MVC Financing

[jpa2825]

I'm currently planning to use MVC's financing on our last traunch of DPs for 18 mos. and then pay off. They offered 3250 DPs (with a 2 yr. use window) in exchange for using the financing. If I pay off early, there is no prepayment penalty, but I lose the 3250 DPs.

Paid as much down as I could to finance as little as possible.

$29,537 at 10.99% for 18 mos. seems to be about $2,600 in interest.

Basic question: is paying $2,600 for 3250 DPs with a 2 yr. use window good value OR should I just forfeit the 3250 DPs and pay it off now? (Yes, I know it depends on current cash flow and how we'd use the DPs and how much we will "need" the DPs over that 2 yr. window, etc.)


(NOTE: The monthly amount is charged to my MR Credit Card, but I assume if I pay off early, I could do that with the MR Credit Card as well, so the MR points gained there are essentially a wash.)

 

[csalter2]

I'm currently planning to use MVC's financing on our last traunch of DPs for 18 mos. and then pay off. They offered 3250 DPs (with a 2 yr. use window) in exchange for using the financing. If I pay off early, there is no prepayment penalty, but I lose the 3250 DPs.

Paid as much down as I could to finance as little as possible.

$29,537 at 10.99% for 18 mos. seems to be about $2,600 in interest.

Basic question: is paying $2,600 for 3250 DPs with a 2 yr. use window good value OR should I just forfeit the 3250 DPs and pay it off now? (Yes, I know it depends on current cash flow and how we'd use the DPs and how much we will "need" the DPs over that 2 yr. window, etc.)


(NOTE: The monthly amount is charged to my MR Credit Card, but I assume if I pay off early, I could do that with the MR Credit Card as well, so the MR points gained there are essentially a wash.)

3250 * .55 maintenance fee per point = $1787.50 now you can answer your question.

 

[Fasttr]

You can rent additional points if needed. Rental cost for 3250 DP's is approx. $2000, so why pay $2600 for 3250 points you may or may not need, but can be had for $2000 if you find you do need them.

 

[kds4]

We went through this same decision point 2 years ago (with our last DP purchase). I recommend paying it off and spending $2,000 to rent 3250 one-time use points (if/when you need them) instead of paying $2,600 for them. Save the $600 now and keep the flexibility to rent the 3250 at any time in the future you decide you need/want them (and not just within a one-time 2 year window).

 

[Jeffrey]

Have you considered only carrying 10-15% of the loan for 18 months ?
I did the same thing 10 years ago when I bought (developer before discovering TUG) with a 60 month finance. The only requirement (without forfeiture of points) was that the account had to be open for 18 months. I paid the first month or two the required amount and then paid approx. 80% in the third month and carried the residual balance through the end of the 18 months as required. All payments went through the MR credit card. It would be worth checking if this still works for you in which case the finance charges can be drastically reduced making the bonus points worth even more

 

[rvpitt]

I used the strategy Jeffrey described too, but Marriott now states that if you pre-pay one extra penny, the bonus points no longer apply.

 

[kds4]

I used the strategy Jeffrey described too, but Marriott now states that if you pre-pay one extra penny, the bonus points no longer apply.

That's how they ensure those 'free' 3250 points are not free.

 

[Seaport104]

I used the strategy Jeffrey described too, but Marriott now states that if you pre-pay one extra penny, the bonus points no longer apply.

I am in process of buying and asked the same question. Most you can put down is 10% (my recollection) and you can only pay the calculated monthly payment no more for the first 18 months. My idea was put the 10% down, pay off 85% of it in the first month's payment and finance the rest but Marriott said no go. I can't pay more than the monthly payment for 18 months to qualify for the bonus points so I just paid cash via new Marriott credit card that gave me 6x the points

BTW- you cannot pay off the loan with a credit card so with financing you lose the ability to earn points

 

[jpa2825]

I am in process of buying and asked the same question. Most you can put down is 10% (my recollection) and you can only pay the calculated monthly payment no more for the first 18 months. My idea was put the 10% down, pay off 85% of it in the first month's payment and finance the rest but Marriott said no go. I can't pay more than the monthly payment for 18 months to qualify for the bonus points so I just paid cash via new Marriott credit card that gave me 6x the points

BTW- you cannot pay off the loan with a credit card so with financing you lose the ability to earn points

Do you mean you can't pay off the balance with a credit card? The monthly payments can definitely be paid via credit card.

 

[bizaro86]

Do you mean you can't pay off the balance with a credit card? The monthly payments can definitely be paid via credit card.

It's incentives for them. They really want you to make your monthly payment, but don't particularly want you to pay off the loan early since that reduces it's value.

Thus, they aren't willing to pay credit card fees for an early pay-off.

 

[catharsis]

you can make a payment into the loan account online in your owner account using a credit card, anytime you want and in any amount you want.

just verified this in my account.

 

[jpa2825]

I think it may be much worse than originally summarized. When I did the calculations above to get the $2,600 in interest, I simply did the amortization as if the borrowed amount ($29,537) was borrowed at 10.99% for 18 mos. In reality, the amount is borrowed at that rate for 10 yrs. and just paid off after 10 mos. Given that interest is front loaded in such an arrangement, my new calculation suggests that after 18 mos. I will have paid $4,700 in interest rather than $2,600. That seems to make more sense at $30k @ 10% interest for a year would be $3k and $4.5k for 1.5 yrs.

I better look at catharsis' suggestion of figuring out a way to pay off the loan via credit card.

Feel stupid that I got caught up in the frenzy and thought that paying 11% interest for only 18 mos. was a good deal. Oh well, live and learn. Hopefully someone else reading these threads can avoid the same mistake.

 

[jpa2825]

you can make a payment into the loan account online in your owner account using a credit card, anytime you want and in any amount you want.

just verified this in my account.

It looks like this method only allows payments to be done via bank transfer, not credit card. As pointed out above, if we had paid full amount when we bought the points, we could have put that all on our MR Credit Card and secured ~150k MR Points (and, most importantly to me right now, 10 nights toward LT Platinum Premier). I guess I'm gonna have to go back to my "advisor" and see if I can convince them to allow me to pay off balance via MR Credit Card. Wish me luck.

 

[Fasttr]

I think it may be much worse than originally summarized. When I did the calculations above to get the $2,600 in interest, I simply did the amortization as if the borrowed amount ($29,537) was borrowed at 10.99% for 18 mos. In reality, the amount is borrowed at that rate for 10 yrs. and just paid off after 10 mos. Given that interest is front loaded in such an arrangement, my new calculation suggests that after 18 mos. I will have paid $4,700 in interest rather than $2,600. That seems to make more sense at $30k @ 10% interest for a year would be $3k and $4.5k for 1.5 yrs.

I better look at catharsis' suggestion of figuring out a way to pay off the loan via credit card.

Feel stupid that I got caught up in the frenzy and thought that paying 11% interest for only 18 mos. was a good deal. Oh well, live and learn. Hopefully someone else reading these threads can avoid the same mistake.

Agreed, your $4.7K calc seems much more accurate. Funny how we all took your $2600 as gospel and nobody challenged that as too low at the time.

 

[jpa2825]

Just an update. Circled back to my advisor with a polite message that we had done the math and that 3250 DPs in exchange for $4.7k in interest over 18 mos. didn't seem like such a great deal for us when we have other funds to pay off now and get the credit card points from paying off. Asked best person to contact to pay off balance with credit card. Her response / rationalization is below. She has a job to do and I respect that. That said, I read the last line as "feel free to call them and try to use your credit card to pay off balance, but it ain't happenin'." We shall see.

BTW - anybody have any idea what she's talking about with the "Marriott Rewards checks?" I assume Chase periodically sends out "cash advance" checks for their credit cards. I don't get paper statements any more, but I always thought those were awful deals even if you paid them off immediately. Would make no sense if it was just like a credit card charge and no extra fee.


I understand your thinking on the interest. We actually had an investment broker do a spreadsheet to see if it was worth it, and he said if you did the following it would be worth it: write off the interest, use the Marriott Rewards card to get the additional points, and only keep it the 18 months using the bonus points for a high end stay. One example he used was the Ritz Carlton Club (the timeshares). So, for example, 3175 is 5 nights in the St. Thomas Ritz Carlton in January (high season) in a 2 bedroom villa. The rental on those same five nights is a little over $2000/night + $150/day resort fees and taxes so that is well over a $10,000 stay. You could apply the same logic to the Ritz Carlton in San Fran, Vail, Tahoe, or Aspen. However, if you look at 3000 points for a stay here in the summer at Grande Ocean or Barony, that would get you 5 nights. The rental in the summer here is $720/night +tax for a total of $4,392. I am not sure if you would use those for something like that, but those are great examples.


If you decide to pay it off, please call the finance department at 800-763-4877. I do not know if they will take a credit card to pay it off, but I do know they will take checks. If you have a Marriott Rewards check (they send them periodically), you could still get points I think. I hope this helps!

 

[Venter]

I am in process of buying and asked the same question. Most you can put down is 10% (my recollection) and you can only pay the calculated monthly payment no more for the first 18 months. My idea was put the 10% down, pay off 85% of it in the first month's payment and finance the rest but Marriott said no go. I can't pay more than the monthly payment for 18 months to qualify for the bonus points so I just paid cash via new Marriott credit card that gave me 6x the points

BTW- you cannot pay off the loan with a credit card so with financing you lose the ability to earn points

I went through my documents and it stated that the deal is only valid with a down payment of 10-20%.

 

[1Kflyerguy]

If you decide to pay it off, please call the finance department at 800-763-4877. I do not know if they will take a credit card to pay it off, but I do know they will take checks. If you have a Marriott Rewards check (they send them periodically), you could still get points I think. I hope this helps!

I don't have personal experience paying off a MVC loan with a credit card, but did do that with my HGVC loan a few years ago. HGVC would not let me "pay off" the loan with the card. However a helpful agent informed me that while they have rules again using a CC to payoff the loan, you can use a card for extra payments. I believe they had a limit on size of the extra payments, but it was reasonably high. Its been a few years, but believe i was able to pay an extra 5 or 10K per week, charged to my Hilton AMEX. Just left a small balance for the auto pay to technically "payoff".

Not sure if MVC works the same, but i would suggest trying that if they won't let you pay the full balance off with a credit card.

The cash advance checks from Chase and others don't earn any points so there is no sense in using those.

 

[jpa2825]

3250 DPs have hit my account so I am looking at strategies to pay off revolving loan quickly but still maximize MR points via CC while doing so.

• Is conventional wisdom still that you can't simply call 800-763-4877 and pay off the full balance via MR CC?
• If yes, is it still possible to call and pay off a few big chunks of the balance (but not all) via MR CC to get the points?
  • Assuming balance it $27k, call and say "I'd like to leave my revolving loan open, but pay down the balance / change the monthly amount that is charged to may Marriott Rewards Credit Card from the current $421 to $10,000."
• At 6x, if you can get $25k paid off via CC this way, you have 150k MR points which can offset some of the turrrible decisionmaking at the outset of this deal.

Any insight appreciated.

 

[Dean]

3250 DPs have hit my account so I am looking at strategies to pay off revolving loan quickly but still maximize MR points via CC while doing so.

• Is conventional wisdom still that you can't simply call 800-763-4877 and pay off the full balance via MR CC?
• If yes, is it still possible to call and pay off a few big chunks of the balance (but not all) via MR CC to get the points?
  • Assuming balance it $27k, call and say "I'd like to leave my revolving loan open, but pay down the balance / change the monthly amount that is charged to may Marriott Rewards Credit Card from the current $421 to $10,000."
• At 6x, if you can get $25k paid off via CC this way, you have 150k MR points which can offset some of the turrrible decisionmaking at the outset of this deal.

Any insight appreciated.

I voted pay it up front before I realized it was from 1.5 years ago. We had this very decision last March and decided to forego the bonus points because of the requirement to keep the loan for 18 months. One point in the "analysis" from above, the interest would not be deductible except in very rare situations. I'd just pay it in full and if you need something to act as a backup such for cash flow, I'd get a personal loan locally, cheaper and less variables. You should be able to pay it down though and reduce your interest if you don't want to pay the entire amount but I suspect the payments will stay the same. Just make sure they know to reduce the principle balance and that you're not simply prepaying payments.

 

[mdurette]

Just curious, but this happens in the lending world all the time. The salesperson states you cannot payoff in xxx months....but nowhere in the documents does it state this. The amount of time the salesperson gives is the buyback period, basically the company looses its commission from the lender if the loan is paid off early. They tell you this, but in all actuality they can't enforce it since it is not in the contract.

 

[davidvel]

Just curious, but this happens in the lending world all the time. The salesperson states you cannot payoff in xxx months....but nowhere in the documents does it state this. The amount of time the salesperson gives is the buyback period, basically the company looses its commission from the lender if the loan is paid off early. They tell you this, but in all actuality they can't enforce it since it is not in the contract.

Not the loan, but don't the terms of getting bonus points require this?

 

[Dean]

Not the loan, but don't the terms of getting bonus points require this?

Correct. When I looked at it I was pretty sure I could finance and then pay it down just to the amount where it would have paid out over the 18 months but decided it wasn't worth fooling with.

 

[pianodinosaur]

I do not think that taking out a loan to purchase a timeshare is a good idea. I do not think that getting into credit card debt is a good idea either. I suggest that both kinds of debt be paid off as quickly as possible.

 

[jpa2825]

3250 DPs have hit my account so I am looking at strategies to pay off revolving loan quickly but still maximize MR points via CC while doing so.

• Is conventional wisdom still that you can't simply call 800-763-4877 and pay off the full balance via MR CC?
• If yes, is it still possible to call and pay off a few big chunks of the balance (but not all) via MR CC to get the points?
  • Assuming balance it $27k, call and say "I'd like to leave my revolving loan open, but pay down the balance / change the monthly amount that is charged to may Marriott Rewards Credit Card from the current $421 to $10,000."
• At 6x, if you can get $25k paid off via CC this way, you have 150k MR points which can offset some of the turrrible decisionmaking at the outset of this deal.

Any insight appreciated.

Called today to pay down balance via SPG AmEx card to maximize points. I was told the only way to pay additional amounts was via a checking account. Asked if I could just change the monthly amount currently being charged to my SPG AmEx. Was told again that the only amount that could be charged to a credit card was the actual monthly amount that was calculated based on the 10 yr. maturity. Any extra amounts to be paid (whether monthly or in a big chunk) had to be paid via checking account only.

Unless someone else sees another angle, I guess I will just get a payoff amount and pay it via my checking account to stop the bleeding on the 10.99% interest. Live & learn, I guess. Pretty dang expensive 3250 DPs as it turns out.

 

[dioxide45]

It seems that they are relying on that interest rate to help offset the costs of the merchant fees they have to pay. Sometimes quite high for lucrative rewards credit cards.