Emie Fortney

Should I Buy a Timeshare?

September 2, 2014 By Emie Fortney 4 Comments

Some reasons you might not want to buy a timeshare

Nearly all of us have heard about timeshares, and the supposedly great deals they offer over hotels. Many of us have also heard that they are a scam or a ripoff. While the timeshares sales people will make it out to sound like buying a unit is one of the best deals ever, there are several indicators this may not be the case. For those of you who are undecided on the timeshare option and would like to make an informed decision (you can do this by seeing what consumer experts like Dave Ramsey and Clark Howard have to say about them), there are several things to consider which may indicate whether or not it is a good idea. Here are 5 indications timeshares are not as good of a deal as the salespeople would have you believe.

A Poor Secondhand Market

You can tell a lot about a product by its secondary market. A product’s secondary market is when a product is sold used or secondhand. A high quality product that is in high demand will have a thriving secondary market. When a product has a poor secondhand market, it’s a good indication few people are interested in purchasing the product even when it is offered at a discounted rate. The secondary market for timeshares is extremely poor, with many more people trying to sell than those wanting to buy.

Bribes For Consideration

Most consumers do not readily think of timeshares on their own. In fact, consumers are generally introduced to the idea of these units by being promised some type of free reward for attending a presentation. Now, if you consider that closely, you may realize that it’s slightly suspicious that the only way for resorts to get consumers to consider buying a timeshare is by offering them some type of bribe to get theme there. Products which are in demand have consumers seek out the product on their own. That’s not the case when it comes to these holiday resort units.

Questionable Contracts

If you have ever considered making a purchase which required you to sign a contract, then you already know it’s common procedure to allow the consumer time to fully review the contract. Those who must sign should consult with their lawyer to ensure the contract is worded as it should be. One of the first red flags people should notice is a salesperson who doesn’t allow the consumer to fully review the contract. When a resort is trying to sell timeshares, this is exactly what they do. The salespeople will refuse to let the consumers take the contract home and fully review it, or have their lawyer review it. In fact, if you don’t sign it then and there, they won’t even allow the contract out of their office.

Sales Methods

When you stop to consider how most products and services are sold, you’ll find that for the most part they sell themselves. Most of the time consumers are allowed to see the products and services, to test and examined them, and then make a decision on whether or not they are interested in buying it. While going against the grain and selling something in an unusual way does not necessarily mean what they’re selling is not good, it could be an indication that the product is not good enough to sell itself. When resorts are selling timeshares, they are only open when they are hosting a large presentation with the promise of a freebie for consumers who consider buying.

High-Pressure Sales Tactics

As stated before, high-quality products and services pretty much sell themselves. So, when high-pressure sales tactics have to be used in order for the consumer to make a purchase, it’s a good indication that the product or service is not really good enough to sell itself. High-pressure sales tactics also tend to be used more often when the salespeople are promising much more than they will be able to deliver. Timeshare presentations tend to be high-pressure sales events, which should have most people wondering if they are really the great deal they are made out to be.

No matter what type of purchase you are considering, you should always be sure to look for signs indication whether or not it will be a purchase that fulfills your expectations. Knowing what signs to look for in a good purchase can help you ensure your purchases always leave you satisfied. The signs listed above are big indicators that timeshares are not the great deal they have been made out to be, and it’s why it’s always best to fully research your options before making a decision.

If you make the decision and then later regret it, you may want to look at ways to exit the timeshare. Companies like Newton Group Transfers are there to help make this resale easier. Give them a call at 1-888-549-5145 today!

Clark Howard Hates Timeshares

August 20, 2014 By Emie Fortney 6 Comments

Clark Howard calls timeshares a defective product

When deciding on a major purchase, many consumers look to expert opinions to help them decide whether or not a purchase is a good idea. As the star of The Clark Howard Show, Clark Howard is a consumer expert who speaks his mind on a variety of financial topics, and his opinion of timeshares is clear. According to Howard, timeshares are nothing more than a “defective product.” He doesn’t recommend timeshares as something anyone should purchase.

In a post on Howard’s website from last year, he goes into great detail as to why he considers timeshares a defective product. He also focuses on a new law which passed in Florida making it even harder for those who own timeshares to resell their units by preventing people to sell to what are referred to in the industry as “Viking Ships.”

Timeshare Viking Ships are a controversial and somewhat unethical way for timeshare owners to get rid of their unwanted unit. What they do is charge the owner a fee to take the timeshare, then put it into a company that declares bankruptcy, forcing the resort to take back the unit.

To support his opinion that timeshares are a defective product, Howard brings to attention the timeshare industry’s apparent desperation to keep owners paying maintenance fees, and all of the other fees associated with owning a timeshare, by making it more than a little difficult to resell their timeshare.

To prove his point, Howard highlights the secondhand market for timeshares. He states that his definition of a defective product is one where there are hundreds of owners wishing to sell, while there is not anyone who is interested in purchasing the product. He also points out that many timeshare owners may not see the initial defectiveness of their purchase until they try to resell it. In fact, many owners are perfectly happy with their unit when they are able to use them on a regular basis. However, it’s when their circumstances change and they’re unable to use their unit that they find it is nearly impossible to resell it, and they must continue paying all associated fees until it’s sold.

Howard’s advice to anyone who is considering a timeshare purchase is very firm. He says you should not walk, but run away. In fact, he goes on to state that, “…unless you can go in with two broken arms and know you won’t sign any documents” you should not go to any timeshare presentations.

Another aspect that Howard does not mention, although he is most likely aware of it, is the fact that timeshares can be rented for the price of the maintenance fees without any upfront investments. In some cases, timeshares can even be rented for less than maintenance fees. From a financial standpoint, it doesn’t make sense to purchase a timeshare and be responsible for all associated fees when you can simply rent the unit for about the same price as the maintenance fees.

Of course, the resorts would much rather you remain an owner and pay all of their fees than take back your unit so they must resell it. Which, Howard states, is one of the main reasons why he considers it as a defective product. It’s a major red flag when owners try to return their units to the company, without any reimbursement for the money they spent on its purchase, and the resorts won’t accept it. Howard calls lawmakers out on their efforts to pass more laws which protect the timeshare company’s profits, while Viking Ship companies may be the only choice for some owners to get rid of their unwanted units.

So, if you are wondering what a well-known consumer expert’s opinion is on purchasing a timeshare, then you should know that according to Clark Howard, they are simply a defective product.

Hotels vs Timeshares: Why Hotels Are the Cheaper Option

August 13, 2014 By Emie Fortney 7 Comments

One of the main selling points that timeshare representatives emphasize is the fact that timeshares are less expensive than hotels. This is not exactly true. Timeshare representatives are salespeople, and that’s exactly what they’re trying to do – sell you something. When they make their presentations, they do it in such a way that they are not always providing the most accurate information on how much it really costs to own a timeshare. In order to have a true understanding of whether or not hotels are cheaper than timeshares, you must first understand what costs are associated with timeshares that you do not have with hotels.

Initial Costs

Here is the biggest difference between hotel and timeshare costs: the purchase cost. When you stay at a hotel, you don’t pay any upfront purchase costs. You do not have to pay $20,000 just for the ability to stay in hotels while you travel. That is exactly the case with timeshares. With timeshares, you pay a huge upfront amount, usually much more than $10,000, for the purchase. Most of the time, this would not be a major issue in and of itself. However, the problem is the fact that when you sell your timeshare you will most likely only be able to recover between 10% and 20% of what you paid. In fact, you would be amazingly lucky if you were even able to recover 50% of what you paid for your timeshare. When you purchase a timeshare, just for the ability to use it, you’re losing 80% to 90% of the purchase price when you eventually sell it.

In other words, if you keep your unit for 10 years and you initially pay $20,000 for it, over a 10 year period, you’re paying $1,600 to $1,800 a year for the unit. That might not seem like a bad deal, but it’s only the initial cost. There are many others which will add to that price.

Financing Costs

If you are like many people, you won’t have the money to pay for timeshare upfront. In this case, you’re going to have to explore your financing options. You’ll find loans for timeshares are very expensive due to the fact they aren’t considered real estate loans. In fact, the interest rates you’ll have to pay can be compared to the interest rates for your credit card. So, on top of the costly purchase price, there is a good possibility you also have to take out a loan and pay high interest rates on it. When compared to the price of booking a hotel room, financing a timeshare is definitely much more expensive.

Costs for Non-Use

Most people who purchase a timeshare plan on being able to use it year after year on a regular basis. Unfortunately, as most of us can attest, things don’t always go as planned. If you purchase a timeshare, there’s a high probability at some point during your ownership something will happen which prevents you from going on vacation that year. Unlike a hotel, even if you do not use your timeshare, you’re still responsible for paying all costs associated with it (i.e. maintenance and fees). When using a hotel, if you don’t go someplace one year, you don’t have to pay a dime to do so.

Costs for Upkeep

Many people who purchase a timeshare do so because they believe that it’s a cost-effective financial decision. While many people may believe that owning a timeshare is more cost-effective than staying in a hotel whenever they go on vacation, they may not realize there are many additional costs and fees associated with owning a timeshare. Whenever you buy timeshare, you will generally be charged with yearly or monthly maintenance fees. These fees can vary according to the resort and timeshare purchased, but generally run between $300 and $1,000+ per year. Unfortunately, you have to pay these fees regardless of whether or not you have actually used your timeshare each year. For some people, the upkeep costs are equivalent to what they would have spent on staying at a hotel for their vacation. Don’t forget you’ve already paid a huge upfront fee in order to secure your unit, so this fee is added to the cost of that.

Repairs & Assessment Fees

Another aspect to consider is what happens when the property where your timeshare is located needs to be repaired or improved. Due to the fact that you don’t own the actual property, only your unit, the company which owns it can charge you an assessment fee for repair costs anytime they want. You don’t get a vote in the decision. For most timeshare companies, this fee ranges from flat fees to a percentage of the total repair costs, and it must be paid immediately. For example, if a natural disaster occurred which caused a great deal of damage, then you could be charged thousands of dollars that are due immediately. On the other hand, you’ll never be charged any assessment fees or repair fees if a hotel that you stay at happens to be damaged or needs repairs.

Membership Costs

If you own a timeshare, and belong to a timeshare exchange company, then you are responsible for paying all membership fees. Timeshare exchange companies allow members to rent or exchange their timeshares amongst each other. Some timeshare exchange companies charge as little as $100 annually, but they can also charge a lot more than $100. The difference between owning a timeshare and using a hotel is that hotels will never charge you a membership fee. In fact, hotel memberships are usually free and allow the members to earn rewards when they use their hotel rooms.

Exchange Fees

If you own a timeshare, then you may get tired of going to the same place every year. While this is easy to do when you stay at hotels, trying to exchange or swap your timeshare with someone else can be difficult and expensive. Most exchange companies that handle these transactions charge a fee, which can range anywhere from $100 per exchange to a percentage of the total price. And, that’s if you are even able to exchange. Often you need to do this months in advance, making last minute changes nearly impossible.

Paperwork Costs

When someone who owns a timeshare wishes to sell it, you must have the paperwork from the resort. Much of the time, requesting these documents comes with a fee. Timeshare companies charge you for “document preparation” services which can cost anywhere between $250 and $500+. These document preparation services usually entail notifying the timeshare company of a change of ownership, drawing of a deed or contract, and obtaining a title. Luckily, a hotel never charges you any document or paperwork fees.

Sales Costs

If someone decides they no longer want their timeshare, the only way to get rid of it is by reselling it. There are different ways to resell a timeshare, such as hiring a company to sell it for you, a real estate agent, or trying to sell it yourself. Any method you use to resell your timeshare is going to have costs associated with it. Companies which will resell your timeshare for you generally charge a fee for their service. If you have a real estate agent, then they will charge a percentage of what the unit sells for. If you try to resell your unit yourself, then you will have to pay any advertising fees as well as a significant amount of your time. With hotels, all you have to do is pay for the cost of your stay and leave.

Even though timeshare salespeople will lead you to believe that owning a timeshare is much less expensive than staying in a hotel, in the long run the fees associated with owning a timeshare are much more significant than what it would cost to stay in a hotel during your vacations. The best way to ensure you’re making an informed decision on whether or not you should purchase a timeshare is by understanding all of the fees and costs that comes with it. Then it’s up to you to decide whether it is more cost-effective to purchase a timeshare or stay in a hotel.

Are Credit Cards Beating Credit Karma at Its Own Game?

July 29, 2014 By Emie Fortney 10 Comments

Credit Karma versus credit cards for free scores

Credit Karma is currently the king of free credit scores, but that crown may be in jeopardy. Major credit card companies, such as Discover, Barclaycard and First Bankcard are now offering free credit scores to their customers as part of their monthly billing statements. Due to credit card companies entering into the free credit score business, this service area is undergoing another big change. The question is whether or not this change will leave Credit Karma as a second-rate player rather than a leader. Unfortunately, the future looks questionable for the company.

This trend isn’t likely to change, and it will likely only increase with more and more credit cards offering free credit scores in the future. FICO has been negotiating with other large credit card issuers to bring FICO scores to their monthly statements. If these plans go through, millions of consumers will no longer need free credit score services like Credit Karma, Credit Sesame and Quizzle, because they will be getting their scores automatically each month. They will also be getting their FICO score and not a FAKO score.

The bigger question is whether or not banks will soon be following this new trend as well. Consumer advocates are now beginning to push for financial institutions to provide free credit scores to consumers in an effort to help them gain a better understanding of how credit reporting and their personal credit scores work. If this trend takes hold, then it’s possible banks and credit card services everywhere will offer free credit scores along with their regular services. This shift would place Credit Karma and services like it in a position where they may not be able to survive. All these services have a number of obstacles to overcome in order to stay relevant in this rapidly changing free credit score reporting service world.

One of the biggest issues facing Credit Karma is convenience. They have managed to grow into the number one business in the field of providing credit scores by providing the convenience of obtaining the score for no cost and without a credit card. With credit card companies now beginning to provide consumers with credit scores on their monthly statements, and the possibility of banks and other institutions following suit, Credit Karma is losing the convenience factor, which underpinned a lot of its success.

On the upper hand, it’s not all doom and gloom for the company. Their services still offer consumers the benefit of having access to their credit score once a week, whereas credit card companies and other institutions only offer them once a month. They also offer more than just credit scores. They offer tools to help people see how decisions they make end up affecting their credit score. While it appears that the credit card companies are also moving in this direction, they aren’t providing this service as conveniently as Credit Karma is at the moment.

The company has also seen a great deal of support from investors who have a firm belief that they will be able to successfully overcome the obstacle of remaining a relevant service. Tiger Global Management, Google Capital and Credit Karma’s existing investors all contributed to raising approximately $85,000,000 in new financing to help the company out while they work to readjust and overcome the new obstacles they are facing. Considering that Credit Karma already has a history of finding new and unique ways to serve their customers’ needs, investors are more than confident they will soon overcome the new challenges placed before them.

There are definitely some major changes taking place in the world of free credit score providers. In a world that is consistently becoming more dependent on technology and convenience, it’s no surprise that it’s becoming easier and easier to obtain your personal credit score. With such a wide variety of financial institutions now jumping onto the bandwagon to provide credit scores to their consumers, it will definitely be interesting to see how Credit Karma will be able to grow and thrive as a business with the increasing competition.