How did you pay for resale?

[miTnosnhoJ]

There are some good reasons to finance, but they generally involve a timing issue where you would be able to quickly pay off the loan within a year. The problem with financing is that you spend your potential savings on interest payments. You would be better off renting or paying Disney for a room than financing points.

 

[4ParkFamily]

Thanks for all the input! We have half of the money saved and would not take out a high interest loan. The max amount I would take any loan out would be a couple of years. I was going to buy enough points for a week in March and 4 days the week before Thanksgiving. We would have enough cash to buy 100 points now and get another 100 in a year or two. Is there a downside to doing it that way? I just hate to spend thousands of dollars on renting points when that could go towards my own. I am probably over thinking all of this but I really do not want to stay off property or skip a year. I am also concerned that when they are done with all the parks and resorts the prices will go up. Thanks again.

 

[Lola_Stark42]

I had very a very similar thought process. I have rented points several times, and as resale prices go up, and direct prices go up, so did the rental prices. I was actually going to rent points again for my trip next year. I've been talking myself into buying in for a number of years, and I really did not want to spend more money renting someone else points! *I* am comfortable with the decision I have made. Ultimately, you need to look at what your usage pattern is going to be. If you feel you will continue to visit yearly (as I have been), and don't want to skip a year, then the big question would be how comfortable you feel buying say 100 points now and 100 points in 1-2 years, vs buying 200 points now. Maybe you can meet yourself in the middle and look for a contract with 150-160 points? No one can predict what prices will do, but the trend has certainly been them going up.

 

[4ParkFamily]

How does it work if you buy 2 contracts at different resorts when it comes to booking 11 months out? Does the resort you are booking at have to be with all of that resorts points or can you use some off of your other contract? Hopefully this makes sense.

 

[KAT4DISNEY]

How does it work if you buy 2 contracts at different resorts when it comes to booking 11 months out? Does the resort you are booking at have to be with all of that resorts points or can you use some off of your other contract? Hopefully this makes sense.

Only the home resort points during the home priority booking period. With banking and borrowing that can be up to 3 years of points - ie you buy 50 points at BLT and at 11 months you could use 50 banked, 50 current and borrow 50 to total 150 points available. If you also owned at AKV for example you could book some AKV nights at 11 months too and do a split stay. Or, wait until 7 months to try and use the AKV points for a BLT room (or vice versa).

 

[DougEMG]

We paid cash. Also rented out some points and used that cash towards more purchases.

 

[a742246]

Another cash purchaser here.

 

[kniquy]

I paid cash, but i can see your logic in financing and paying for your contract vs paying for a Disney room. If you finance despite what terms you get - pay it off sooner to avoid all the interest fees. If you are diligent with your finances they go ahead and finance a small portion-- you are already saving money if you look at the big picture -- you are not paying the high price for Disney rooms, you are buying resale which is a huge savings compared to direct buy of DVC -- so in the end your break even might be slightly longer than someone paying cash but you will be saving money.

You do really need to take a hard look at what you can afford -- the amount you are putting down and what your monthly loan payment would be and what your yearly MF would be. It could add up to a good size car payment. Maybe you need to start off with a smaller contract or make sure you are buying a cheaper resort so that you can make your money go farther -- you can certainly buy more SSR points with $10,000 than you can at BLT or BC. So really look at what you can afford.

when i went in to buy i knew what i had to spend, committed to going every other year so i could buy a contract for 1/2 the points (with being able to bank for next years trip), I factored in the length of contract, scoured the points charts as many of the resorts are expensive for a room (VGF, POly, BLT) compared to other resorts for the same room size (BC, BW, AKV, SSR, BRV, CCV) so what you can get with your points can vary from one resort to the next -- don't assume that you can buy a contract to get the cheapest room (so ex: AKV value room) because those are take even before the 11 month mark.

There are a lot of variables that go into the purchase. Just ask lots of questions here -- do take a close look at the financing of a portion as maybe you could forgo one trip and that could help avoid needing to finance.

 

[Bruin_mouse]

I appreciate the sentiment of the pay cash or nothing crowd, but from a strictly numbers standpoint financing can make sense. Consumer Reports did this analysis in 2016 on Poly assuming a $168/point purchase price financed with a 7 year/8% loan:

https://www.consumerreports.org/personal-finance/is-a-timeshare-vacation-a-good-value/

Even with closing costs, maintenance fees, and interest they found a break even point at 13 years when compared to staying at Poly cash.

Since most folks on here buy resale and may have access to lower interest money (e.g. a HELOC), you can potentially be looking at a much earlier break even point due to the lower costs than the Consumer Reports analysis.

Time value of money is a concept hammered by the pay cash crowd. I would just say that there is also money value to time. We can't take for granted the fact that we'll be around, or healthy enough, to enjoy something like DVC when you are finally able to pay cash. The reality is that resale DVC has mostly shown itself to hold its value and even be an appreciating (albeit mostly slowly) asset in the long term. Anything can happen but I think that financing DVC isn't even comparable to something like financing a $70,000 luxury car.

I say this all not to say that you should buy DVC at any cost regardless of your financial situation. Far from it. I just think it's clear that you you have to make a much more nuanced analysis than just accepting "pay cash or nothing" as the gospel and being done with it.

 

[Louis morrell]

Everyone should buy what they want however they want. I think what you are getting is good advice. If you are not in a position to pay cash maybe an honest evaluation of " is DVC right for me right now" is in order. I can honestly say it took me a while to decide if it was the right decision for our empty nest years. We are far from wealthy but have saved over the years so we had the extra money to pay cash. We also had never made a luxury purchase. Did we make the correct decision? Did you? Who knows. Only time will tell.

Mine is just free advice so take it for what it is worth.

 

[taurus8012]

I can tell you my experience as I asked the same question thirteen years ago.... the pay cash or nothing advice almost won out. Tide turned when I realized my family and I was a Disney addict LOL... My family at the time was going 2-3 times a year, I live in Syracuse NY, so it wasn't cheap but I never missed the trip. I realized three things: I was going to Disney no matter what ,I wanted to own at Animal Kingdom Villas and prices will always go up. Disney is not like other timeshares as its always in demand ,easy to rent and easy to sale.
Since I knew I would never have all of the money at one time and I knew I would pay off the loan early financing Disney wasn't a hard choice at all. I say Go for it
I would say that I am a money value to time type. The only regret I have about DVC was I did not own sooner

 

[kmc8826]

Following as I am in a somewhat similar situation as OP. I appreciate all the responses and input.

 

[crisi]

There are some good reasons to finance, but they generally involve a timing issue where you would be able to quickly pay off the loan within a year. The problem with financing is that you spend your potential savings on interest payments. You would be better off renting or paying Disney for a room than financing points.

That was us, we closed with a home equity loan that we'd paid off within a month because a check we knew would arrive arrived. Had it taken longer to close, we wouldn't have needed the home equity loan at all (or had I been willing to sell stock, but I didn't want to sell stock when I knew liquid cash was coming in.)

 

[crisi]

I appreciate the sentiment of the pay cash or nothing crowd, but from a strictly numbers standpoint financing can make sense. Consumer Reports did this analysis in 2016 on Poly assuming a $168/point purchase price financed with a 7 year/8% loan:

https://www.consumerreports.org/personal-finance/is-a-timeshare-vacation-a-good-value/

Even with closing costs, maintenance fees, and interest they found a break even point at 13 years when compared to staying at Poly cash.

Since most folks on here buy resale and may have access to lower interest money (e.g. a HELOC), you can potentially be looking at a much earlier break even point due to the lower costs than the Consumer Reports analysis.

Time value of money is a concept hammered by the pay cash crowd. I would just say that there is also money value to time. We can't take for granted the fact that we'll be around, or healthy enough, to enjoy something like DVC when you are finally able to pay cash. The reality is that resale DVC has mostly shown itself to hold its value and even be an appreciating (albeit mostly slowly) asset in the long term. Anything can happen but I think that financing DVC isn't even comparable to something like financing a $70,000 luxury car.

I say this all not to say that you should buy DVC at any cost regardless of your financial situation. Far from it. I just think it's clear that you you have to make a much more nuanced analysis than just accepting "pay cash or nothing" as the gospel and being done with it.

It CAN make sense, but it involves risk....and you need to be able to afford the risk. If the economy crashes, you loose your job, and you can't pay your DVC loan, you'll find yourself trying to sell - probably at a loss. Financing works best when you don't need to finance. Or when you are lucky or in a situation where you know that the risk you are taking on isn't high (you work in a high demand field, you are properly insured against illness or death). The people who understand the nuance don't tend to ask the question.

Your money value to time idea is flawed - because if you have a family that is dependent on you - then unless you are very well insured, if at some point in the future you can't enjoy DVC, then you are probably not going to be doing a great job of supporting your family. Your first obligation should be to providing them with financial stability - not Disney vacations.

 

[miTnosnhoJ]

It CAN make sense, but it involves risk....and you need to be able to afford the risk. If the economy crashes, you loose your job, and you can't pay your DVC loan, you'll find yourself trying to sell - probably at a loss. Financing works best when you don't need to finance. Or when you are lucky or in a situation where you know that the risk you are taking on isn't high (you work in a high demand field, you are properly insured against illness or death). The people who understand the nuance don't tend to ask the question.

Your money value to time idea is flawed - because if you have a family that is dependent on you - then unless you are very well insured, if at some point in the future you can't enjoy DVC, then you are probably not going to be doing a great job of supporting your family. Your first obligation should be to providing them with financial stability - not Disney vacations.

In support of your point:
When I bought some additional points at VGF, I looked in detail at the recent transactions on the Orange County Comptrollers site to try to understand retail pricing. I was surprised how many of the total were foreclosures by Disney. DVC contracts have pretty high value in the resale market, but for people in financial distress, many found it was better to let Disney foreclose, than trying to sell on the resale market and come up with principal, delinquent interest, and delinquent dues. They end up wrecking their credit rating because when they are in financial distress, the Disney contract becomes a low priority compared to their primary residence, food, utilities, and the like.

 

[PlaneCrazy]

Thanks for all the input! We have half of the money saved and would not take out a high interest loan. The max amount I would take any loan out would be a couple of years. I was going to buy enough points for a week in March and 4 days the week before Thanksgiving. We would have enough cash to buy 100 points now and get another 100 in a year or two. Is there a downside to doing it that way? I just hate to spend thousands of dollars on renting points when that could go towards my own. I am probably over thinking all of this but I really do not want to stay off property or skip a year. I am also concerned that when they are done with all the parks and resorts the prices will go up. Thanks again.

I prefer smaller contracts (~100ish points) for a few reasons. A couple of those are they seem to sell a little faster than the large block (just my observation) and if we ever decided we had more points than we needed we could just get rid of a contract. If you buy a large contract and decide at a later date that you have more points than you want/need it is my understanding you can't split that contract up and sell part of it.

We pay cash, but that's our preference. My choice would be to buy the 100 now for cash and add 100 more at a later date when the cash was available.

 

[gharter]

This is a luxury item and we paid cash for both contracts. If you have to finance, I would strongly think about not buying at this time. Yes, prices may go up. However, as others have mentioned, along with the purchase price, you have yearly dues to pay.
If you plan to go frequently, then buying even with financing could make sense if you have a strict plan to pay it off as quickly as possible.
Otherwise, think about renting points when you go. Its often cheaper then just paying out of pocket and you get the DVC experience.

 

[Bruin_mouse]

Your money value to time idea is flawed - because if you have a family that is dependent on you - then unless you are very well insured, if at some point in the future you can't enjoy DVC, then you are probably not going to be doing a great job of supporting your family. Your first obligation should be to providing them with financial stability - not Disney vacations.

There's no flaw in the concept of money value to time anymore than there's a flaw in time value of money. Interest is simply the cost of having something today instead of in the future. If paying interest today lets you enjoy DVC while you have your health and your children still enjoy Disney, then great. At no time did I ever say you should do that at the expense at providing for your family. Those are your words not mine.

I strongly disagree with your view that anyone with a family that finances their DVC purchase and has something unfortunate happen to them isn't fufulling their obligation to take care of their family. Bad things happen to good, hard working people that take care of their families. I saw it plenty over my nine years in the military.

 

[Best Aunt]

If you think it's okay to buy because you can always sell later, don't forget that the seller has costs at closing, unless you manage to negotiate to have the buyer pay them. On my recent small purchase, the seller paid $150 Estoppel fee to DVC, $18.50 recording fee to clerk of the Circuit Court, and commissions of 8.5% of the sale price.

If you think you will break even in a number of years if you purchase DVC, to what are you comparing your contract's purchase price? When I make a DVC reservation, I like to look at the rack rate that Disney is charging for the same room. But realistically, if I did not have DVC, I would not be staying in one-bedroom villas and paying rack rate. I would be staying in regular hotel rooms and hopefully getting a discount.

 

[crisi]

There's no flaw in the concept of money value to time anymore than there's a flaw in time value of money. Interest is simply the cost of having something today instead of in the future. If paying interest today lets you enjoy DVC while you have your health and your children still enjoy Disney, then great. At no time did I ever say you should do that at the expense at providing for your family. Those are your words not mine.

I strongly disagree with your view that anyone with a family that finances their DVC purchase and has something unfortunate happen to them isn't fufulling their obligation to take care of their family. Bad things happen to good, hard working people that take care of their families. I saw it plenty over my nine years in the military.

That isn't what I said. I said its a flawed concept, not a wrong concept. I said that you need to be certain you'll take care of your family if that happens BEFORE you spend a lot of money on commitment to Disney. That could be insurance. It could be other things. Medical bankruptcy is a very real thing - and a timeshare loan is just going to add to that pain. If you are concerned about getting in your vacations before you become too ill or injured or dead to enjoy them, you should make sure that you are also concerned about how your family will be able to enjoy life at that point first. You should prioritize a luxury over future security because at some point you might not be able to enjoy that luxury. You should do that if you are a good, hardworking person or if you are a mean, lazy person. It isn't a character thing, its a logic thing - if you are worried about the cart, you should worry a little about the horse, he comes first.

Disney is a great vacation. DVC is a really nice way to enjoy Disney. Neither Disney nor DVC are necessary to give your family good times and great memories.