Back in the 1990’s and early 2000’s timeshares were all the rage. Pay an upfront fee and a small annual maintenance fee and you had your annual vacation booked. But the advantages of timeshares typically end there.
Below are 4 dangers of timeshares that you need to be aware of before buying into one.
4 Dangers of Timeshares
- Costs and Fees
As I mentioned, to get into a timeshare, you have to pay an upfront fee. This can be as high as $20,000. Luckily, this is just a one-time fee and with it, you get to vacation at a specific resort for one week out of the year. Typically, it’s the same week every year.
From there, the only additional cost you have is the annual membership or maintenance fee. This fee is usually around $200-$300. While this doesn’t sound bad, I haven’t gotten to the bad parts yet. First, the membership fees tend to increase on an annual basis. After all, as properties get older, they need more maintenance and in some cases, more costly maintenance.
I know of someone who has held a timeshare for 15 years. The annual maintenance fee started out at $200. It is currently $850. That is a decent amount of money.
But the fees don’t stop there. What if you want to go to a different resort for a different week? Luckily there are exchange programs. You can give the exchange program your week at your “home” resort and get a like-valued week at another resort. But with this comes fees. You have to pay a fee to the exchange company plus a transaction fee for the exchange. The annual fee to the exchange company is around $125 and the transaction fees range from $50 to $500!
Another danger is the availability of more popular destinations. When I was younger, a friend’s family had a timeshare. In order to go to a popular destination like the Caribbean, they had to book the week two years in advance. To me, this is crazy. I don’t know what I am doing next month let alone 2 years from now!
- Hard To Dispose Of
Most time shares have no expiration date. This means that you own it for life. Even scarier is that some timeshares now have a clause that they will pass along to your children when you pass away. So, regardless if you take a vacation, you are paying the annual maintenance fee. If you lose your job, you still have to pay the annual maintenance fee. Because of this, it is important that you do the math before signing on the dotted line.
- Scams Galore
Because it is so hard to dispose of your timeshare, there are scams everywhere. You can spot many of these scams because they will ask for an upfront fee before doing anything. This should be a huge red flag to you. Never pay to get rid of your timeshare until it is actually sold.
Additionally, there are some sites that will auction off your timeshare for you. But again, many of these companies never guarantee a sale and will require you to pay to sign up to become a member of the auction site and will have you pay listing fees as well.
Compare Timeshare Costs to Vacation Costs
Before you buy a timeshare look into what the maintenance fee is annually and run it out 15 years or so by increasing it by 3% for inflation. Then look at how much you tend to spend on a vacation and how often you go and compare that not only to the maintenance fee, but also the upfront cost and the costs associated with exchanging your week for a week somewhere else.
I am not here to tell you to never get involved in a timeshare. I am here to tell you to think hard, ask lots of questions, and run your own numbers. Many times, the timeshares will hard sell you and put pressure on you to make a decision on the spot. This is another red flag. Take your time and do your own math.
Many times you will find that a timeshare just isn’t worth it. There are some good ones out there, you just have to find them. I know a couple that have owned a timeshare for close to 20 years. They love going back to the same place. To them it never gets old and it’s the best money they spent. Do your homework so that your timeshare experience can be just as pleasurable. You don’t want to make a quick decision and then regret it while on vacation every year.
What is your experience with timeshares?