Many consumers who consider buying a timeshare, are unaware of the other financial verticals that allow the timeshare industry to make large profits. From the high balloon front-end payment, to the likelihood of escalating membership and maintenance fees, to earnings for extending special lending options to timeshare buyers.
Every aspect within the timeshare cycle is a profit generating revenue, for resort investors. In this article, we will discuss some of the hidden fees related to finance charges, to better explain how resorts earn the astronomical profits they see annually, from members. We will also discuss why clients who are working through a timeshare cancellation service, should never stop paying their minimum monthly fees (or loan payments) if they wish to avoid damaging personal credit.
How Timeshares Make Money
While there are many timeshares available through private sale, starting as low as the legal minimum for property exchange ($1.00), large and new resorts are highly skilled at recruiting buyers, even before the facility is fully built. This sales strategy helps to both fun the cost of development for investors, while generating monthly revenue from new members. And the price of getting into a new timeshare comes with a hefty down payment, in most cases.
Consider that the average American has less than $1,000 in personal savings. So, when it comes time to buy a timeshare that requires a large down payment, financing is an issue for most families. Conveniently, and to expedite the sale of inventory, a timeshare resort will usually offer finance service, at a low introductory interest rate.
The gesture may seem to be gratuitous or even kind, but the reality is that there is money to be made in lending, even at incremental low-cost interest rates. Many of the largest timeshare organizations in America, position this as a service that the resort is extending to buyers as a favor, or as a special ‘gift’ to its timeshare members. If that was the case, the resort would waive the mandatory buy-in payment, or in the very least, offer interest free financing, to help families afford the purchase.
Should you delay payment, the late fees and other administrative charges that are incurred, simply layer the profitability that resorts can earn from paying members. When you stop and think about the value of timeshare ownership, and calculate the real cost of financing, membership, maintenance fees and associated charges, the affordability of owning a timeshare becomes negligible.
It is no wonder that disreputable timeshares do everything they can, to maintain their contractual captive audience and payees. The standard fees are just the tip of the iceberg, when it comes the amount of money that they earn from every customer, with hidden and convenience charges.
Can You Get a Refund on the Timeshare Purchase Loan?
In the majority of timeshare cancellation cases, the objective is to break the contract, and liberate the owner from future payments and financial obligations related to ownership. There are many circumstances that provide legal grounds for canceling a timeshare contract, including purchase by mistake (where the consumer was not aware they were buying). Other consumer cases have been successfully resolved by Aconsumercredit™, on the grounds that the timeshare sale or contract agreed to, resulted in a breach of contract by the timeshare company or resort.
A breach of contract can include several considerations. If the resort for instance, promised no or low interest financing, and then began to charge the customer interest on the loan, the consumer may have grounds for both dismissing the timeshare contract and the loan. One of the most important aspects to taking legal action against a resort, is to confirm that what they sold the consumer in writing, was never provided. Even after the consumer asked for a specific incentive, or service.
There have been many successful cases where consumers experienced a breach of contract with the timeshare resort, and after filing a legal complaint, were able to recoup some of the initial investment, or amount that was financed. Again, nothing is guaranteed with regards to any valuation or refund, as each contract is reviewed on a case by case basis.
What Happens to the Loan After You Cancel Your Timeshare?
Depending on the details of the timeshare cancellation case, a partial refund may be possible. In very serious cases of misconduct and contract fraud violations, the consumer may be awarded a settlement with the resort, that provides a full refund. These cases however are rare.
Because of the nature of the loan, many consumers fall into another trap, attempting to sell or transfer their timeshare membership to someone else. Sadly, the timeshare resale market offers plenty of opportunities for consumers to be taken advantage of, and the resale rate for timeshares statistically, is less than 2% in the United States. Selling a timeshare is rarely the best, and most affordable way out of a timeshare contract.
You may successfully cancel your timeshare, and find that you do not have grounds for canceling the purchase loan. Finance agreements are far less complicated and tend to protect the lender against dispute, and offer few opportunities to reverse or refund the initial loan amount. If the timeshare meets the terms of the financing agreement, the consumer may find it difficult to argue a case.
Where individuals have multiple timeshare contracts, and extensive purchase loans and financing agreements with resort memberships or clubs, they may consult with a financial planner to determine if personal bankruptcy is the best path. However, some owners opt to simply pay out the balance of the purchase loan, grateful to be relieved of membership and maintenance fees, and further contractual obligations.
Remember to protect your credit, by making all required minimum payments, even while your case is being assisted by timeshare cancellation professionals. Credit ratings are difficult to build, and can take years to repair; don’t let your credit score be another casualty of your negative experience with the timeshare industry.