Timeshare loans are one of the most popular ways for people to finance their timeshare. But these loans aren’t right for everyone. The interest rate on these types of loans can be very high, and many buyers will pay more than they need to in the long run.
During the initial sales pitch, a developer will often try to sell you on their financing plan. This means paying off the cost of your timeshare in smaller installments over a number of years. Fortunately, this can also be a viable option if you’re looking to avoid the high costs and inflated rates that are often associated with developer loans.
However, it’s important to know what you’re signing on for before you get involved with any type of loan. There are a few key things to consider, including the length of your loan and the rate you’ll be offered.
Personal Loans
Whether you’re borrowing from your developer or from a private lender, it’s best to look at several different options before deciding on the right way to finance your timeshare. You’ll need to compare the interest rates and terms of each option, so that you can decide which is the best fit for your situation.
Credit Card
Using a credit card to pay for your timeshare may be the best option if you have a good credit score and a good amount of available credit. You’ll be able to earn rewards points and take advantage of lower rates than you’d be able to with a traditional loan.
Home Equity Loans
If you have a significant amount of home equity, you can use it to buy a timeshare. This is an excellent option if you’re able to get a low interest rate and a loan that covers the entire purchase price of your timeshare.
You can find these type of loans through banks, mortgage companies and online lenders that specialize in providing timeshare financing. You can also look into peer-to-peer lenders that allow you to borrow money from other timeshare owners.
Timeshare Resale Market
The resale market is an ideal place for buyers to look for affordable timeshare financing. There are many companies that help to connect buyers with sellers who are ready to sell their timeshares at a discount.
In addition to selling their own timeshares, these companies often have relationships with other lenders that offer loan products for timeshare buyers. Depending on the lender, you can often find very competitive rates and flexible repayment terms.
LightStream, an online lender owned by SunTrust Bank, offers a timeshare refinance loan that offers rates starting at 5.99% and no origination fees or prepayment penalties.
Pre-Completion Financing
Often, when timeshare owners are purchasing new timeshares or upgrading their existing ones, they will need to refinance their current loans with the new ones. These loans will typically be securitized to create a new loan with a different interest rate and length of maturity.
These types of loans will usually be backed by a pool of other timeshare loans, and are typically treated as prepayments for the purposes of reducing the overall debt burden. Although these kinds of loans are generally not a risk to the securitization trustee, the development of a default can have a significant impact on the performance of the asset-backed securities.