Timeshares can be a great way to spend time with family and friends or to experience new destinations. However, the maintenance fees and annual costs of owning a timeshare can add up. That’s why many people seek financing to help with the cost of owning a timeshare. Fortunately, there are several options for financing a timeshare loan.
Many times, the salesperson for a particular timeshare property will have specific lenders they recommend that buyers use to finance their purchase. This can be one of the easiest ways to obtain a timeshare loan, but it also may mean higher interest rates than if you shopped around.
Moreover, the lenders the salesperson recommends are often known as sub-prime lenders and their loans are investigated less stringently than those of a high street bank. This can result in more expensive loans for the buyer, especially for those with a lower credit score.
In addition, the lenders the timeshare developer works with are usually referred to as “internal” loans, which means they’re not reported on your credit report. While this can make it easier for some buyers to secure financing for their timeshare, it can also have long-term negative effects on your credit.
While there are no guarantees, if you have good credit and want to refinance your timeshare loan, you should be able to find a lender that will give you an unsecured personal loan for the purpose. These are often advertised as loans for “once-in-a-lifetime” trips and are ideal for those who have a strong income that can support the payments of their timeshare.
Another option for refinancing a timeshare loan is through a home equity loan. This tends to offer much cheaper rates than a personal loan, but it requires that you own your home and have enough equity in it. Nevertheless, it can still be an excellent option for those who have a home that’s appreciated in value and who don’t have any debt on their primary residence.
Timeshare loans have been resilient during the coronavirus pandemic and are expected to continue to perform well as travel demand returns. However, a setback in the recovery of travel demand could slow or reverse current loan performance.
A third option for refinancing a timeshare is through a specialized unsecured consumer loan known as a “pre-completion” timeshare loan. These are loans that are purchased and securitized before the associated timeshare project is completed and are backed by the creditworthiness of the sponsor of the timeshare project. Such loans are a risky investment for investors as the developer and servicer of the loan have an indirect and unquantifiable stake in the success of the project.
Lastly, you might be able to get a personal loan through an online lender such as Upstart. These are typically unsecured and can be used for just about anything, including purchasing a timeshare. They are often advertised as having a quicker process and lower rates than home equity loans.