A timeshare loan is a type of loan that can be used to purchase a timeshare. It can be provided by a third-party lender or by a salesperson. The typical loan includes the purchase price of the timeshare, loan fees, and interest. This loan can be refinanced to reduce the monthly payments, or to get a better rate.
Timeshare loans are a popular choice among consumers. But, they can also be a financial burden. In addition to the purchase price of the timeshare, borrowers may also have to pay yearly maintenance commitments. These fees can include interest and capital payments. There are many reasons why borrowers may find it difficult to keep up with these commitments.
For example, if a timeshare resort owner falsifies finance documents, the obligor could be liable for a great deal of damages. In addition, the bank could be responsible for mis-selling a loan, if a lender or agent sold the product to the obligor in violation of consumer protection regulations.
To avoid mis-selling, consumers should be able to understand the differences between a timeshare contract and a proper purchase contract. For instance, a contract can be void if it is a fractional ownership. Other options for consumers may include a share deeded ownership or bequeathed ownership.
If a consumer is considering a timeshare loan, they should first consider whether or not they can afford it. Timeshare lenders are not as generous as other consumer asset classes, like residential mortgages. That is because the initial cost of the timeshare is much higher than the average person can afford. However, if a consumer is able to obtain a home equity line of credit (HELOC), they may be able to qualify for lower rates.
While it is not recommended that a timeshare obligor refinance the timeshare, the opportunity to do so is available. Depending on how long the existing loan has been in existence, obligors can take out a new loan and increase the balance. Alternatively, they can remodel the existing loan. Refinancing the loan is not always the best option, however.
The perfected security interest in a timeshare loan is a term that is governed by state law. Typically, the perfection of a security interest in a timeshare loan involves the possession of the promissory note. State law also governs recordation of the deed.
A timeshare loan can be a viable financing option for a vacation home, but it is important to do your homework before signing on the dotted line. Many timeshare loan scams have been reported, so it’s best to do your research and consult a professional before making a purchase.
Consumers who are looking for a timeshare loan should beware of cold calls from unscrupulous salespeople. Some have even alleged that they were forced into taking out a loan by the timeshare resort seller. Do your homework before signing on the dotted line, and if you suspect that you have been mis-sold, seek legal advice.