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The average sales price for a timeshare is $24,140, according to the American Resort Development Association. This doesn’t include the annual maintenance fees, which can increase over time. As a timeshare owner, you’re responsible for paying the fee every year, regardless of whether you stay at the timeshare or not.
If your timeshare isn’t working out, or it’s simply too expensive now, refinancing may be an option.
You may want to consider refinancing your timeshare loan or paying it off with another type of loan if you’re experiencing any of these scenarios:
It may be better to keep the timeshare as-is if you’re in one or more of these situations:
The steps you take to refinance your timeshare depend on the method. Refinancing is using another loan to pay off an existing loan. However, since there’s no equity in timeshares, the refinancing process is a little different.
Keep in mind that some of these options can be risky and could lead you into even more debt if you’re not careful.
Most banks won’t refinance a timeshare mortgage because the resale value is low. However, some lenders specialize in timeshare refinancing and can offer you a lower payment.
For example, LightStream — a branch of SunTrust bank — offers timeshare refinance loans to US citizens with good credit. While interest rates vary, there are no original fees or prepayment penalties and you can apply online.
Compare online lenders for timeshares — they usually offer more competitive rates since they don’t operate physical branches.
If you have a solid credit score, you may qualify for a non-collateral, personal loan that can be used to pay off your developer-financed loan at a lower rate — usually around 8% to 12%. While rates are typically higher than HELOCs, they’re likely lower than the rates offered by timeshare agents.
Use our table to compare personal loan provider’s rates and loan amount options side by side.
If you’ve built up enough equity in your primary home, you may qualify for a HELOC at a significantly lower interest rate compared to your current loan. Once approved, you can use the HELOC to pay off your higher-rate, developer-financed loan.
If you have a high credit card limit with low or no interest for a time, you might be able to use it to pay off your timeshare with a credit card. But be aware this can be risky. When the low intro interest rate expires, you’ll be hit with higher interest rates. And one late or missed payment could lead to an interest rate hike overnight.
Another option is to borrow against your 401(k) retirement savings. The interest rates for 401(k) loans aren’t based on your credit history, and you can repay the loan over a number of years. But you could jeopardize your future retirement or face penalties if you don’t pay the loan back within five years.
Most borrowers refinance to get a lower interest rate to save long term, or seek a lower rate to get a lower monthly payment (or both). And lowering your interest rate on a loan can save you tons of money in the long run.
For example, let’s say you had a 15% interest rate on a $20,000 five-year loan (most timeshares have a term around five to ten years). That’s a monthly payment around $476 and about $8,548 in total interest charges over the loan term.
If you were to lower the rate on that loan to 8%, that would lower your payment to around $406 and reduce your total interest charges to about $4,332. That’s a total savings of $4,216 over the course of the loan — and a $70 cheaper monthly payment.
A word of caution: Refinancing can also give you the ability to lengthen your loan term. The longer your loan term, the more time interest charges can accrue. If your only motivation in refinancing is to get a lower monthly payment, getting a longer loan term can achieve that goal, but you’ll pay more overall if the rate stays the same.
Timeshares are legally binding purchases. If you don’t want your timeshare anymore but refinancing doesn’t seem to fit your situation, your options may be:
There are some risks to consider before refinancing your timeshare — but the pros may outweigh the cons if you have good credit.
Timeshares are tricky, and unlike most real estate purchases, they don’t build up equity. If your rates are sky-high, you could refinance down to a better rate with a specialized lender, home equity line of credit, personal loan or credit card.
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