14 Reasons Why a Timeshare Might Be a Terrible Idea

Timeshares have always been a popular way to go on vacation every year. But people don’t tell you that there are quite a few risks associated with investing in a Timeshare. Some of these can end up putting a real damper on your holiday.

How can something that seems so good on the surface have many pitfalls? Like with many transactions, the devil is in the details. It’s not bad to follow the simple rule: if it sounds too good to be true, it probably is.

If you’re considering investing in a timeshare, we’ve curated a list of things to watch for before writing the check. Looking out for these things can prevent a bad decision. We’ve listed 14 reasons why a Timeshare might be a terrible idea.

High Initial Costs

Buying into Timeshare is not the most affordable way of going on holiday, thanks to the initial purchase fees. Many people forget that you still don’t own the property after spending all that money. According to data from CBS News, the average cost for a vacation home (not Timeshare) is around $22,000, and the average price of a Timeshare for one week is $24,140, just to buy in.

High Interest

Many people’s initial purchase costs are way out of their budget, so they choose to finance their purchase without realizing they’ll be nailed on high interest. For example, the travel website View From The Viewing revealed that “54% of [Marriott Vacations] timeshare buyers used financing with an average loan of $28,400, an average term of 12 years, and an average interest rate of 13.4%.”

Limited Flexibility

A problem many people face after investing in their Timeshare is limited flexibility. Owners are often locked into specific weeks or seasons, making planning a family vacation particularly difficult. Make sure to read your contract thoroughly. Otherwise, you may find that you’re limited to vacations during off-peak seasons when people are working or in school.

Changes in Program Terms

One popular benefit of using Timeshare is the points that you earn. However, this can become a problem when it comes time to swap points between your home property and other locations, and you find out these locations have been sold. Changes in program terms can mean you can no longer visit those locations.

Low Resale Value

Timeshare buyers often learn the hard way that this investment does not have a very high resale value. Even though Timeshare sales reps tout these vacation programs as a good investment, the reality is different. That’s why you often find these ‘amazing” 90% off bundle deals. They’re just Timeshare owners desperate to part with their “investments.”

At Risk for Exit Business Scams

If you do decide to let go of your Timeshare, you should be aware that you’re at risk of getting scammed by Timeshare exit businesses. These businesses say they can help you get rid of your Timeshare obligation. All you need to do is make an upfront payment, and you’ll never see them or your money again.

Complex Contracts

Timeshare contacts are notoriously complicated, with hidden clauses on when to stay at locations, miscellaneous fees, and how to get out of your contract early. To avoid these problems, we suggest having a lawyer review your contract before you sign it. If you’re unsure of something in the contract, it’s best to ask.

More Expensive

Many people think having a Timeshare makes going on vacation easier, but it could cost you more if your life circumstances change and you don’t travel as much as you did before. For example, your health may have deteriorated, or your children have grown up and moved out, so you need fewer bedrooms, and now you’re stuck paying for an expensive Timeshare.

They Don’t Generate Income

They call Timeshare an investment, but it’s important to note that it does not generate income like real estate. Plus, you don’t own the property. You just have a fractional share, but this does not give you the advantages that owning real estate would give you.

High Maintenance Fees

Don’t forget about maintenance fees. Now that you’ve spent your money on the initial purchase, you’ve still got to maintain the property that’s not actually yours. The average annual maintenance fee costs more than $1000 regardless of whether you used the property. CBS News reported that one Timeshare owner revealed that she spends around $6000 on yearly maintenance for her two timeshares.

Property Taxes

On top of purchase costs, interest, and maintenance fees, you may have to pay property taxes even though you don’t own the property. You may qualify for a tax deduction depending on whether the taxes will be billed to you. Be sure you know how it’s handled before signing on the dotted line.

Exchange Program Problems

Many people buy into Timeshare because of the desirable exchange programs without realizing the problems with this program. Some of the most common issues people have had are coordination problems and so many restrictions that planning a holiday becomes a hassle.

Special Assessments

Many Timeshare sales reps don’t often tell potential buyers they may have to pay random fees because of special assessments. These assessments cover costs related to Timeshare maintenance, upgrades, and repairs. These fees can range anywhere from $500 to $1000.

High Travel Costs

The last reason Timeshare is a terrible idea is that it doesn’t help with travel costs. You have your accommodation lined up, but you’ve still got to get there, and once you add up the costs you spent on just the accommodation, it may have been cheaper to rent out an Airbnb instead of monthly fees.

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