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

[DisneyOutsider]

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

I don't know that "most people" finance their Disney vacations on credit cards every year. Do you know?

Either way, you're just telling me that one bad financial decision is less bad than the other. I'll go a step further... and say that if your currently reality is financing annual vacations on credit cards (ie carrying a balance on the card from month to month because of said vacation), then buying DVC is a financial mistake of EPIC proportions.

 

[crisi]

Its 5.75 for 0-36 months up to 40k. We do have fairly high credit ratings. But I get where you going. People doing this probably aren't in the same situation.

For us personally we don't keep 30k liquid. It tied up in investments, etc. So its sometimes easier to finance for 24-36 months than liquidate assets. We do not own DVC though, just saying that as a generalization that not everyone financing is trying to cause a new recession due to mismanagement of money.

Yep, you are using it as leverage. That's how I use my debt as well, and one of the reasons I'm very well off. That isn't how most people are using debt according to professional economists who study the matter. It doesn't sound like you are likely to come in here when its too late to sell your DVC to save your house from foreclosure and you are underwater on loans. Which is what we saw several times during 2008 - 2010.

Its the difference between someone who "finances" and someone who "takes out a loan." Its the reason why I'm not against financing as a blanket proposition. But I'd rather come across as really judgy and tell everyone its a horrible idea than read another one of those 2009 posts about someone losing their house and being underwater on their DVC. Those posts REALLY affected how I post on this board, and it really affected how other long timers around here treat the "DVC is a great deal all the time" and "Financing is a good idea" posts.

The other thing I've come to realize about this board is that for everyone who comes in to ask a question, there are maybe dozens of other people reading and soaking in the information who aren't posting. You could come in and post about your stable financial situation and not wanting to take money out of investments and ask if financing is a good idea - you could describe your Disney habits, and DVC could be a perfect fit. And I could say "yeah, it sounds good for you." And ten other people could read that post who are making minimum payments on their credit cards and have uncertain jobs and use it to justify financing without understanding the difference between "financing" and "taking out a loan." I don't want to be the reason someone gets foreclosed on.

 

[miTnosnhoJ]

Nothing to see here.

 

[MickyLynn]

I don't know that "most people" finance their Disney vacations...one bad financial decision is less bad than the other.... and say that if your currently reality is financing DVC is a financial mistake of EPIC proportions.

OK, most people who are in the financing boat.
If 40% of people can't make a $400 emergency fund, and less than 40% are on track for retirement, you can bet vacations, Disney or otherwise, are going on CCs.

There is also an age component here. Young families, who would derive the most benefit, are least likely to be in a position to pay cash.

 

[Mikamarii]

For us it's about money management. Financing is a tool. Just because you have the cash for something doesn't mean you should spend it but also if there is something you want and financing is an option you shouldn't ignore the opportunity. We bought dvc on our honeymoon. We financed. Granted we were able to pay it off within a couple years and spent about 2-3k in interest. By doing that back in 2011 vs saving to pay cash and buy now we saved about 25k between the drop in the cdn dollar and increase in dvc prices. The unaccounted for "value" is that we got to enjoy many Disney trips while our children were young.
The problem with debt is most people that get in it is because of poor management. High interest loans play a huge factor. But if you live within your means and financing can help with a purchase that makes life more enjoyable then use all the tools available to you.

 

[crisi]

Why do you think young families would derive the most benefit? There are a LOT of DVCers who are retirees.

I honestly think that is one of the problems with this board. You don't know who is on the other end of the keyboard - but over the years I've learned a lot of the regular posters who have gotten a ton of use out of DVC are older, are really pretty darn well off, and if they bought when their kids were young, often have very small families (like one or two kids). Many didn't buy until their children were adults. In other words, the people who are giving advice are usually not people with young families. If they had young families, it was a while ago.

 

[jerseyduke]

One problem is the interest rates, usually 9% and up. That is high. Remember every penny you pay in interest in your life is a penny you cant spend on what you want and need.

However, if you purchase DVC outright, and say save 3000$ in future interest, then just go blow that 3K on garbage you dont need, not financing did not really do anything for your financial situation.

If you invest it and grow it....that is a different story.

It is really about money management.

 

[vacationer1954]

Have you noticed this?

It goes beyond the whole debt thing, I think. We've encountered a lot of issues, not so much on this forum but elsewhere where many responders just want to be nasty instead of helpful. Most recently, we asked whether it was worth the cost to repair some surface damage to a ceiling due to settling of our home before putting it up for sale. Some of the responders seemed like they were not capable of passing the thread by without posting something nasty about us considering not repairing it regardless of the cost.

 

[Deb & Bill]

Because pixie dust doesn't exist. Life happens when you least expect it and it gets in the way of fun sometimes.

 

[MickyLynn]

Right, if they bought when they had young families they had more time to use it. That's just linear time. I don't want to be morbid about it, and I get that tomorrow isn't promised, but we are talking about a 50 year lease.

 

[Maistre Gracey]

When we were members, about 1/2 of our contracts were financed (had around 19).

I can’t speak for today, but back then even with finance charges factored into the equation, DVC was still cheaper than getting an on property deluxe hotel room.
So.... is it really a stupid option?? In my opinion, NO. Obviously it’s even a better deal if you can pay cash, but financing is still a valid option imo.... especially if you factor in interest one could earn with that money still available to invest.

 

[Mickey of the Villages]

People are judgy because it is no different than putting vacations on a credit card and taking years to pay them off. No one really thinks this is a good financial strategy. Also, the interest is quite high on these timeshare purchases through Disney.

People finance cars, but I don't think too many people finance a $50,000 luxury car over 10 years at 10-12% interest. This would be like doing that.

In my opinion people are judgey because they feel superior and more knowledgeable than others, and they have a forum to say so.

 

[katriscari]

For us it's about money management. Financing is a tool. Just because you have the cash for something doesn't mean you should spend it but also if there is something you want and financing is an option you shouldn't ignore the opportunity. We bought dvc on our honeymoon. We financed. Granted we were able to pay it off within a couple years and spent about 2-3k in interest. By doing that back in 2011 vs saving to pay cash and buy now we saved about 25k between the drop in the cdn dollar and increase in dvc prices. The unaccounted for "value" is that we got to enjoy many Disney trips while our children were young.
The problem with debt is most people that get in it is because of poor management. High interest loans play a huge factor. But if you live within your means and financing can help with a purchase that makes life more enjoyable then use all the tools available to you.

This is basically our family. Having an 800+ credit score and using it wisely is not always a bad thing. I am ok with paying a little interest in order to take my kids when they are young, rather than saving and starting when my older one is close to being a teenager. I am even contemplating the personal loan option through my local bank to get a much lower rate than what I am paying through Disney. 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. I need to see what my upcoming work bonus will be before I decide on that.

 

[Ben E N]

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.

 

[Marionnette]

In my opinion people are judgey because they feel superior and more knowledgeable than others, and they have a forum to say so.

Judge much yourself?

Probably not. But your post comes across that way.


See how it works? You didn’t mean to be offensive but your post could be interpreted by some people that way.

 

[jerseyduke]

I bought VGF at 150 per point, and needed to finance a portion of it. I did so for three years. I DID NOT pay a particularly high rate on what I borrowed, certainly less than Disney's 8.99% offering.
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.

I could have gotten the money and paid it off in full, but I would have had to pay capital gains taxes that I wanted to defer.

Now, I do not think this is the typical case. But it suggests its not a stupid question. I would not say no not finance is a hard no...but it is very much a 'proceed with caution and use with good reason'.

I think people get more adamant because a lot of times it means people are over extending themselves. That is dangerous.

 

[DVC Jen]

Don't worry about what others think. Everyone has their opinion and some think theirs is the only right one. You do you and what is right for you.

We financed one contract. We paid it off. We paid cash for the second. We are happy. We don't care if someone else disagrees with how we handle our finances.

 

[larry47591]

We financed resale in September had it paid off in January. We financed ccv direct in January. We plan to have it paid off within 2 years. For us financing works, I think it’s really a case by case basis. Only you know if it’s really something you can afford.

 

[Mickey of the Villages]

Judge much yourself?

Probably not. But your post comes across that way.


See how it works? You didn’t mean to be offensive but your post could be interpreted by some people that way.

Unfortunately I am terribly judgmental. This is the truth and not sarcasm or cuteness. I am every bad thing I see in others and likely the worst at the things that I point out. You're right and I should think about that (and I will).

It doesn't make it ok. My judgement or others, they're all wrong (in my opinion). I do appreciate you making this point.

 

[Disney Dad ADL]

Unfortunately I am terribly judgmental. This is the truth and not sarcasm or cuteness. I am every bad thing I see in others and likely the worst at the things that I point out. You're right and I should think about that (and I will).

It doesn't make it ok. My judgement or others, they're all wrong (in my opinion). I do appreciate you making this point.

Yeah, I understand it's difficult balance. "Helpful advice" goes to "unwanted advice" goes to "judgemental" very quickly, and it's really hard on an internet forum to figure out how to say your piece without getting overly judgemental.

There are people who feel that financing DVC is a mistake, and I would probably say that if you were to pick a random person out of a hat, it is likely that that person should not be financing DVC. Advice on an internet forum will tend to try to speak to the average unknown person. However, only a Sith deals in absolutes as they say. Only you know what your finances look like, no one else does. At the same time, it's easy to dismiss sound advice too easily just because it's something we don't like to hear.

My suggestion would be to anyone who is considering financing DVC: If lots of people are telling you financing DVC is a bad idea, listen to their advice rather than ignore it as being "judgemental" offhand. Make sure you run all the numbers and think about the downside risks, and don't let emotion cloud your judgement. And at the end, if you still feel that financing DVC is a good idea, then go ahead and pull the trigger and ignore the naysayers. Then, you should feel more confident in your decision because you've thoroughly considered the risks that you may not have otherwise looked at.