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.
If you have already made the decision to get a timeshare before reading this article and now you want out, you can contact The Newton Group Transfers at 1-888-549-4154. They are there to help turn this bad decision around. Call them today!
Have you ever gotten tangled up in a timeshare? Tell us about your experience in the comments below.
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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