During 2017 it was estimated in the United States alone 9.6 billion dollars was generated owing to timeshare sales, that’s nearly a 4% increase over 2016 and an astonishing 26% increase since 2013.
Buyers need to fully understand they themselves do not own out right the timeshare, they are one of many. Consumers whom enjoy the privilege of using the property, enjoy this along with up to 51 other owners.
Consumers only own that property for 1 week of the year, however, some are lucky enough to purchase more weeks.
ABC Lawyers believe that on average, the cost of a timeshare unit in the US costs approximately 22,180 thousand dollars and in 90% of cases this staggering amount is due upfront.
Should the vendor not have such funds available, financing is an option, but at a cost.
IMPORTANT NOTE, financing incurs much higher interest rates than your standard mortgage. The reason the rates are significantly higher are due to the risks involved, due to the consumer not actually physically owning anything, should they default on the payment the lender cannot foreclose on the property and resell it, for this reason they compensate these such risks with a much higher interest rate.
Borrowers lucky enough to have a low credit rate could be looking at a 20% interest rate over a 10-year period, whereas a buyer with a stronger credit rating could pay only 14% during the period of the loan.
$22,180 x 10 years @ 14% equals $344 a month or $3444 a year, this over the 10 years stated costs a staggering $41,000, that’s $19,000 in interest payments alone.
If the consumer has to opt for the higher rate due to their credit rating been poor, their timeshare would cost your around $52,000, that been a hefty $30,000 in interest.
In addition, the timeshare also incurs annual maintenance and upkeep fees, which can rise drastically each year and without any prior warning.
It was reported that the average cost in maintenance fees on an annual basis is around $1000. That multiplied by the number owners for 1 single unit alone for their 1 week a year generates an income of $52,000, can you imagine the money each resort draws in each year on maintenance fees alone.
The United States has approximately 1570 resorts and 205,100 units, therefore, on average a resort brings in more than 6.5 million dollars in maintenance fees for that individual resort.
As previously mentioned, in addition to annual maintenance fees, other costs such as up keep costs can be incurred, these can include, pool repairs, external painting of the resort, replacing roofs, pavements, tiles, the lists can be endless.
Therefore, based on the figures quoted a single unit can cost anything from four thousand dollars to five thousand dollars per year.
If the owner purchased 1 week, (seven nights), effectively this is costing the consumer anything between 600 dollars to 750 dollars PER NIGHT, the higher figure been those who have a poor credit rating. You could book a luxurious hotel almost anywhere in the world for those kinds of prices!
Once owners have repaid their loan, they could be looking at a more realistic price per night of around 140 dollars.
Ultimately the cost of owning a timeshare could cost significantly more than booking an annual holiday or even purchasing a forever home! Think with caution and do your homework before you commit to something you may well regret later!
See our recent post regarding the ups & downs of owning a timeshare.