Timeshares allow you to stay at the same vacation destination year after year, for a week or more at a cost that can be significantly less than staying at a high-end hotel. However, timeshare salespeople often promote financing to help potential buyers afford the purchase, and these loans can come with high interest rates that can cost you more over the life of your loan than what you would pay if you purchased a comparable property without seller financing.
Some people who buy timeshares finance the initial down payment on a property with a credit card that offers a 0% APR for six to 18 months. This can save you money, but you should ideally only consider this option if you’re confident that you can pay off your debt before the introductory offer expires. Otherwise, you could end up paying a much higher interest rate than the developer’s financing, and you should also know that credit card companies may change your introductory rate at any point in the future.
Other people who buy timeshares use personal loans from banks or online lenders. These are typically unsecured, meaning that your assets won’t be at risk if you miss your payments, but they don’t always have the best interest rates available for borrowers with good to excellent credit scores, and they can take longer to process than other types of loans. You’ll want to shop around and compare offers from different lenders to find the best rates.
Homeowners with enough equity built up in their homes may also be able to use a home equity loan or line of credit (HELOC) to purchase a timeshare, as these are secured by the equity in your home and can offer lower interest rates than what you’d get with a personal loan from a bank or other lender. However, this option comes with the risk that if you default on your timeshare, your mortgage company can repossess your home and you may be forced to move.
Refinancing a timeshare loan can be difficult, especially since most traditional lenders don’t offer this service and there aren’t many non-traditional lenders that do. However, it’s worth exploring if you’re eager to lower your double-digit interest rates, and you can find a loan that works within your budget. However, you should also know that this can cause your credit score to decline if you’re late with repayments. This could lead to additional credit issues down the road, including a reduction in your available credit lines or your lender closing your account altogether. You can check your credit score and personal loan options with SoFi, a trusted lender that doesn’t impact your credit. Learn more about how to improve your credit and qualify for a low interest rate with SoFi today.1