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

[Bellex917]

Curious where you all weigh in on this.

My good friend has DVC and has been talking me through her experience. I've also been listening to the DVC podcasts and reading here religiously as I enter the researching phase. For background, I tend to be pretty conservative financially. I am not an impulse buyer and focus on saving. We have the money to buy a small contract, but it's not there for "that" so to speak, so I don't want to touch it. We are currently starting a specific DVC savings fund.

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.

I guess I look at the interest at financing probably outpaces the rate it increases. If you financed, did you feel it was "worth it" when in the end you spent so much more per point? Are you glad you did it?

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. But this is a true passion. I'm curious where others fell on this topic. As I listened to The DVC Fan podcast episode on financing I realized most of the people on it financed it, so that made me feel slightly less nervous to do it... Still weighing my options.

 

[UrsulaWantsYourSoul]

Well the other thing to keep in consideration is if you wait 3-5 years to save up money... think of all the vacations you could have been enjoying during that time! YOLO! haha. But yes, if you're doing direct, that cost tends to go up like 3% every year. I know your average DVC owner is somewhat affluent and there are more than a share of "never finance" people here... you have to weigh what makes most sense for you / your situation. Especially if there are little kids involved for a variety of reasons. .

 

[Bellex917]

Well the other thing to keep in consideration is if you wait 3-5 years to save up money... think of all the vacations you could have been enjoying during that time! YOLO! haha. But yes, if you're doing direct, that cost tends to go up like 3% every year. I know your average DVC owner is somewhat affluent and there are more than a share of "never finance" people here... you have to weigh what makes most sense for you / your situation. Especially if there are little kids involved for a variety of reasons. .

At this point I'm only considering resale. The perks of direct don't outweigh the price for me at this point.

 

[RaymOOOnd]

If you have a Disney Chase Visa with a high credit limit, you can finance through Disney at around 9% and then transfer that balance to the Chase Visa. They then have these newfangled plans ("MyChasePlan") wherein you can pay your balance off over some number of months or years at some set fee per month which is typically less than what the interest would have been. And you earn a bunch of credit card rewards. This could be a compelling middle ground I think between buying with cash and financing with mortgage-style amortization.

 

[BeachClub2014]

Whether something is "worth it" is truly different for everyone. Tons of people finance their DVC purchase. There is nothing wrong with doing so. If getting points now to use is worth it to you, then yes, it is worth it.

 

[miTnosnhoJ]

I am in the camp of waiting and paying in cash. If you go to Disney frequently, there are savings to be had by staying at a DVC resort, and you get very nice accommodations. But that savings could quickly disappear if you are paying 10-15% interest.

 

[Bellex917]

If you have a Disney Chase Visa with a high credit limit, you can finance through Disney at around 9% and then transfer that balance to the Chase Visa. They then have these newfangled plans ("MyChasePlan") wherein you can pay your balance off over some number of months or years at some set fee per month which is typically less than what the interest would have been. And you earn a bunch of credit card rewards. This could be a compelling middle ground I think between buying with cash and financing with mortgage-style amortization.

I do have the Disney Chase Visa... that's interesting... I never thought of that as an option.

 

[BeachClub2014]

I would be curious to know what percentage of contracts are financed. I bet it is a relatively high number, but have zero knowledge to support the belief.

 

[Bellex917]

I would be curious to know what percentage of contracts are financed. I bet it is a relatively high number, but have zero knowledge to support the belief.

I was surprised listening to the podcast that most of these people financed. But realistically, most people don't have 20-60k+ just laying around. So I get why financing is needed. I know for us to get in anytime soon we will need to at least partially finance it. I just want to be sure I'm comfortable with that and that we have saved enough to not be making a bad move for our family.

 

[Sandisw]

While did not end up needing to finance, we were prepared to do so and had we, we would have been perfectly happy with it. We had a yearly vacation budget and when we were deciding about DVC, what we put in there yearly (and would spend), covered the cost of buying DVC, with the financing, along with the other costs we spent for our yearly trip.

So, we were not increasing our spending since that was money spent every year anyway for vacations. We knew prices would go up and we decided if we were spending that for cash stays anyway, it made sense to put it toward something that after 7 years, we would be saving...of course, we have added on a lot since then so no real savings, but lots more Disney nights too!

It really is a personal choice and only you know how comfortable you are with taking on this type of debt. Saving for it is great, but unless you stop taking vacations...we would not be...then you are continuing to spend money that IMO would make more sense to be used to buy, interest charges aside.

Good luck!

 

[BeachClub2014]

I was surprised listening to the podcast that most of these people financed. But realistically, most people don't have 20-60k+ just laying around. So I get why financing is needed. I know for us to get in anytime soon we will need to at least partially finance it. I just want to be sure I'm comfortable with that and that we have saved enough to not be making a bad move for our family.

Makes perfect sense. Early on in our DVC lives we were just starting out and financed thru DVC and had many years worth of amazing trips and memories with the fam. More recently, bought new and more points and paid cash. One thing in life that is never guaranteed and you cannot control is time.

We bought early, played hard, loved every doggone minute, and have no hindsight regrets.

 

[dvc lover 1970]

Finance it and pay off sooner but at least you keep more cash

 

[BamaGuy44]

It depends on what kind of financing you're talking about. If you pay 10 or 12% (or more) and stretch it over 8 or 10 years like many people do, you are really taking a beating on the interest for sure. But there are much cheaper and smarter ways to borrow money. A personal loan from a credit union or lightstream will be more like 5-6%. I know the podcast loves Monera (since it's part of their company) and they make it easy, but the rates are pretty high, almost like putting it on a credit card.

The way you're talking about doing it, the risk would be minimal, IMO. You'd never be "upside down" and since you're not stretching it out your finance charges would be pretty reasonable, You're paying a little extra for the convenience of getting in earlier. If you're only financing 30-40%, you could get a credit card with 0% for 18 months and probably pay most or all of it in that time with no interest at all.

To answer your question, we financed our resale contract and I definitely don't regret it. It was a LightStream loan at 4.5%, which we will pay off in about 2 years. I don't keep that much money in cash and had no interest in taking money out of investments that earn more than the interest rate.

 

[NVDISFamily]

Having two young kids and knowing that I will have great memories for years to come made me decide to take the risk and finance a good portion of our buy in to DVC. I'm actually working on getting the loan now and I've built out a schedule where I should be able to pay off everything in 5 to 7 years. I could cash out of a lot of investments and other things to make this go much quicker but I would rather just force myself to keep to a budget and pay this off ASAP. This will keep me from buying a bunch of junk I don't need anyways. Plus once we play off the first batch of contracts I'm sure I'll have a strong urge to add on a few SAP contracts to increase the go to Hawaii or WDW points for our every now and then trips.

 

[Cyberc1978]

If it was me and I had savings which could cover the entire purchase but I felt uncomfortable using it all then I would save maybe an additionally extra 10-15% so I didn’t deplete my savings account totally when I pay cash for the entire purchase.

On top you could look for a loaded contract and then rent the extra points as that would bring the total cost down.

 

[🍀TwinsMom]

The most vocal group here on the boards says pay cash only and the sky is going to fall if you finance. The reality is, according to a former DVC salesperson, 80% of folks do finance -- BUT, they pay it off in about two years. That certainly dovetails our experience. We don't do anything unless it can be paid off in 2-3 years, if not sooner.

IDK if there's a looming recession that may slow down DVC jacking up the rates across the board, but since we bought in 2019 it has been a nonstop march towards higher prices. There's a reason people over and over proclaim their biggest regrets are not buying sooner and not buying more points from the get-go, when direct incentives are best out of the gate buying more points.

If you have savings for a majority of it and are perusing these boards and running numbers, you're already on the right path to being responsible. It depends on your risk tolerance. I do also think there's a lot of X factor enjoyment that comes with buying DVC, for us. We are forced to take/plan vacations, which before we rarely did, and we're doing fun family trips with our kids at great ages for WDW. We bought when they were 5 and 6 and have already gone five or six times since then on our points.

We paid off the loan in chunks and was able to charge it for points and then immediately paid off the CC each time, so we got free airfare for the first two trips out of the purchase

 

[Bellex917]

Thanks to everyone who responded so far, definitely makes me feel better.

 

[Matty B13]

We did short term financing on most of our resale contracts, but are now all paid off. I would never finance a direct purchase through DVC, their interest rates are way above the industry standard. Look to your local bank, our one of the banks that specializes in timeshare financing.

 

[CaptainAmerica]

This might be controversial for some, but you could consider borrowing against your 401(K) if you have assets in there. That way all the interest you have to pay, you're paying to yourself.

I normally don't like borrowing in any way, including this one, but I'm going to be doing it for an extremely short amount of time to pay for my Aulani contract while I wait for my Saratoga Springs contract to sell, so I feel like I'd be hypocritical to not throw it out there.

 

[Robbie Cottam]

If you have a tax attorney, or accountant as them if you can still deduct the interest paid to finance as a second home.
If so it put the argument of cash vs. leveraged into a tail spin.

But either way you have to feel comfortable with your purchase.

And as other have said, if you finance you are enjoying vacations a lot sooner.