How much do timeshares cost?
A timeshare is a luxury good and should only be purchased if you have the money to do so. Financing is not an option. If you need to use personal finance options then you can’t afford this!
As you will find out in this post; How much do timeshares cost? A lot!
What is a timeshare?
You may have heard that timeshare sales person say to you:
“You are getting Vacations for life” ! Isn’t that why you signed up? Won’t all the thousands of dollars be worth it in the end? That’s the lie the timeshare industry wants you to believe!
“While the product is often real estate based, the consumer’s primary purpose in purchasing a timeshare is to acquire a fully pre-paid, lifetime vacation experience rather than to purchase a dwelling or residence.” ARDA (“American Resort Development Agency”)
To put this into simple terms: It’s only a pre-paid vacation plan and should never be considered anything otherwise, despite what some of the unethical timeshare companies sales pitches claim.
Disney’s timeshare resorts may have a family friendly vibe but make no mistake; they are ruthless business people with money as their only bottom line. Now if you can grasp the fact that these developers only care about their bank accounts going up then you must understand that they don’t care about your vacation but only what’s in your pockets.
As you will learn below, to answer how much timeshares cost we will have to add multiple fees such as annual maintenance fees, assessment fees, the original purchase price & more!
Vacation with debt at inconvenient times
There is nothing worse than going on a Vacation with Debt. The whole purpose of taking time off is to relax, recharge and unwind. But how does one do this while staying at a resort they really didn’t want to book in the first place, but everything else was “Unavailable” as you found out.
Not to mention while you are on Vacation they will want you to join them for an “Update” Meeting. Make no mistake, the only thing getting updated is your timeshare loan if you believe what they say.
If it’s a monetary investment you are looking for, stay far, far away from timeshares.
“An investment should generate income, increase in value or, in the best cases, do both. Timeshares don’t do either”.
Is a timeshare an investment? No!
Timeshares depreciate in value immediately after purchase as the cost was over-inflated to begin with. There is no timeshare location on the planet that will not depreciate. But I’ve heard about people selling timeshares for good money? Just visit craigslist and other timeshare resale websites to see how many you can buy for a one dollar sales price.
Such Vacation Properties will continue to depreciate, as there is an over abundant supply on the resale market.
Timeshares do not generate income! You simply have partial ownership in a single property but it is shared with 50 other owners and does not give you the right to rent out for income. You don’t even have the right to renovate and create added value for potential resale. (Timeshare owners are allowed to pay annual fees, though).
This is why Banks and other lenders will not support a timeshare loan and definitely not at a decent rate.
Patricia Hayhurst, mortgage consultant for Capital Bank in Coral Gables, Florida. “They are considered high-risk lending.”
“There is no direct lending market for timeshare buyers,” ARDA said in a letter to the Consumer Financial Protection Bureau (CFPB)
Read Our Article: “What is a Timeshare – Should I Cancel Mine” Here.
Developers financing – How much do timeshares cost?
The Resort Developers are aware of these financing issues but don’t be fooled by these sharks. All Diamond, Marriot, Hilton and Wyndham Resorts saw is another opportunity to take your money at a ridiculously high interest rate.
“In general, 50% – 90% of U.S. timeshare sales are financed by the timeshare operator, because consumers can’t/won’t pay cash at the time of purchase. Factors affecting % include location, lead generation, price point, and consumer. Some will cash-out within 30 days of purchase, but most do not. Instead, they’ll pay 12%-18% interest on their loan for 3 – 10 years.” Donald Peruta, Senior Vice President Liberty Bank – ARDA World
Developer financing is lending offered by the timeshare operator and should be avoided at all cost as it is typically with a double-digit interest rate. It is the same as taking money from your local mobster. (Loan Shark)
In addition, it is offered to the potential buyer immediately so as to close the sale before you realize what had happened.
That ruthless sales pitch does not allow you to make a sensible decision at a later date. By not allowing you the time to research the opportunity that should sound the alarm bells.
The ease of immediate approval is ridiculous. Would any bank on the planet give you a mortgage that very same day? They absolutely would not! So why do you think it’s ok for the developer to do so? Its because they have sold your unit 50 more times at a high interest rate and your sale is just gravy for them. They made their money 50 times over already.
The Ways to Finance a Timeshare
1. Unsecured Personal Loan is only an option if you have a good credit rating. These loans are generally higher interest rates, sometimes as high as 35% plus. These can be through your bank or credit union but it can be a lengthily application process and if eluded towards a timeshare, chances are you will be turned down. The benefit of this loan is that no upfront collateral is necessary.
*Note that the interests are so high as it does not make sense.
2. Secured Personal Loan requires some asset that you will secure towards the loan. Note that the asset has to have enough value and will stand to loose that asset if you default on the loan.
3. Home Equity Loan and Line of Credit are loans against you home. If there is value in your home that has built up you can take out some of that equity. A line of credit is the same concept except you are taking out a credit against your home.
These can come with lower interest rates but you run a very serious risk of losing your home if you default on your payments.
4. Credit Card is an option but you will effectively have high interest rates and if defaulted, the credit card companies will come after any asset and that can include wages.
Now with this said, are these options? Yes they are.
Does any of this make sense? ABSOLUTELY NOT!!!!!
All of these come with an inherent risk of loss and serious repercussions if defaulted. The only party that stands to make any money is the lender as they will connect themselves to a tangible collateral or an asset. The key word here is asset and this is exactly what a timeshare is not.
Let us put the timeshare cost in perspective
If I were to tell you that I have a vacation but I will charge you an 18% interest rate for the next ten years with additional increasing maintenance fees (increasing fees each year) that will run you for the rest of your lives, and you can only use it once a year, maybe not when you want it. Oh, and if you change your mind you still have to pay for that vacation and can’t sell it.
It sounds crazy right. So why is it ok to buy a timeshare?
No matter how you look at it, timeshares only make sense for the resort owners, as they are making money hand over fist and will do anything to keep it coming.
Weather you can’t afford the timeshare anymore, you are digging yourself into a deeper hole with further financing options, or it is just not making any financial sense anymore, know that there are options to get you out of that binding timeshare contract and that is Easy Time Share. Contact us anytime for a free consultation.