Buying a timeshare is one way to enjoy a vacation spot each year without the cost of purchasing a second home or paying for high-end hotel rates. Depending on the type of timeshare you purchased, it may also save you money in the long run. However, many timeshare buyers purchase their property through developer financing, which can lead to high interest rates and a difficult financial situation if you miss payments or default on the loan.
If you’re struggling with a timeshare debt, there are options for getting out of your agreement that don’t damage your credit. These include returning your property through a deed-back program, selling the property on the resale market, or renting it to a family member. While these are all viable options, they’re not as effective as the option provided by Centerstone Group.
A timeshare is a form of shared ownership that gives you the right to use a property for a specified length of time each year. Timeshare developers typically sell their properties as either fractional ownership (share deeded to multiple buyers) or right-to-use purchase contracts. The title of the property remains with the developer in both cases. The property owners have the right to rent or sell their fractional share to another party, but they can’t transfer the full title.
For timeshare salespeople, offering financing is a key part of the pitch to get you to sign on the dotted line. The speed at which the financing is offered and the repayment terms are often attractive to buyers. However, it’s important to shop around for the best interest rate when it comes to financing a timeshare. In fact, even with a good credit score, you may find that personal loans offer more competitive interest rates than the timeshare loans offered by your salesperson.
As with other consumer asset classes, the ability of the transaction sponsor and servicer to perform operational functions is critical to the successful collection of timeshare loan receivables. If the transaction sponsor or servicer encounters significant challenges that could threaten its viability, a bankruptcy court would likely impose an automatic stay on the securitization entity’s transactions and suspend scheduled payments to investors.
As a result, the legal structure of timeshare loan securitizations generally provides protections for investors that are not present in other consumer asset securitizations. For example, the structure includes agreements that prohibit creditors unrelated to the transaction from filing claims against the collateral assets in the event of bankruptcy. It also includes provisions to prevent the sale of assets outside the pool of timeshare loan receivables.