Timeshares have a debatable role in the holiday industry. Usually, they are hyped up as investments by cunning sales representatives, making them sound like a smart financial investment. The choice of freedom, to travel wherever consumers wish and choose the time to suit is often the major selling point, according to the sales rep. However, in most cases timeshares are seldom either, making them extremely bad for you and your pocket.
Why Most Consider Timeshares to be Bad Investment
Never be fooled into thinking timeshare is an investment. Investments as a rule, increase in value allowing owners to sell on and make a profit.
However, timeshares commonly don’t meet either of those criteria. Instead, they are an expense, long term financial drain which consumers cannot easily unload.
The Financial Burden of Owning a Timeshare
More often than not, owners firstly must pay off the remaining monies owed on the timeshare. Most secure loans through the timeshare company, which usually takes years to finish paying this debt, particularly as the interest rates have a tendency to to be high.
Upon paying in full for your timeshare, owners are not out of the woods. Whilst ever their name is tied to the ownership, owners are held responsible for the annual maintenance and up keep fees, which can amount to thousands of pounds each year. These fees also increase on an annual basis.
Even when the timeshare isn’t been used, owners still have to pay such fees. And, if they miss anyone of those payments, the timeshare company can potentially foreclose on them.
Owners are Guaranteed to Lose Money
Owners cannot earn a regular income from their investment, unless they choose to rent out their allocated week. The rental fee would have to be greater than the annual maintenance fees, which is highly unlikely, therefore, owners will still lose money.
The Decrease in Value
Timeshares do not function like other forms of real estate. In many cases, they lose value over time, even if the location is usually desirable. In addition, the supply of timeshares far outweighs demand. Should owners wish to sell, they usually have to do so at a loss and, even then, it could take months or years to get it off their hands. Either way, even if they do sell at a loss, they cannot claim it as a capital loss on their personal taxes, adding more disappointment to an already stressful situation.
You Don’t Own a Property
Most owners believe they part own a property, which in reality isn’t true. They don’t officially have many rights to the property itself. Instead, they are a co-owner, and one of many. As a rule, owners cannot do anything cosmetic to the unit to make it more valuable or personal to potential buyers, it is simply there to enjoy.
Why Timeshares May Not be Always Suitable
The big sell amongst timeshare salespeople is that they will tell the buyer, timeshares are more convenient than a conventional holiday and will suit the needs of the owner, claiming to save them money in comparison to arranging annual family holiday, but this usually isn’t the case. When consumers add the cost of a timeshare and the maintenance fees together in comparison to a regular holiday, the regular holiday will generally come in a lot cheaper.
ABC Lawyers have spoken to many clients who believe, that when booking a regular holiday, consumers can at least vary the weeks to suit, whereas with a timeshare owners are locked into a specific week and location every year. If owners cannot for whatever reason use their week they usually can’t defer for another time.
Therefore, consumers can be held to ransom with the same scenario each year. Should they decide to holiday elsewhere, then they will have the additional cost of this holiday on top of their timeshare costs.
To conclude, ultimately, no matter what the salesperson is telling the buyer, timeshares can be bad news for most consumers. They are not what they are portrayed to be, ‘good investments’ or ‘convenient’ and most certainly they are not cost effective. Instead, they can be expense and a financial burden which is incredibly hard to escape from should the consumer wish to get out of their contract.
See our recent post regarding timeshare fraud, and its increasing levels.