Financing your next DVC resale points package might not be on your radar; however, paying cash up front may not be the best financial decision either once you discover reasons you may want to finance your next DVCShop purchase.
Why Financing Is Preferable
Having cash in hand and sending it to the escrow company at closing is great if you can afford it, but the fact is that many people scrimp and save for several months or even years to pay for their magical DVC resale package. If saving has been this difficult for you, it’s a good idea to pay for the points over time instead of using your whole with your savings up front.
Financing allows you to spread out some of that cost, so you aren’t parting with all of your money at once. You can use a hefty chunk, or as little as 20% of the purchase price, as a down payment, but wiping out your savings is ill advised. This is because it’s a much wiser decision to leave an emergency fund in your savings account for those unexpected expenses that may arise.
Furthermore, you could use some of that pay-in-full cash to actually go on vacation with and enjoy what you just purchased. This is called “balancing the fun with the funds”. Why pay $10,000 today for 10 years of future accommodations when you can pay $1,000 each year (plus a small amount of interest) for ten years and enjoy the same accommodations for the same amount of time? Remember, the shorter term the loan the less interest you pay, so we recommend loans of five years or less.
The chart below shows how a five-year term saves you thousands of dollars vs. a longer ten-year term:
Financing will also allow you to get the vacation package that you otherwise cannot afford upfront. This way you have your choice of premium accommodations and the best home resort more suited for your family’s lifestyle, rather than settling for something not perfect and trying to get what you really want later.
This doesn’t mean you should take on a loan bigger than you can afford. Bee Thaxton here at DVCShop can provide you with a few options and price ranges on the vacation package you want. Use this easy payment calculator here https://www.vacationclubloans.com/rates-calculator/ to see prices vs. down payments which result in different monthly payment amounts. You should pick the one that you are most comfortable with without stretching your budget.
Building Good Credit Helps
It’s implied in the “cash is king model” that all debt is inherently bad. This is not wholeheartedly true. If you paid cash for everything you would not build any credit and this can hurt you. Having good credit when applying for car insurance or a job can verify you are responsible and able to follow through on your commitments. You also earn lower interest rates on large purchases by having credit established.
Vacation Club Loans’ rates are based on your credit score. It is so easy to get approved – ONLY a 600 FICO is required, and you are automatically approved for DVC Financing. Because we base our interest rates on your credit worthiness, we can offer the lowest interest rates in the industry! Rates start as low as 9.9% for excellent credit and can go up to 14.9% for lower scores. However, we always beat our competition when it comes to rates. Financing a DVC resale purchase can also help increase your credit score. By using a lender that reports to credit bureaus you will benefit from making those payments on time. Contact www.vacationclubloans.com for a free credit evaluation and quote if you want to learn more.
Save Even More Money!
Regardless of the price and down payment you choose, make sure your loan does not have additional monthly fees, unnecessary closing costs added, or a prepayment penalty. These all add to the total cost and can erase all the savings you made on your original purchase through the resale market. You should be able to make your monthly payments on just the principle and interest plus add additional principle payments anytime you like without penalty.
Currently, at the time we are writing this article, mortgage interest can be deducted on your personal tax return. Since Vacation Club Loans records a mortgage on this DVC financed deal, you may be able to deduct the mortgage interest! Please check with your tax accountant as laws are expected to change from time to time.
For additional questions regarding these kinds of opportunities to join or add-on to the Disney Vacation Club, please do not hesitate to contact the Bee Thaxton, your DVC resale expert, at firstname.lastname@example.org.