off in a reasonable time frame is perfectly fine. Pushing it to 10 years less so, but something shorter term is not the end of the world.

 

[BamaGuy44]

The truth is the math on financing is pretty brutal and at that point it’s cheaper to just rent points 99% of the time.

"Financing" is such a broad term that statements like that really have no meaning. Is it 11% for 10 years, or 4% for 2 or 3 years? The math is very different on those. With a resale contract, short term financing with a decent rate, you can easily pay less overall than someone buying the same points direct for cash. Yet nobody tells direct buyers they're 99% better off renting or that they killed their ROI.

 

[Robbie Cottam]

That 70% is just a polling bias where it is seemed as people who say that paid cash are somehow buying DVC “better” than those who finance. So when a public poll is placed the people who paid cash tend to respond to the polls much more than people who finance.
The person who posted that 80% of DVC sales are financed sounds about right to me (especially on the direct side).
Resale may be different since rates are higher in general and DVC financing is super easy.
Honestly direct from DVC if paying off in a reasonable time frame is perfectly fine. Pushing it to 10 years less so, but something shorter term is not the end of the world.

The info is all available on the Orange County comptrollers website ….

Should only take about a month to sift though all the current deeds and see if there have ever been a mortgage.

However, with all the negativity towards financing DVC I can see a lot of people that have finances not speaking up.