Timeshares are a popular form of vacation ownership. They give you access to a resort location for one or two weeks each year, often in popular destinations around the world. They also allow you to trade your week for different locations and rooms if you don’t want to stay at the same location. However, purchasing a timeshare can be expensive and if you cannot afford the initial cost in cash, many buyers look to use timeshare loans. However, there have been cases where these loans have been mis-sold or even illegally issued to timeshare buyers, leaving them with unmanageable debts and stress.
The average price of a new timeshare is $24,140, and interest rates can be steep, according to the American Resort Development Association (ARDA). If you are looking to purchase a timeshare on the resale market, you might have more options than financing through the developer. However, it is always best to do some research before committing to any purchase.
If you are planning on attending a timeshare presentation, it is wise to make your research in advance to be aware of the financial options available to you. The more you know about the different options, the more empowered you will be to decide what is right for you and your budget.
When a timeshare presentation is given in the US, it is mandatory for the seller to provide a disclosure statement that includes information about any loans or other forms of credit offered by the resort. In some cases, the sales representatives will offer financing, which can be a tempting option as you will have the opportunity to ask questions directly of the loan provider.
The problem with these loans is that they are unsecured, meaning there is no collateral to protect the lender should you default on your payments. These lenders typically work with intermediaries, and it is these that should be regulated by the FCA. However, it has been found that these intermediaries do not carry out sufficient due diligence and risk assessments before granting the loans to timeshare buyers. Moreover, they do not make it clear to the consumers that these loans are being sold to fund a timeshare and therefore break Spanish law.
Another possible option is to borrow from your own 401(k) plan, but you should be aware that the money borrowed will need to be paid back as soon as you retire or are no longer working. Borrowing from a 401(k) plan can have tax implications, and it is not a good idea to do so without consulting with a professional before making the decision. Alternatively, some online lenders will offer personal loans specifically for the purpose of funding a timeshare purchase. These can be a better option than loans from the developer as they tend to offer more competitive rates and are regulated.