Timeshare and resort membership companies enjoy a never-ending supply of consumers, who want to believe that owning a timeshare is financially the key to ensuring affordable vacations for their family, and friends. The global economy has hit both middle and lower income families hard, making the dream of fun vacations and tropical destination seem further from reach. While cost of living has continued to go up for families in the United States, wages and salaries have grown far more slowly, and increases in salaries are almost unheard of these days. That fact, and employment factors, increasing credit card debt and other financial issues makes vacationing more of a luxury today, than it ever has been in the past, for the average American family.
If American families hope for the best, when they consider timeshare ownership as a solution to providing affordable vacations, the timeshare industry does its best to encourage that misinformation. Not only do most timeshare companies mislead consumers about the actual long-term costs of ownership, but they have built-in financial penalties and point systems that are deliberately designed to make as much money as possible, from each owner.
In this article for our consumer protection blog, we demonstrate the hidden fees, charges and penalties that provide additional revenue for timeshare resorts, and how consumers are frequently unaware of the cost of these services, until they find themselves in a dispute with the timeshare. Or when it’s too late to back out of the timeshare purchase, without creating damage to personal credit.
There is a very ugly and psycho-social side to timeshare sales that our team is exposed to daily, as we help American’s cut through the red tape, and cancel their timeshare for good.
1. High Upfront Balloon Purchase Down Payments
Because we believe (with extensive industry experience) that the entire timeshare ownership proposition is designed to work against the financial benefit of American families, the worst stories we hear about predatory contracts and financial practices, happen when a consumer buys a brand-new timeshare.
Much like buying a car new, and losing substantial depreciative value after you drive the vehicle home, a new timeshare represents the most painful exploitation of consumer interests, in our opinion. If you are going to buy a timeshare for the first time, resort membership sales teams will sell you on the need to purchase in a new resort, rather than buying a timeshare resale, from another owner. The state-of-the-art amenities, new furnishings and other bonuses are heavily propositioned to the consumer, to make buying a more affordable resale timeshare seem like a bad option.
The reason that new timeshare lean heavily against consumers, is of course, profitability. The best time for a timeshare to sell units is during phases of new construction, when the developer needs an influx of investment money to continue to build and expand upon the property. The way that this is orchestrated is of course, giving consumers the perception of a ‘bargain’ because they are among the first one-hundred or more timeshare owners, in a new resort. They are told that once the development is complete, that prices will increase dramatically, and that influences a sense of ‘buy now or regret it later’ for the consumer.
The truth is that as a timeshare expands and builds more units, demand usually goes down. When there are more units available to sell fractional ownership, it becomes critical for the timeshare to fill those units as quickly as possible, to capacity. Costs and budget are based on 60% or higher membership rates. Your best deal is not at the beginning of a development (no matter how excited you are about the new resort); consumers save when they buy resale, or at the end (in most cases) of the building phase.
That balloon payment? That simply makes it easier for the resort to finance the construction project, thanks to astronomical down payments requested by timeshare companies. You’re helping them, but they are not offering you their best deal (no matter what they say).
2. Non-Competitive Interest Rates for Purchase Loans
Coming up with a large balloon payment to purchase inside a new timeshare resort, is difficult for most American families. Since these down payments can start at $10,000 on average or more, many timeshare buyers need flexible financing options. Consider that the average timeshare purchaser is not necessarily in a position of having a lot of capital (savings) or credit availability; if they did, they’d buy a vacation home.
Naturally, the timeshare has a solution for this problem; they will loan you the money, even if you have damaged credit. Sounds wonderful, right? Except that their interest rates are predatory, to say the least. Consumers can expect a finance package that sounds like a good deal (it’s not). They offer lower buy-in interest rates for first-time buyers, including lower interest introductory periods of one-year, after which interest rates climb to be comparable to your highest fee credit card. Ouch!
The timeshare industry isn’t doing you a favor, by helping you finance your balloon down payment, at a crippling interest rate, that will tack on thousands of extra expenses in addition to your resort membership and maintenance fees. But for timeshare organizations, it’s a lucrative ‘free service’ they offer their customers, and it’s a profitable one for them.
3. Misreported Maintenance Fee Projections for New and Older Resorts
If we had a dollar for every time we’ve been told that consumers were promised economical long-term maintenance fees by their timeshare. By law, a timeshare company is required to provide a legal copy of an estoppel summary and agreement (the same as real estate condominium transactions). The estoppel summary reviews the board of directors for the resort, and a report of costs associated with operation, maintenance and repair of the resort. They are required to accurately report the fees that the timeshare is currently charging members, and where those funds are allocated.
Two recurrent problems with unscrupulous timeshare organizations, is misreporting and misdirection, when it comes to projecting the real costs that are filtered down to consumers, in the form of escalating maintenance fees. With new timeshare resorts, it is impossible to accurately predict what the ongoing cost of maintenance will be, as they have no historical data and information. With an older timeshare, some organizations have been found guilty of suppressing the real cost data from potential buyers, in order to lower the anticipated monthly maintenance costs, for worried consumers.
In every timeshare contract is a financially dangerous section, that explains your maintenance fees (as a buyer) can go up at any time, for virtually any reason. And there is nothing a timeshare owner can do to dispute maintenance fees that can double, triple or quadruple at any time during their contract. Timeshare sales experts say maintenance fees ‘might go up’ over time; we’re telling you from twelve years in timeshare cancellation service to American families, that it will. You can bank on it, and it will change how you perceive the value of what you are paying for, and timeshare ownership.
4. Charging for Additional Points for Flexible Vacation Time
Buyer beware, when it comes to resorts and timeshares that are managed by a point system. You may have asked the right questions regarding how much time, and what kind of scheduled weeks (i.e., holiday’s) you can get from your timeshare. The sales representative may not (and they frequently do not) disclose that buying extra points to unlock reciprocal agreements with other resorts, or high-demand vacation weeks, will be necessary.
You wanted flexibility and access to a timeshare to make memories with family and friends. What you got, with many point systems, is a lot of red tape and an opportunity for the resort to charge extra fees. And they will. It’s part of their profit model.
5. Financial Penalty Fees for Normal Administrative Requests
Many consumers we speak to are horrified at the fees, and costs for simple administrative requests that they make from their timeshare or resort membership club. What can they charge these extra fees for? Just about anything actually, and it is also a revenue generator for the investment companies that run timeshare resorts.
Anticipate addition fees when you:
want to transfer ownership
pay your membership or maintenance fees late
attempt to sell or rent your timeshare
notice damage in your timeshare suite
have extra guests requiring parking
request your contract, receipts or other documentation
attempt to cancel your timeshare
The timeshare industry is a multi-billion-dollar money making machine, one that thrives on lies, high-pressured, immoral and frequently illegal sales practices. But every service and structure of the average timeshare company is designed to do one thing; make money for the investors and property management team. The industry is nefarious for bilking consumers out of their hard-earned dollars, through misrepresentation of information, real costs and expected amenities.
Is it time to free yourself from the financial racket of timeshare ownership? Our team of legally assisted timeshare cancellation experts is ready to help you transition out of your timeshare contract. Call us at 1-800-587-EXIT or chat online with one of our timeshare cancellation counselors. We’re here to help.