Is Buying Timeshares A Good Financial Decision?
Have you ever been invited to view a timeshare presentation? Those that telemarketeers promise that only takes 45 minutes, where you have to bring your spouse and promise of a free stay? I’m sure you have. I have too.
A few people ask me what I think about timeshare holidays. From a financial perspective, it might and might not make sense. However from what I know asking a few people who did buy a timeshare, they more or less just break even on their purchase if they are lucky.
Timeshare operators make money. If not they would keep selling the timeshare. I think in the free economy, making money is okay as long as the buyer gets his fair value. I think there is a few factor against buying timeshares.
1. Tied up capital. Usually you need to put a lump sum of capital to buy the timeshare although there are some that allows spread out payments. Even so, say the timeshare cost 15,000. You are not going to spend 15,000 this year on holiday. Probably say 2,000. The balance 13,000 is tied up money that you can get a return on.
2. Maintenance fees. Most timeshare have a maintenance or subscription fee that you pay yearly. It can be substantial over say 10 years.
3. Timeshares are usually bought by people with a growing family since it will cost a fair bit to bring the whole family along. But with new babies coming along, some couples rather stay home perhaps 2 out of 10 years. Sure you can make up for it, but then why force yourself to take the holiday if you are not keen to go.
4. Limited choices. Timeshare resort are usually limited to a certain number of resort you can go to. If you develop the urge to see something different for a change, your are sort of forced to choose between using your timeshare and missing out on the place you really want to go or end up still paying for hotel accommodations.
5. Low resale value. Timeshares are something that have little resale value. Having been to such presentations when professional sales person are needed to sell a timeshare, it proves that timeshare actual value is low. It something has intrinsic value, you don’t need salespeople to push it. People will queue up for it.
Here are the 5 reasons buying timeshares are not a good financial decision.
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