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Can I Refinance Timeshare Loans?

It’s easy to understand the allure of a timeshare. You’ll have access to a luxurious vacation at a high-end resort every year for the rest of your life. For many families, this can be an appealing way to travel, especially if you have young children and need a multi-bedroom unit.

Unfortunately, these purchases are often impulse decisions that are made without truly evaluating all the costs involved. During the timeshare sales presentation, high pressure tactics are used to get you to sign your contract on the spot. While this approach is a very effective way for the salesperson to close the deal, it often results in timeshare owners agreeing to predatory financing options that can be crippling over time.

Timeshares aren’t cheap. According to the American Resort Development Association (ARDA), the average cost of a new one-week timeshare interval is $22,942. Unless you can afford to pay this entire price upfront, you’ll need to take out a loan to finance your timeshare.

Timeshare Loans Offered by the Developer Come with Excessive Interest Rates

The most common approach used by the salesperson is to refer you to their partner lenders, who will almost always approve your timeshare loan immediately. Unfortunately, this approach usually comes at a considerable cost. The average interest rate on a timeshare mortgage from the developer’s lender will range from 14-18%, and it can be as high as 20%. This is significantly higher than most other loan options from third-party lenders.

Why do so many timeshare owners agree to such predatory lending terms which significantly increase the overall cost of the purchase? In most instances, the primary reason is convenience. Most people don’t walk into the sales presentation expecting to buy. Therefore, they haven’t looked into other options for financing a timeshare. This makes people more susceptible to simply accepting the loan terms provided at the sales pitch, especially since they’re being pressured to sign the contract before leaving the room.

However, there are several drawbacks of taking out a timeshare mortgage with the developer:

While defaulting on your loan may seem like the best way to get out of an untenable situation, it’s actually one of the worst decisions you can make. If you default on your mortgage and the resort forecloses on your timeshare, you can experience damage to your credit score. In addition, the foreclosure will stay on your credit report for seven years, making it more challenging to secure loans and other favorable credit terms for years to come.

ReFinancing Your Timeshare Loan Is an Option

If you’re struggling to make your monthly payments, you may be able to refinance your timeshare loan in order to secure a lower interest rate and lower your monthly payments. This may be an excellent option to consider if:

ReFinancing Options for Your Timeshare Loan

You have several options available if you’re looking to refinance your timeshare loan.

Home Equity Loan

A home equity loan allows you to use your home as collateral. This often unlocks much lower interest rates and potentially allows you to borrow larger amounts of money (depending on the value of your home). However, you take on a significant risk with this option. If you’re unable to make the monthly loan payments, you can potentially lose your home.

Unsecured Personal Loan

If you have a good credit score, you may be able to qualify for an unsecured personal loan. These loans are typically granted based on your creditworthiness and ability to repay, and don’t require any collateral.

The interest rates on these loans are usually higher than what you’ll pay on a home equity loan, but lower than the rates offered when your loan is funded by the developer’s preferred lending partner. The primary benefit of an unsecured personal loan is that you won’t be at risk of losing your home if you default.

Specialized Lenders

Most banks will usually require you to take a home equity loan or a personal loan to refinance your timeshare mortgage. However, there are a few lenders that specialize in timeshare refinancing. While you’ll usually receive a higher interest rate than a typical home equity loan, you may find that these lenders offer favorable rates compared with a personal loan.

Common lenders specializing in timeshare refinancing include:

Credit Cards

Using a credit card to pay off your timeshare loan may be a viable option if the remaining balance on your loan isn’t too high. By using a card that offers a 0% promotional interest rate for a set period of time, you can potentially save a lot of money in interest fees.

However, you’ll need to pay attention to the terms of the credit card. Once the low promotional interest rate expires, you might find that the interest rate rises sharply, forcing you to transfer the remaining balance to another card offering a low-interest introductory rate. This constant transfer of balances can be a hassle and cannot continue indefinitely.

In addition, if you have one late or missed payment, it can result in a significant spike in your interest rate.

Borrowing from Your 401k

You may also be able to borrow money from your 401k account as a means to refinance your timeshare. This may be a good option if you have a poor credit rating, since interest rates aren’t determined by your credit history.

However, there are risks associated with this option:

A Better Option than ReFinancing: Cancel Your Timeshare

While refinancing your timeshare loan provides a way to reduce your interest rate and lower your monthly payments, it won’t deliver significant long-term relief if you’re struggling to afford all the expenses associated with your timeshare. Refinancing your mortgage won’t lower your rapidly escalating annual maintenance fees, and it won’t change the cost of property taxes, utilities or special assessments levied by the developer. Therefore, it’s possible that you’ll still struggle to fit the cost of your timeshare into your budget after refinancing your loan.

If your timeshare has become a financial burden, a better solution may be to legally cancel the contract. At Timeshare Termination Team, we’ve helped hundreds of families just like you who are struggling to make these crippling payments every year. Our team of in-house attorneys will carefully analyze the terms of your agreement in order to recommend a customized exit strategy that will safely, legally and permanently get rid of your timeshare.

Our exclusive You First Approach™ is focused on your unique needs and goals, allowing you to break free of the burdens associated with timeshare ownership. An important part of this process involves educating you about your options and recommending a strategy that reflects your best interests. As part of our You First Approach™, you’ll receive the following educational materials:

You’ll also receive our Money-Back Exit Guarantee™. If we’re not able to safely, legally and permanently cancel your timeshare, you’ll receive a full refund.

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