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How to finance a new timeshare

Get the best deal for your new vacation share with our tips.

Buying a vacation home can be hard to justify, especially if you don’t have more than a few weeks each year to relax in it. But a timeshare is one way to take advantage of the perks of property away without covering the whole cost yourself.

Also called interval, fractional share-owned or vacation properties, timeshares may be synonymous for high-pressure sales pitches and hard sells. But the American Resort Development Association says they’re making a comeback.

Get in on the rebound with what you can expect to pay — and how you can finance one — before taking up a timeshare.

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How can I pay for a new timeshare?

Many timeshare companies offer on-site financing with their sales pitch. But it’s not your only option — and it’s often not your most competitive. The average timeshare loan comes with an interest rate of 14% over a 10-year term, but these rates can soar as high as 20% with some clubs.

Before you let a rep convince you to sign up for a new loan, consider these savvy alternatives that can save you a bundle in the long run.

Unsecured personal loan

If you have strong credit, consider taking out a personal loan to pay for your timeshare. These loans don’t require collateral, and interest rates typically range from around 4% to 36%. Usually, you can borrow from $2,000 and $50,000, which covers many timeshares, though some lenders offer unsecured personal loans as high as $100,000.

Look for a personal loan from your bank, credit union or online lenders. Banks and credit unions might offer even lower rates than those you’ll find online. But they can take time to process your application, and often with stricter eligibility requirements.

Home equity loans

For borrowers who already own a home — or a good part of a home — the equity you’ve built up becomes a borrowing option. Through a home equity loan, you can typically borrow between 80% and 95% of your home’s value.

Because this loan uses your home as collateral, it’s often easier to qualify for than an unsecured personal loan. It also can come with more competitive rates. However, you run the serious risk of losing your home if you default.

401(k) loan

Borrowing from your retirement plan can be risky. If you can’t pay it back or you lose your job, you’ll pay hefty penalties for withdrawing from your retirement account before it’s due.

But if you’re certain you won’t leave your job before you repay the loan, borrowing from your 401(k) could be an inexpensive financing option. With most 401(k) plans, you can borrow up to $50,000 and pay it back over five years with a variable interest rate of prime plus 1%. All interest you pay goes back into your 401(k) — though you won’t earn investment returns while you repay your loan.

Credit cards

Using a credit card might make sense if your timeshare is only a few hundred or thousand dollars. Credit cards also be useful for those annual maintenance and membership fees. If you think it’ll take you more than a few months to pay off, consider applying for a new credit card with a promotional 0% APR for the first six to 18 months. That way you won’t pay interest on your balance until the promotional period is up.

How much does a timeshare cost?

When it comes to timeshares, you often have three costs to consider: the purchase cost, the maintenance fee and the membership fee.

Purchase cost

This is the main expense when it comes to buying a new timeshare. Purchase costs can range anywhere from $500 to $40,000, though the average is around $10,000. How much you pay depends on factors like the type of building and its location and the time of year you’re purchasing to use it. Studio apartments in an inconvenient neighborhood probably won’t cost you as much as a resort timeshare, for example.

The most popular weeks like Christmas or the Fourth of July — called “red weeks”— tend to be the most expensive. Weeks without as much demand — called “blue weeks” — are less expensive.

Maintenance fee

Most timeshares come with an annual maintenance fee that can range from $200 to more than $700 each year. This fee covers costs like housekeeping, utilities, weather-related repairs and other upkeep of a vacation home.

Like with the purchase cost, maintenance fees are typically higher with larger timeshares, especially if it’s part of a resort.

Membership fee

Many of the major timeshare companies like Interval International charge an annual membership fee of around $90. If you need help exchanging your timeshare for something different, this fee can go up to $125 for that year.

Must read: Don't forget the cost of going on vacation.

Vacations can be expensive, even if you have an affordable place to stay. Americans spend an average $2,026 during their timeshare vacations — or about $592 per person — according a 2018 American Resort Development Association report.

The top expenses? Eating out and flying in. To cut back on costs, consider a timeshare near your home, and plan on cooking a few meals in.

5 tips for getting a good deal on a timeshare

By knowing what to expect with a timeshare, you can find a legitimate property that works for you and your family.

  1. Don’t take the first offer. Even if it sounds like a good deal, there’s a chance an even better price is out there. Try to get a few offers before settling on one.
  2. Read customer reviews. A company might brag about its Better Business Bureau rating, but it won’t always reflect customer experiences. A few negative reviews isn’t necessarily a red flag, but if you notice patterns on the BBB, on Trustpilot and in forums, you might not want to work with that company.
  3. Know your state’s right-of-refusal law. Many states have laws that allow customers to back out of a timeshare within a stated time after making a purchase. Look out for companies that ask you to sign your contract in a different state than where your timeshare is located — they might be trying to get around state regulations.
  4. Read the contract and the fine print. What’s in your contract can shed light on you’re getting into far better than a sales pitch. A legal expert can help suss out red flags and answer questions about specific clauses.
  5. Check for scam alerts. The American Resort Development Association publishes a running list of timeshare scams to avoid online. The BBB and Consumer Financial Protection Bureau also issues warnings against scams. If you’re suspicious of an offer you’ve received, make sure it’s not on any lists.

Bottom line

It might be tempting to go for the timeshare loan that’s offered in your sales pitch. But you find more competitive rates and terms elsewhere, not to mention options that don’t involve financing at all.

To get the strongest deal you’re eligible for, compare all options available to you against your costs. Learn more about personal borrowing in our comprehensive guide to personal loans.

Frequently asked questions

Can a timeshare go into foreclosure?

Yes. Because your timeshare is considered real property, it can go into foreclosure if you aren’t able to pay maintenance fees or other expenses you owe. However, foreclosure processes vary by state. Seek out the advice of a lawyer or real estate professional for guidance.

How can I refinance my timeshare?

You can refinance an existing timeshare with many types of products such as a home equity line of credit, personal loan or credit card.

Can I get timeshare financing with bad credit?

Yes, but you might not have as many options without a good credit score. Look into a secured loan, which requires collateral but tends to come with less strict eligibility requirements than an unsecured personal loan.

How much is a timeshare loan payment?

It depends on the rates and terms of your loan. Use our monthly payment calculator to figure out how much you’d pay each moth based on the loan amount, interest rate and terms of your loan.

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