Part 1: Why Timeshares Are Bad for You

Timeshares have a controversial role in the vacation industry. Usually, they are touted as investments, making them sound like smart financial decisions. Often, their convenience is a major selling point, according to the sellers. But, in the end, timeshares are rarely either, making them incredibly bad for you and your finances.

The Financial Burden of Owning a Timeshare

In most cases, you first have to pay off your timeshare. If you secure a loan through the timeshare company, it usually takes years to finish paying this debt, especially since the interest rates tend to be high.

Even after you pay off your timeshare, you aren’t out of the woods. For the entire time you own a timeshare, you are typically responsible for hundreds of dollars each year in maintenance fees. Plus, this expense usually goes up every year.

To make matters worse, you have to pay these fees even if you don’t use your timeshare allotment. And, if you miss one of those payments, the timeshare company can potentially foreclose on you.

Why Timeshares Are Bad Investments

Calling a timeshare an investment is really a misnomer. Investments should help you generate income or at least increase in value, allowing you to profit when you sell.

However, timeshares generally don’t meet either of those criteria. Instead, they are an expense; a long-term financial burden you can’t easily unload.

They Lose Value

Timeshares don’t operate like other forms of real estate. In many cases, they lose value over time, even if the location is generally desirable. Plus, the supply of timeshares far outweighs demand. If you want to sell, you usually have to do so at a loss and, even then, it could take months or years to get it off your hands. Additionally, even if you do sell at a loss, you can’t claim it as a capital loss on your taxes, making the situation worse.

You’ll Lose Money

In the meantime, you can’t earn much income from timeshares either. Your only option is to potentially rent your timeshare out during your allotted time. However, unless you can rent it for enough to cover your maintenance fees and loan payment, you’re still losing money.

You Don’t Own Anything

While timeshare participants are sold as being “owners,” that isn’t really true either. You don’t officially have many rights to the property itself. Instead, you are a co-owner, and one of many. Usually, you can’t do anything to the unit to make it more valuable to potential buyers or more personal, simply as a means of enjoyment.

Why Timeshares Aren’t Always Convenient

Salespeople try to tell you that timeshares are convenient. They claim you’ll save money in comparison to setting up family vacations every year, but that usually isn’t true. When you add the cost of a timeshare and the maintenance fees together, coming out ahead isn’t common.

Plus, you are locked into a specific week and location every year. If you want to travel to another destination, that timeshare can’t come with you. And, if you can’t go on a trip during that particular week, you usually can’t reschedule for another time.

Instead, you are stuck with one scenario, year-in, and year-out. If you do decide to travel elsewhere, then you are paying for a timeshare and a separate vacation, which isn’t convenient or cost-effective.

Timeshares Are Bad For Most People

Ultimately, no matter what the salesperson says, timeshares are bad for most people. They aren’t a good investment or a convenient, cost-saving vacation solution. Instead, they are an expense, a financial burden that is incredibly hard to escape. If you do manage to get out of it, you usually take a serious loss, and you can’t even use that to lower your tax burden.

In many ways, timeshares are a trap, so make sure to look past the flashy promotions and overzealous sales presentation and really read the fine print if you even consider one. Otherwise, you’ll likely regret your decision.

Have you ever gotten tangled up in a timeshare? Tell us about your experience in the comments below.

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Rick Lawler says

October 6, 2018 at 6:06 pm

While a lot of your information is accurate and spot on, much is out-of-date or doesn’t cover the entire timeshare spectrum. My wife and I have attended many timeshare presentations since we were married in 1981. It’s been a long time since we’ve heard a timeshare presented as a financial investment.

Our particular timeshare is a points-based program. When we bought in 1995, there were 17 resorts in the system. Today that number is approaching 100 resorts (at no additional cost to us). Within a few hundred miles of our home are well over a dozen resorts. We get to choose when, where, how long, and the size of condo for each individual stay. The number of stays is limited only by our credit balance. We can accumulate credits if we don’t need them, borrow from next year’s allotment if we need more. Or we can purchase one-time use credits if those options aren’t available.

The initial cost and annual maintenance fees are a pain, for sure. But compare that to the purchase, and upkeep, (and eventual replacement) of an RV. My advantage is that I don’t have to drag it everywhere, clean it, or pump out the bilge tank.

You are correct in that most timeshare programs can be a trap, with all the faults you listed. Especially if you end up not using it. Those with a specific week in a specific unit often end up buying vacations they can’t take.

There are options available that are more convenient and flexible. Our kids grew up staying in resort condos rather than hotels. They have some awesome memories from dozens of vacations over the years. That’s a pretty good return on our investment.

Comments

Rick Lawler says

October 6, 2018 at 6:06 pm

While a lot of your information is accurate and spot on, much is out-of-date or doesn’t cover the entire timeshare spectrum. My wife and I have attended many timeshare presentations since we were married in 1981. It’s been a long time since we’ve heard a timeshare presented as a financial investment.

Our particular timeshare is a points-based program. When we bought in 1995, there were 17 resorts in the system. Today that number is approaching 100 resorts (at no additional cost to us). Within a few hundred miles of our home are well over a dozen resorts. We get to choose when, where, how long, and the size of condo for each individual stay. The number of stays is limited only by our credit balance. We can accumulate credits if we don’t need them, borrow from next year’s allotment if we need more. Or we can purchase one-time use credits if those options aren’t available.

The initial cost and annual maintenance fees are a pain, for sure. But compare that to the purchase, and upkeep, (and eventual replacement) of an RV. My advantage is that I don’t have to drag it everywhere, clean it, or pump out the bilge tank.

You are correct in that most timeshare programs can be a trap, with all the faults you listed. Especially if you end up not using it. Those with a specific week in a specific unit often end up buying vacations they can’t take.

There are options available that are more convenient and flexible. Our kids grew up staying in resort condos rather than hotels. They have some awesome memories from dozens of vacations over the years. That’s a pretty good return on our investment.