Breaking Down Timeshare Costs: Is Ownership Worth It?

Timeshare companies such as Marriott Vacation Club and Wyndham tout the value of owning a timeshare, citing the quality family time, memories, and vacation destinations as a worthwhile investment. However, many timeshare owners find themselves compromising their personal finances. This is because a timeshare is not truly an investment that generates income, but rather a property that comes with many additional fees that owners often discover too late.

Before purchasing a timeshare, it’s important to understand that the responsibility doesn’t just end with annual payments. Timeshare buyers must also bear the burden of numerous extra expenses in order to enjoy their vacation spot for a week each year. It’s important to be aware of all the additional costs associated with timeshare ownership before making a decision to buy.

Breaking Down the Timeshare Cost

Timeshare companies often target regular vacationers by sending them gift cards and vouchers for free hotel stays, with the condition that they attend timeshare presentations. During these presentations, they lure guests with complimentary breakfasts and stunning visuals of idyllic timeshare locations, aiming to create the impression that this luxurious lifestyle is affordable for their budget.

However, the reality quickly sets in, as within a few weeks of signing the contract, buyers begin to realize the true cost of timeshare ownership. In the following breakdown, we explore the various expenses associated with owning a timeshare property that potential buyers should consider before making a purchase.

Upfront Costs

The purchase of a timeshare always involves an initial cost, which represents the total value of the property. Just like in real estate, every timeshare has an overall purchase price, ranging from $10,000 to over $100,000, depending on the location, size, and the developer. Since most buyers cannot pay for the property outright, they usually have to finance it.

One option is to set up a payment plan with the timeshare provider, which allows buyers to pay off the property over a number of years. Alternatively, some buyers choose to take out a personal loan to finance their purchase, enabling them to have lower monthly payments and potentially lower interest rates. However, if buyers’ credit score and finances do not qualify for either of these options, they can opt to take out a home equity loan, which is secured by using their primary home as collateral. This option is not recommended as it puts both properties at risk if the buyer fails to make payments.

It is important to note that the upfront cost of a timeshare is not the total cost of ownership. Timeshare companies typically charge high interest rates, ranging from 14% to 20%. For instance, if you purchase a $30,000 timeshare with a 10% down payment of $3,000 and pay a 20% interest rate over ten years, the total amount paid will exceed $55,000, without adding maintenance fees. While personal or home equity loans may be a more affordable option, the interest rates can still result in thousands of dollars in extra costs.

Maintenance Fees

Annual maintenance fees are charged by all timeshare resorts to cover the cost of salaries and upkeep of the property. These fees are used to renovate common areas, such as pools, lounges, and tennis courts, as well as for upgrades within the units, such as new air conditioning units or bathroom tiles. Maintenance is important to ensure that your timeshare unit remains comfortable and up-to-date for future use.

However, the problem with maintenance fees is that they tend to increase each year, much like rent on an apartment. In some cases, maintenance fees may even rise faster than inflation. Additionally, not all of the money collected from maintenance fees goes towards maintaining the property, as a portion is often allocated as “management fees” for the timeshare company.

Timeshares are a popular form of vacation ownership where multiple individuals share the right to use a property for a specific period each year. While owning a timeshare can provide a wonderful vacation experience, it’s essential to understand the financial responsibilities that come with it. One such obligation is the payment of maintenance fees. In this article, we will explore what happens if you don’t pay maintenance fees on timeshare and the potential consequences that may arise.

Most timeshare owners fail to carefully read their contract to check if there is a limit to how much fees can increase annually. While some agreements cap fee increases at 10-15%, this can still represent a significant amount. For example, if you purchase a timeshare with a yearly maintenance fee of $1,000, you should expect fees to increase by at least 5% per year. Within a decade, this could result in a 50% increase, meaning you will be paying $1,500 annually.

Special Assessments

In addition to upfront costs and maintenance fees, the timeshare industry also generates revenue through special assessment fees that can be imposed at any time. These charges are meant to cover the expenses of repairing damage caused by unforeseen events such as hurricanes, blizzards, or earthquakes that may impact vacation properties.

Avoiding these additional costs can be challenging, as many timeshares are located in areas that are prone to natural disasters. While special assessment fees are not necessarily a deceptive expense that timeshare developers impose on their customers, they are an unanticipated cost that is often not discussed during the initial signing of the timeshare agreement.

Emotional Distress

The cost of owning a timeshare isn’t just about money, as it can also bring about stress and negative feelings that shouldn’t be associated with vacationing. When the idea of owning a timeshare was first introduced, it appeared to be an affordable and picturesque option. However, now that you have had time to reflect, you realize how burdensome it can be. Coordinating vacation plans for an entire family within a limited timeshare week can be a daunting task, and dealing with a timeshare company that lacks empathy for the financial difficulties they’ve placed on you only exacerbates the situation. With all these emotional and financial challenges, it begs the question: is owning a timeshare really worth it?

Avoid an Unprecedented Timeshare Cost

To entice prospective buyers into signing timeshare contracts, companies often employ marketing strategies by offering luxurious vacation destinations and complimentary perks at an affordable price point. However, the reality of owning a timeshare is often quite different, with hidden costs that can make it a costly investment. Even if the company discloses the initial price, they often neglect to mention the additional expenses associated with owning and using the vacation property.

Unexpected timeshare costs include high-interest rates on loans or financing plans, rising annual maintenance fees, and unpredictable special assessment fees in the event of natural disasters. If you are seeking a sound investment without hidden charges, purchasing a timeshare is not the ideal option. However, if you are already a timeshare owner struggling with the expenses, selling your timeshare may be the best option to avoid financial difficulties.

Centerstone Group is a full-service advocacy group that offers assistance in freeing clients from timeshare contracts. Our services are tailored to help those who have been victims of fraud, high-pressure sales techniques, or misrepresentation during the timeshare sales process. If you are interested in our services, contact us for a free consultation.