Timeshare debt is a real problem for many Americans, and the latest data from Fitch Ratings shows that timeshare borrowers are missing more payments than ever. A recent study found that about 3.75 percent of timeshare owners were behind on their bills in the fourth quarter, up from 3.37 percent a year ago and the highest level since 2011.
Debt is a major concern with any vacation ownership, but it’s especially significant for people who purchase or sell their timeshares during economic downturns. Missing timeshare payments can lead to collection notices, levies, judgments and foreclosure, and these problems can have lasting effects on your credit.
The first step to overcoming your timeshare debt is to stop using it and start paying on time. This can be done by refinancing your loan, which can free up cash flow that you can use to make your payments more affordable. However, it’s important to remember that refinancing loans aren’t always easy for borrowers with several missed payments on their record.
Another option is to sell your timeshare back to the resort, which will typically buy it back for a fraction of what you paid. The resort may also offer you rewards points that can be redeemed for future travel or other perks at the same property.
Refinancing your loan is a great way to lower your monthly payments, but be sure to shop around and compare rates before making the switch. If you have good credit and a solid history of paying off your mortgage, it may be easier for you to get a lower rate with a specialized lender, home equity line of credit (HELOC), personal loan or credit card.
A low interest rate can help you save on your monthly payments and reduce the total amount of interest you pay over the life of the loan. For example, if you have a 15% interest rate on a five-year mortgage and you’re struggling to keep up with your monthly payments, a lower rate could save you money over the life of the loan.
You can also refinance your timeshare through a personal loan, which is a better option than taking out a timeshare loan offered by the salesperson who sold you the property. Private lenders will often offer lower interest rates and longer repayment terms, which can make your monthly payments more manageable.
If you’re in a tough financial situation and need some relief, consider a timeshare exchange or selling your timeshare back to the resort. These are both alternatives to foreclosure that can help you get out of your timeshare quickly and for a fair price.
Foreclosure on a timeshare is the worst possible outcome for any owner. A foreclosure will hurt your credit score and make it more difficult for you to borrow money in the future, even if you have excellent credit.
The process of foreclosure is a lengthy and complex one, but it’s one that can have serious consequences for your overall financial well-being. It’s especially a bad choice for people who have just started building credit or who are trying to rebuild their credit after a bankruptcy.