Does Disney treat those who buy resale differently?

[ELMC]

Originally Posted by MichiganDVC

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years.

Originally Posted by JimMIA

So essentially, your strategy is to purchase at more than double the price, and then finance at a higher interest rate than is available elsewhere -- possibly 10% higher?

Why? Because you want it?

What's surprising to me is the poster's open admission that they are paying double AND financing. Typically the justifications don't ever address this difference in cost. People buying direct and financing are not paying $22,000, they are paying $307 a month with 10% down. We all know that this is the salespeople's way of getting potential buyers to ignore this significant price discrepancy. In those cases it's helpful to point out the real numbers and the fact that one would most likely be paying triple the cost of resale over 10 years. More times than not this sparks some kind of realization and perhaps even a change of heart. But when someone admits knowing that ahead of time and still wants to proceed, I think all we can do is wish them luck. And yes, maybe do this...

[GoofyDad1970]

Originally Posted by MichiganDVC

I tried to read through all the posts, but I may have missed this. Resale buyers do NOT get the generous financing that Disney direct buyers do. We are required to have $10,000-$20,000 in cash all at once. (Yes, some may choose to get their own loan, but at a higher interest rate than Disney offers.)

Point is, how many people can really buy, with cash in hand, a 160 point resale contract at AKV? That's $13,000 roughly. OR...they can finance $22,000 for those same points for up to 10 years. So, unless you have $13,000 in cash, your best bet is to finance with Disney for 10 years. Much more affordable. So, let's not pretend that buying resale is this golden piece of cake. You have to have tens of thousands of dollars available, right now.

WHAT?!?! Disney's interest rate is outrageous! They told me it would be around 13% and they never even did a credit check. I financed 250 AKV resale points with my bank for around 3% over five years, which I am fortunately in a position to pay in two years. Many on this board would argue that even my financing deal was a bad one, but clearly 13% over ten years is insanity. I actually thought about financing through Disney with a direct purchase, or financing a resale through the place recommended by the timeshare store, and I am just grateful I came to my senses.

[ELMC]

Originally Posted by GoofyDad1970

WHAT?!?! Disney's interest rate is outrageous! They told me it would be around 13% and they never even did a credit check. I financed 250 AKV resale points with my bank for around 3% over five years, which I am fortunately in a position to pay in two years. Many on this board would argue that even my financing deal was a bad one, but clearly 13% over ten years is insanity. I actually thought about financing through Disney with a direct purchase, or financing a resale through the place recommended by the timeshare store, and I am just grateful I came to my senses.

At 3%, financing your resale purchase may be more about leveraging debt and could actually make sense, especially when you consider what money you would spend on non-DVC vacations that would not have applied to your purchase. You bring up a good point, though. I think it's important to distinguish between financing a resale purchase at 3% and financing a direct purchase at 13.99%. They are two very different things.

[Dean]

Originally Posted by ELMC

At 3%, financing your resale purchase may be more about leveraging debt and could actually make sense, especially when you consider what money you would spend on non-DVC vacations that would not have applied to your purchase. You bring up a good point, though. I think it's important to distinguish between financing a resale purchase at 3% and financing a direct purchase at 13.99%. They are two very different things.

The problem with the cheaper choices is often the added risk. If you do it on a CC (and have other CC debt) such that you might jump to an even higher interest than DVC or risk your home, the risk could actually be more than the cost for the direct interest, in my book. For those that have CC debt, there are other ways to kick in that 20% range of interest than simply being late on a payment. For some, just your debt circumstances can do it in some cases.

[GoofyDad1970]

Originally Posted by Dean

The problem with the cheaper choices is often the added risk. If you do it on a CC (and have other CC debt) such that you might jump to an even higher interest than DVC or risk your home, the risk could actually be more than the cost for the direct interest, in my book. For those that have CC debt, there are other ways to kick in that 20% range of interest than simply being late on a payment. For some, just your debt circumstances can do it in some cases.

Dean, I did not put it on a credit card. Having said that, if you know where I can get a credit card that has a fixed rate of 3%, please let me know the name of the lending institution. Thanks.

[Illini Al]

Originally Posted by GoofyDad1970

WHAT?!?! Disney's interest rate is outrageous! They told me it would be around 13% and they never even did a credit check. I financed 250 AKV resale points with my bank for around 3% over five years, which I am fortunately in a position to pay in two years. Many on this board would argue that even my financing deal was a bad one, but clearly 13% over ten years is insanity. I actually thought about financing through Disney with a direct purchase, or financing a resale through the place recommended by the timeshare store, and I am just grateful I came to my senses.

3% isn't bad, especially if you're going to pay it off in two years. For the total amount we're talking, I'd still pay cash, but I understand that many can't.
I'm generally against financing anything associated with a vacation, but I know lots do. Congrats on your purchase and have fun!!

[Dean]

Originally Posted by GoofyDad1970

Dean, I did not put it on a credit card. Having said that, if you know where I can get a credit card that has a fixed rate of 3%, please let me know the name of the lending institution. Thanks.

If you'd like to share you're welcome to. I was simply trying to point out that most of the options people have used to try to purchase with less interest have risk, sometimes significant risk. Some CC are actually free for some situations, assuming you dot the I's and cross the T's and many have posted about doing so, esp the Disney CC. I think some of the options that people have used include CC, second mortgage or HELOC, car loans and secured loans against CD's or similar. All have risk but some more than others. However, even at 3% against a CD, it is still a poor choice, IMO.

[ELMC]

Originally Posted by Dean

If you'd like to share you're welcome to. I was simply trying to point out that most of the options people have used to try to purchase with less interest have risk, sometimes significant risk. Some CC are actually free for some situations, assuming you dot the I's and cross the T's and many have posted about doing so, esp the Disney CC. I think some of the options that people have used include CC, second mortgage or HELOC, car loans and secured loans against CD's or similar. All have risk but some more than others. However, even at 3% against a CD, it is still a poor choice, IMO.

I think this is an important point you're making and it does tie back to leveraging debt. For example, a business parther of mine is involved in a great municipal bond fund. It returns 7% annually, tax free. For him it makes sense to take the money he would spend on DVC and instead invest it in the bond fund and finance the DVC purchase. This would net him 4%. Obviously it would be cheaper not to buy at all, but we're operating under the assumptions that we have all decided to spend some amount of our net worth on vacations, specifically DVC.

My point is, if you have a next best alternative for the money that returns a higher interest rate than the interest you pay on the loan, financing a DVC purchase may make sense (assuming you factor in risk, liquidity, overall DTI ratio, etc.). But I will suggest that this is most likely applicable to a very small percentage of people's situations.

[Dean]

Originally Posted by ELMC

I think this is an important point you're making and it does tie back to leveraging debt. For example, a business parther of mine is involved in a great municipal bond fund. It returns 7% annually, tax free. For him it makes sense to take the money he would spend on DVC and instead invest it in the bond fund and finance the DVC purchase. This would net him 4%. Obviously it would be cheaper not to buy at all, but we're operating under the assumptions that we have all decided to spend some amount of our net worth on vacations, specifically DVC.

My point is, if you have a next best alternative for the money that returns a higher interest rate than the interest you pay on the loan, financing a DVC purchase may make sense (assuming you factor in risk, liquidity, overall DTI ratio, etc.). But I will suggest that this is most likely applicable to a very small percentage of people's situations.

Clearly a 3% loan with little risk (not tied to house, car, etc) isn't a big deal for one that can "afford it" otherwise. To me the behavior in question is far more damaging than the simple dollars involved. Personally I'm not sure that any debt is good no matter what the likely return is, but that's esp true for an individual over a company.

[ELMC]

Originally Posted by Dean

Clearly a 3% loan with little risk (not tied to house, car, etc) isn't a big deal for one that can "afford it" otherwise. To me the behavior in question is far more damaging than the simple dollars involved. Personally I'm not sure that any debt is good no matter what the likely return is, but that's esp true for an individual over a company.

I agree. I am often taken aback by the nonchalant way many people talk about going into significant debt over a rapidly (actually immediately) depreciating asset. It scares me. The reason I worked so hard to get such a low price on my resale contracts is because I wanted the ability to completely change my mind a year from now and be able to get most (or all, or ever more) of my money back. I don't plan on doing that, but it's nice to have the option. I would be uncomfortable buying at today's direct prices and having absolutely no reasonable exit strategy.

[djwood24]

I paid cash for my resale a few years back and do not regret it at all
I like most say wouldn`t finance it as I hate paying interest on vacations

[Mickey'sApprentice]

Originally Posted by JimMIA

There is a problem with this egalitarian approach. How does DVD differentiate direct sales and make them more attractive except by giving direct buyers something they don't give all owners?

Dean's example above of airlines is very apt. When I fly American Airlines (which is almost always), I am treated WAY better than someone who flies only occasionally. I get preferred seating they can't even hope to book, early boarding so I never have to worry about having a place for my carryon stuff, free baggage check instead of paying, and LOTS of other stuff. And if the weather is nasty, I get home as soon as possible and they don't because the airline bumps them off their scheduled, confirmed flight so they can put me in their seat. AA has even re-routed me so they could do that.

Is that "equal treatment?" Of course not. On the other hand, if I spend more money each year with them, is it really "fair" to give people who don't the same treatment I get? I don't think so. Preferential treatment of your better customers is sound business practice.

I would not be at all surprised to see DVC eventually go to some kind of a VIP program based on direct purchase of a certain (high) level of points. There are numerous models for that type of program in the timeshare world -- DVC is one of the few who doesn't use it...yet.

I really doubt DVC would ever go to home-resort only booking for resale customers; that would destroy their model and really wouldn't be good for direct purchasers either. But there are many, many other things they could do.

We last stayed at WL Hotel in 2005. At previous trips had been in 1992, 1994, and 2002. We paid extra for a courtyard view and received the bottom corner room on the villas side that overlooked some trees. The room view really belonged on that thread for bad views.

Fast forward to last week. We had joined DVC in 2006, bought APs starting in 2009 and had stayed many nights on AP rates at non-DVC hotels. We reserved using AP rates, and paid for a woods view. Well...our view and room was fabulous!! We had a 4th floor room overlooking the beautiful courtyard and Bay Lake.

Plus, everytime we stay at Port Orleans before or after our DVC stays we get larger corner rooms.

[Disney Doll]

I've never been treated differently by any DVC person because of my resale.

I have found the salespeople, when I have encountered them, to be lovely and conversant, like to talk about what you own, what you bought, how you bought and how you use it.

Maybe you just hit someone having a bad day? Or you hit someone who isn't goign to work for Disney for long....