Conventional wisdom among some in the Disney Vacation Club community is that you should not buy DVC if you have to finance it. It’s cash or nothing. Arguments like this drive me crazy. It’s like telling a parent there’s only one way to raise your child. If you’re going to struggle to make the payments, if you’re going to have to give up necessities in order to do it, then I would agree – don’t finance this. But for some, financing is a good option, especially if you’re in a position to pay it off in a short(er) amount of time. Interest rates accrued over 10 years eliminate any financial benefit of buying DVC in most cases, but that’s from my standpoint and someone else may feel differently.
Back in 1996, my partner (at the time) decided to purchase 150 points at Old Key West (I was not listed on the contract as we didn’t think it was important). We were both working jobs in middle management at our respective companies, not rolling in money by any means, but we really wanted DVC as we vacationed at WDW twice a year and it made sense for us. The payments were not a hardship for us and looking back I don’t think either of us has any regrets.
Obviously, if you have the means to purchase a contract for cash, that would be ideal. Not having to make interest payments only increases the lifetime value of your points.
The argument is often made ‘don’t finance luxury items’. I understand that and generally, I agree with it. But where DVC is concerned, I feel that it’s not quite so black and white as some would make it. There are frivolous luxury items, then there are luxury items that really do add to the quality of life. An expensive new ring is frivolous, but an engagement ring is something different. Is it required in the strictest sense of the word? No – it isn’t. However, it represents something more than just the item itself and there are many, many people who will finance a purchase like that because of the intangible value it adds.
For Disney fans – for those of us to whom Disney is more than just a vacation destination, I would argue that DVC falls into the latter category. Is it required? No – it isn’t. Does it add to the quality of an emotionally important experience? I think most DVC members would agree that it does.
There are many options for financing. If purchasing a direct contract with Disney, this purchase can be financed directly through them. Disney does not report the loan to credit agencies (they act as the bank when issuing a loan). They will do a hard pull on your credit, but the loan itself is not shown on your credit report.
Looking at a resale contract? The crack dealer of Disney Vacation Club Monera Financial can lend you a hand. Monera offers both credit check and non-credit check models which essentially means everyone is guaranteed financing. Rates start as low as 9.9% and loan terms are up to 12 years. I have spent many hours playing with their interactive instant quote tool and have many contracts to show for it.
Are you a current DVC member and need a little extra cash? Lenders like Monera also now offer a cash-out refinance option. Whether you’re looking for extra money for the holidays or a home improvement project, you can harness the value of your Disney Vacation Club Membership to help with these expenses. This is also an excellent option for previous direct DVC borrowers who are looking to lower their interest rate or monthly payment. You could even refinance an existing contract to pay for a new one. If your new contract costs the same or less as what you refinance for, you would then be able to pay “cash” for your new contract and skip having to come up with the down payment.
You can also consider a Home Equity Line of Credit (HELOC). This works if you both own your home and have enough equity in it to borrow against. The drawback here is that you are using your house as collateral. If you fall on hard times and default on a DVC-specific mortgage like directly through Disney or Monera, all they can do is take away your contract. If you default on a HELOC used to pay for DVC, they can take away your house.
The bottom line is this – it’s up to each individual to determine what is right for them. If someone makes a financially irresponsible decision in purchasing DVC, they alone will endure the consequences of it. I encourage people in the strongest sense of the word to do their homework if they plan to finance. Look at it from all angles while doing your best to remove pixie-dust from the equation. Pixie dust is only allowed in if the monthly payments of financing a DVC contract do not present a hardship. If you have to give up other things, if you have scale back on your lifestyle or any meaningful necessities, then perhaps it’s not the right choice.