A factor that many people thinking about purchasing a property at a resort unit fail to consider is the cost of the loan for that unit, and how much this will increase the true cost of the owning a timeshare. Rarely do people have the money to purchase this type of property outright, and therefore they must finance the purchase.
If you want a true understanding of what the cost is when you buy a property, it’s essential to take the loan numbers into consideration. When these numbers are added to the purchase price, it usually shows that the purchasing a unit at any resort is not nearly as attractive in the amount it will supposedly save you as the salesperson makes it out to be.
The problem with financing these units is that unlike second homes or vacation property, the vast majority of resort units don’t qualify for a standard housing loan. That means that the low rates you see advertised for home loans don’t apply when making this type of purchase. Even worse, loans attached to a timeshare don’t usually qualify for the tax benefits that a standard housing loan receives.
Instead of paying a single digit rate which you would usually be able to obtain for a home loan, you must typically pay double digit rates sometimes reaching 20% or more (which the resort developer will gladly provide to you since it means even more money to them) on any amount you choose to finance. When the finance charges are added into the other costs of the property, the inexpensive vacation unit becomes a lot less appealing as a way to save money. If you have to finance the purchase, even if it is only a partial financing, the extra costs that this adds to the total purchase price rarely makes these a financially responsible purchase to make.