Friday, June 29, 2012
During your travels, there is a high probability that at some point someone is going to entice you to attend a timeshare presentation (although they probably won't call it this while they are enticing you) with an offer of what appears to be a desirable freebie (show tickets, hotel stay, nice dinner or something similar). Do yourself a favor and decline. Timeshare sales agents are incredibly good at their job and the last thing that your finances want is for you to buy one. Here are five reasons why you never want to buy a timeshare:
Difficult To Sell
When you are buying a timeshare, you usually aren't thinking about what it will take to sell it, but you really should be. Timeshares are extremely difficult to sell, and sometimes it's impossible to even give them away for free. Most people have no idea how much time and effort will be required to actually sell a timeshare, or how much they are likely to lose when they finally do. Because there are so many more people trying to sell timeshares than want to buy them, it can take years to sell a timeshare, and during this time maintenance fees will still need to be paid even when you can't use it.
You Won't Save Money
Timeshare sales agents like to make it look like you will be saving money over other traditional lodging options such as hotels when they are trying to sell you on the idea of purchasing a unit. The problem is that they conveniently make some assumptions that aren't realistic. One is that you will be able to sell your unit for the same price that you paid for it when the fact is most timeshares sell for 80% or less of their original value (think cars once they leave the dealership lot). They also assume that you will pay the full price for hotel lodging when the fact is that with all the Internet comparison sites, people rarely pay full retail for hotel rooms these days. Add in the cost of financing, yearly fees and unexpected fees, and timeshares will not save you money compared to hotel lodging no matter how the sales representatives present the numbers to you.
Many Hidden Risks
Timeshares come with a large number of hidden risks that most people never consider. The biggest of these is the special assessment fees which are basically fees that the resort can levy on owners at any time when they feel they need more money. Since these can end up being thousands of dollars and can come suddenly, they are a huge risk that most timeshare owners aren't aware of when they purchase a unit. There is also the fact that yearly maintenance fees can skyrocket as the resort gets older and more repairs need to be made. What it all comes down to is that owners may have to pay a lot more than they ever expected when owning a timeshare.
You Can Go Without Owning
What most people don't realize is that they can rent the exact same timeshare unit for less than it costs to own it. There are many people who rent their unit because they can't use it, and the timeshare resorts also rent out units that aren't occupied. You can often get the exact same unit during the exact same week for what a typical timeshare owner pays in maintenance fees. By renting instead of buying, you avoid having to pay the large initial investment or take any of the risks that come with owning a unit.
One of the huge expenses that is never mentioned when purchasing a timeshare is the cost of financing the unit. In order to finance a timeshare, you will be paying interest rates comparable to credit card interest rates rather than interest rates that are associated with home loans. In addition, these high interest rates are not tax-deductible in most cases like housing interest rates. The financing costs can add tens of thousands of dollars to the cost of the timeshare over the life of the loan. It will also be impossible to sell the timeshare until the loan is completely paid off locking in many people to a timeshare they no longer need simply because they still have an outstanding loan on it even when they no longer need it. When you take these factors into consideration, it makes little sense for most people to ever own a timeshare. The problem is that timeshares tend to be impulse purchases made during vacations when a lot of thought about what is actually being purchased isn't thoroughly researched. By understanding well before you find yourself in a timeshare pitch that it's something that makes little financial sense, you will save yourself a great deal of time, frustration and money.