Financing

[AylaRanzz]

So, my sister and I are looking at the DVC and we certainly don't have an extra 27,000+ lying around to pay in full. I spoke to someone last time I was in Disney and got various examples of pricing, but that was in Oct, so I don't recall it all word for word. On one of the sheets I was given, the example for 125 points is 10 year financing at $242.11 then montly dues of $56.35. Of course I know that's only an example, but my question is, upon becoming a DVC member, is the 242.11 what you would pay instead of the full amount or do you still need to put a down payment? And does the financing price then depend on how much the down payment was? Thanks in advance.

 

[ParentsOf4]

Last time I checked, DVC interest rates were:

"Premium" credit with 20% down: 9.99%
"Premium" credit with 10% down: 12.0%
"Preferred" credit with 20% down: 12.0%
"Preferred" credit with 10% down: 14.5%
"Standard" credit with 20% down: 14.5%
"Standard" credit with 10% down: 17.5%
Current DVC member with 20% down: 8.99%
Current DVC member with 10% down: 11.0%

Generally speaking, financing any timeshare is a bad idea. And the longer you finance, the less sense it makes.

There are non-financial reasons to join DVC ("Being a DVC member makes me happy") but, ultimately, the only good reason to buy into DVC is because you intend to vacation at WDW for a long time, can afford to stay at Deluxe Resorts, and are looking to save money. I could number crunch scenarios for you but, seriously, if you buy directly from Disney and are looking to finance over 10 years, it could be decades before you reach the break-even point. (In other words, the point at which you'd actually start saving money.)

Be aware that Disney forecloses on dozens of DVC members every month. With a DVC purchase directly from Disney, it's pretty easy to get in over your head.

If you want to stay at a DVC resort, the best financial advice is to simply rent DVC points through one of the well-known agencies such as David's DVC Rentals. Alternatively, just stay at a Moderate or Value Resort. Heck, for the price on eBay, I like renting a 2-bedroom suite at Wyndham Bonnet Creek, which is essentially on WDW property and can be found for $100/night.

You also could look into DVC resales, which generally are much expensive. For example, Disney's direct price for Saratoga Springs Resort (SSR) is $130/point, while the median resale price for SSR in February was $72/point.

Just trying to offer some friendly advice but if you are looking to finance over 10 or 15 years, I politely suggest DVC is not for you.

 

[slappy magoo]

If you want to stay at a DVC resort, the best financial advice is to simply rent DVC points through one of the well-known agencies such as David's DVC Rentals.

-snip-

You also could look into DVC resales, which generally are much expensive. For example, Disney's direct price for Saratoga Springs Resort (SSR) is $130/point, while the median resale price for SSR in February was $72/point.

On the above, I agree, especially since you're talking about an investment between you and another family member, which could be an issue if (hopefully not) you ever have a falling-out, or one of you marries someone who's not into Disney, or marries someone way into Disney but doesn't want to travel with the other sister. One sibling winds up using the points more, there winds up being anger and hostility blah blah blah.

Rent points first. See if you like what the DVC has to offer. After that, if you two still REALLY want to buy but you still don't have the principle (or at the very least a very big deposit, 50% or more), at the very least look into people reselling their DVC points. Sometimes you'll find people who are only selling smaller amounts of points - 100 points, 75, maybe even only 50 or 25. That's usually people who bought in with a bigger amount of points, then decided to "add on" later, and are either just selling off the "add on" points, or they're getting out of DVC entirely but have to sell each chunk of points they bought separately. Someone right now at The Timeshare Store is selling 70 Old Key West points for $80 per point, and you could always make an offer they might accept for less. Buying those 70 points, and banking a year or borrowing a year could get you over a week and perhaps an almost-2-week trip every two years, depending on what time of the year you go. And that would cost each of you about 3 grand. And of course, you could use those OKW points at other resorts, you just have to wait until a 7 month window to book, versus an 11 month window at OKW, and most of those resorts will require more points. OKW being the first DVC resort, the point values are less than most other DVC resorts with the possible exceptions of select "views" like a Standard view at Boardwalk, or sizes like a "Value" sized studio villa at Animal Kingdom Lodge. Just a thought.

 

[ParentsOf4]

I ran some quick numbers, assuming you buy 120 points at SSR to start. (120 points gets you a week in a Studio during Magic Season, which includes spring break and summer.)

If you purchased directly from Disney at $130/point with 20% down and qualified for the 12.0% Preferred Credit interest rate, you end up paying about $12,500 in principle and another $9,000 in interest on a 10-year loan, as well as another $3,100 down. Your total purchase price comes to about $24,600, or about $205/point.

Compare that to buying a DVC resale and not financing, which works out to about $9100 or $76/point when closing costs are included.

Whether you buy direct or resale, you need to pay an annual Maintenance Fee (MF), which was $4.91/point in 2014 at SSR. That works out to $589/year or $49/month. Historically, SSR MF has increased at about 3.0% annually.

I then compared buying directly and financing with renting DVC points at the current common price of $14/point, adjusting this for inflation annually.

Including the effects of inflation, it would take you about 31 years to reach the break-even point if you bought directly from Disney and financed.

There are a number of assumptions built into the calculation. However, the main point is that if you buy directly from Disney and finance over an extended period, it will be decades before your DVC purchase actually starts saving you money.

P.S. By the way, the break-even point for a DVC purchased though resale and not financed is about 10 years.

 

[EOD K9]

I financed back in 2005 and paid off my loan about a year and half early. I have been keeping track of what the price would have been and broke even last year. Is financing the best way to do it?....no....but its what I could afford and worked for me.

 

[BigTxEars]

We bought in via cash on the secondary market this year twice, 100 pts at SSR for $75 per point and 50 points at OKW for $75 per point as well. Closing cost was $400 each time. My maint fees on both combined will be roughly $750 per year. Crunching numbers as best I can I think we will break even at 8 years, well that was before we bought OKW so I am not sure how that has changed now. I think these was a good deal for us. But if I financed it then I am not sure it would have been. The break even would have been a lot longer as would overall cost.

Have you looked at buying a a smaller contract on the secondary market, you can get a 50 point contract for just over $4000 with closing cost. Not enough points each year to stay but you can always rent more points or you can bank and borrow points from the 50 point contract and go every other year until you can add more points latter. It's a way in and can grow into whatever you want it to grow into.

We have 150 points per year, not a lot but with banking and borrowing we can use 200 pts year 1, 100 pts year 2, 200 pts year 3, 100 pts year 4 etc.....that will get us 1 week each year when we go. You can really work the points around using their system to maximize what you have each year

 

[awilliams4]

= I was given, the example for 125 points is 10 year financing at $242.11 then montly dues of $56.35. Of course I know that's only an example, but my question is, upon becoming a DVC member, is the 242.11 what you would pay instead of the full amount or do you still need to put a down payment? .

In this example, you will have to pay 242.11+56.35 monthly right out of the gate.

 

[slappy magoo]

On one of the sheets I was given, the example for 125 points is 10 year financing at $242.11 then montly dues of $56.35. Of course I know that's only an example, but my question is, upon becoming a DVC member, is the 242.11 what you would pay instead of the full amount or do you still need to put a down payment? And does the financing price then depend on how much the down payment was? Thanks in advance.

the sheet you were given might specify "based on 10% down payment" or something like that, you should look for it. But if you're financing and that's the rate you were given, it's basically a mortgage (and can be deducted as one on your taxes). You'll pay that monthly rate of $242.11, PLUS your maintenance fees which currently breaks down to $56.35 a month. Bear in mind, maintenance fees can and will go up. But legally, there are not supposed to be a profit point for Disney, the accounting has to be open to any and every member to confirm that every dime they paid in maintenance fees went to pay for something. But of course, since Disney provides Disney Vacation Club with everything they need to maintain the grounds, we're left to assume there's no bloat and we're getting the best possible rate for upkeep and cleaning or the myriad other things our fees cover.

Again, I can't recommend this enough - you and your sister should rent points just once, make sure the DVC is right for you. And if it is, you should look at the Timeshare Store or other companies that specialize in reselling DVC properties. The financing rates there might be slightly more gouging than DVC's rates, but the prices of the timeshares themselves will be significantly lower. Right now, someone at The Timeshare Store is selling 160 points at Saratoga for $74 per point, which is $11,840. Even if you only paid 10% down, and your credit was so awful you could only get a rate with 14.9% interest, that's $171.29 per month. $70 less a month and 10 more points (though that's also 10 more points you pay maintenance fees for). By buying resale, you'd have some restrictions, but you'd be able to use them at ANY Disney Vacation Club resort, as well as transfer them out for timeshare rentals in RCI if there were a year you wanted to travel elsewhere.