An exotic vacation to a dream destination at a price that fits your pocket!! Sounds mind-blowing? But how about repeating the same plan every year? The same way salespeople make you buy timeshares every year.
Let us learn more about it in this article.
Timeshare is an arrangement where a group of people owns the same property. Owners use this property as a holiday home at the different time. It is a terrific way to utilise a property to the fullest.
The property can be anything such as a villa, a house, an apartment, or a cabin. Timeshares can be bought anywhere either in your own country or overseas. The only problem in this scheme is it is ownership for the long term.Timeshares are easily available online. Salespersons selling timeshares can be seen occasionally at different malls. They use many sales techniques to get people to sign up immediately. Here are some insights of what timeshare is all about and how to sell or buy them:-
How does a timeshare work?A timeshare can also be called as a holiday or vacation club. It can be based on specific time or points. Timeshare scheme price depends on a number of factors such as the location and size of the property, number of years of ownership etc.
- A Specific time-period timeshare scheme allows you to use a specific property at a particular period such as one week a year.
- A point-based timeshare scheme depends on the number of points that you have collected. These points can be redeemed at various resorts and hotels. Under this scheme, the number of days you will get each year will depend upon the number of points collected. In many cases, double points are used during the holiday season. For example, if one day stay is equal to 2 points, then during holiday season one day will require 4 points. These points can also be redeemed for other travel related services.
What happens when you do not use the property in your specified time?You are allowed to swap or rent your timeshare to others via timeshare websites.
Annual feeEven if you do not use the property, you still have to pay the annual maintenance fee. Some schemes also require you to pay an annual membership fee as well. For example, you have taken timeshare for 20 years, and if the maintenance fee is 400$ and membership fee is 50$. Then after paying the upfront fee, you will be paying (400+50) 450$ every year or 9000 in 20 years. Failure to pay addition year fee, (450$ of the above example) may lead to cancellation of the timeshare with no payback of upfront fee.
How can you borrow money to purchase timeshare?Very few banks support timeshare schemes. It’s hard to borrow from the bank. Ask your scheme operator to arrange for the loan as they have tie-ups with many such agencies. Before borrowing be careful to check the following:-
- The lender is established under a proper license.
- terms of the contract
- financing repayments
- cooling-off period
Timeshare is lifestyle expenditureDo not get timeshare thinking you will sell it off later. It is defiantly not that kind of investment, which you sell at a profit. As in this case, the supply is always greater than demand. There are loads of timeshare schemes available for sale with very few people interested in buying a timeshare. Moreover, you have to compete with the already existing seller. Timeshare sellers advertise at a very high budget. Many times, they even give gift cards, cheap movie or theme park tickets to attract buyers. Advantages 1) You can use luxurious and expensive properties at a more affordable rate 2) It is great for those who like perfectly planned holidays 3) There is flexibility in using the property. You can easily rent your property to others or give it as a gift to your friends and family. Disadvantages 1) Timeshare exchange program in form of renting requires additional payments. 2) Annual maintenance and membership fees. 3) Selling existing timeshare is a tough job. 4) Even if you succeed in selling your timeshare chances are you will sell at a loss, and this kind of loss cannot even be claimed.
Summing upPoints to keep in mind before buying
- You cannot always be sure of visiting a property every year.
- It is perfect for those who like to travel to the same place at the same time of the year.
- The value of timeshare depreciates with time, which is the reason many banks do not lend to buy them.
- Most of the people who get a timeshare, lend the upfront money from the creditor, provided by the developer, which charges a high rate of interest.