Adam McCann, Financial Writer
Yes, you can get a loan for a timeshare. It’s possible to get timeshare loans directly from the seller of the timeshare or from a personal loan provider. Usually, the better option is to get a personal loan. That’s because timeshare sellers’ financing options tend to be more expensive. One of the best personal loan providers is LightStream, which has loans specifically for purchasing timeshares with APRs ranging from 5.95% to 17.25%. Other options for timeshare loans include taking out a home equity loan or using a credit card.
Timeshares typically let you stay at a property for one week out of the year, and cost over $21,000 on average, according to the American Resort Development Organization (ARDA). That’s a one-time fee, but you may also have to pay a yearly maintenance fee of several hundred dollars. Vacationers can spend even more money to buy the rights to longer stays (or spend less money to stay less often).
If you’re interested in taking out a timeshare loan, you should ideally have little other debt and no other big financial events coming up. You won’t want to hurt your credit score or get in financial trouble over a vacation.
Ways to get timeshare loans:
- From the timeshare seller. A timeshare seller may offer a plan where you pay off the cost of the timeshare over time rather than having to hand over all the money upfront. While this isn’t exactly the same thing as a loan since the seller doesn’t give you money at the start, it works pretty much the same way, in that you’ll have to make payments in monthly installments. The average APR with timeshare seller financing is 14%, according to ARDA, but rates can be over 20%.
- Personal loan: Most personal loan providers offer loan amounts large enough to accommodate a timeshare, though you’ll likely need at least good credit to qualify for a loan that big. Lenders’ minimum loan amounts tend to start at $1,000 to $3,000, and their maximums range from $25,000 to $100,000. The best personal loan APRs are as low as 6%, though the maximum APRs can be as high as 36%.
- Home equity loan: A home equity loan can offer a lot of funding because you can borrow a portion of your home’s value minus the mortgage balance. Plus, you can use the money for just about anything you want, including timeshares. But home equity loans are secured by your house, so it’s probably not the best decision to risk foreclosure for a vacation rental.
- Credit card: This is really only an option for people with excellent credit scores and high incomes. You’ll need both to get a credit card with a credit limit over $20,000. And since credit card APRs are so high, you’ll want a card with an intro 0% APR on purchases to avoid paying interest on the timeshare. Cards with 0% APRs only offer interest-free financing for 6 to 21 months, so you’ll need to pay off the full amount within that time if you want to save as much as possible.
One word of caution – don’t get a timeshare loan thinking it will be a good investment. While timeshares can certainly provide great vacation experiences, the resale market is very poor and most people sell their share for far less than what they originally paid.
While you do technically own a stake in the property (in most cases), the fact that you co-own with dozens of other people means you can’t make any alterations to the property to increase its value, or sell the full property without a lot of hassle. That’s part of why a timeshare differs from a traditional mortgage. In addition, the timeshare supply greatly exceeds demand. So if you buy a timeshare, expect to lose money in the long run.
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