Timeshare how does it work

The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories.

Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The thought of owning a vacation home you can relax at every year can be enticing, but there are a host of considerations that come with buying and maintaining a property.

One alternative is a timeshare, which offers the perks of a vacation home, but also comes with some tradeoffs. A timeshare is a type of vacation property with a shared ownership model. With a typical timeshare, you share the cost of the property with other buyers, and in return, you receive a guaranteed amount of time at the property each year. In many cases, timeshares are smaller units within a larger resort property. A timeshare allows you to split the costs of owning a vacation property with others based on the timeshare agreement.

In others, each buyer simply leases the property for a period of time — usually for at least several years — without actually owning it. In the past, timeshare buyers were typically locked into one week at a single property. A non-deeded timeshare can cost less than a comparable deeded timeshare, but non-deeded timeshares often have more stringent limitations on the transfer of property than deeded timeshares do, which can make resale more difficult.

If you decide to move forward with a timeshare purchase , using savings to pay for it might be better than financing it. You could also get financing by way of a short-term personal loan , but that can have a high interest rate, too. The right choice depends on your finances and your overall needs and preferences.

With a timeshare, your recurring costs and time investment can be considerably lower. A timeshare can offer the perks of owning a vacation home at a fraction of the cost — you only pay for the time you use, as well as any associated maintenance fees.

These characteristics can make a timeshare a good option if you like to vacation in the same place each year and have the means to finance the purchase upfront. There are other downsides to timeshares, as well. The resale market is crowded, so if you decide to sell, you could incur a loss since supply is plentiful.

Timeshare ownership is another way those in the business explain how you get to use the property on your designated week or weeks. Changing your allocated week could take an act of Congress or at least a hefty upgrade fee. The floating week option allows you to choose your week within certain limits. Each reservation also has to be made during a specific window of time. You might be encouraged to call right after the new year to reserve your summer vacation week at the resort.

You have to be careful though. Your new friends at the timeshare company will come to the rescue with a convenient way to finance your epic purchase! What tends to sneak up on you after that are the extra fees after the initial purchase. With all those extras, the total cost can drain your bank account quicker than that Nigerian prince emailing you for money! Check out these numbers:. Dave Ramsey says you get nothing out of paying for a timeshare except the loss of choices and the loss of your money.

Just put that money in an investment and it could pay your hotel bill! Or remember the numbers we ran through earlier?

Who wants to be tied to one place every single year? In addition, a timeshare contract is a binding one; the owner cannot simply walk away from a timeshare contract because there is a change in their financial or personal circumstances. It is notoriously difficult to resell a timeshare—assuming the contract allows for resale in the first place—and this lack of liquidity may be a deterrent to a prospective investor.

A timeshare resale may fetch a much lower price than the initial cost for two reasons. Timeshares tend to depreciate quickly, and there is a mismatch in supply and demand due to the number of timeshare owners looking to exit their contracts. The timeshare industry is infamous for its aggressive marketing practices. Many timeshare acquisitions are impulsive and emotional purchases made by consumers who are swayed by slick marketing and tall promises.

For example, Las Vegas is filled with timeshare marketers who entice customers to listen to an off-site timeshare presentation. In exchange for listening to their pitch, they offer incentives, such as free event tickets and complimentary hotel accommodations. The salespeople work for property developers and frequently employ high-pressure sales approaches designed to turn "nays" into "yeas. Timeshare marketers may also frequently conceal the actual cost of timeshare ownership and exaggerate its potential benefits.

Because the timeshare market is rife with gray areas and questionable business practices, it is vital that prospective timeshare buyers conduct due diligence before buying. The Federal Trade Commission FTC outlined some basic due diligence steps in its " Timeshares and Vacation Plans " report that should be perused by any prospective buyer.

In the report, the FTC notes:. Overall, it is debatable whether timeshares' significant upfront costs, ongoing maintenance fees, and limited liquidity make them suitable investments for the average investor. For those looking for a timeshare property as a vacation choice rather than as an investment, it is quite likely that the best deals may be found in the secondary resale market rather than in the primary market created by vacation property or resort developers.

Depending on the language in your contract, there are usually three routes to go to get rid of your timeshare. The first is to try to sell your timeshare to somebody else, although if you bought your timeshare new this is almost guaranteed to be a financial loss. The second is to try and negotiate with the timeshare company to break the contract. Finally, if your contract has a "cooling-off" or rescission period and you are still in it, you can often return your contract without penalty.

You may need to hire a lawyer specialized in timeshares to go over your contract terms. If all else fails, you can try to gift your timeshare to a friend or family member who is willing to pick up the ongoing maintenance costs. If you own a timeshare and want to sell it, there are now several websites that you can use to list yours. You can also seek out a timeshare broker to help find a new buyer. As mentioned, the resale price of a timeshare is almost always a great deal lower than the initial purchase price.

Timeshares will have values that depend on several factors such as size and amenities, location, and how easy it is to swap or exchange your location for others. Your timeshare's value is then determined by comparing the offered prices of similar timeshares being advertised for sale and rent on various online platforms.

Buying a "second-hand" timeshare will typically be the most cost-effective route. Be sure to pay attention to ongoing fees and costs such as maintenance and change fees in addition to the purchase price. If you simply stop paying your timeshare fees and charges, they can report this delinquency to credit agencies and you can see a ding to your credit score.

If you can no longer afford the timeshare, you should sell it or negotiate your contract with the timeshare company in order to preserve your credit. Sees Ninth Straight Year of Growth.

Federal Trade Commission. Real Estate Investing. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products.

List of Partners vendors.