Timeshares are, when purchased retail, a bad deal. When you factor in the time value of money, interest paid, maintenance fees, exchange membership fees, exchange fees and whatever other stuff comes up, you end up paying more for a week in a timeshare than you ever would if you had just booked it outright when you needed it. Hope you read that contract carefully, because it’s likely the salesman doesn’t tell you much about the misc fees such as the $500 spent on Title Insurance.
This explains why the salesmen selling a timeshare are able to pocket several thousand dollars in commission for selling you a timeshare product. There is a sucker born every second, and the salesman is counting on you being one. As you can see from our guide to cheap timeshares, most timeshares have little resale value.
To understand the full cost of a timeshare, one must consider several things. First, lets try to understand the time value of money.
Money can of course be spent on anything. Keeping money tends to generate more money through interest or investment. If, for example, a timeshare costs $10,000, in purchasing it you have just taken away the opportunity to invest $10,000 in something else.
With just modest returns on a $10,000 investment on could see between $500 and $1000 a year. So in effect, buying your timeshare just precluded you from receiving at least $500 a year, which could have otherwise been used to pay for a vacation. I took a cruise last summer with my wife. All expenses considered we spent $500 for a summer cruise to Mexico, food included.
Pretty much every timeshare we’ve run into requires that buyers pay a yearly maintenance fee in addition to the purchase price. These usually start at $200, and are commonly run more than $500 a year. And the maintenance fee is far from being the only fee accessed to timeshare owners. Should you ever desire to vacation elsewhere you will be assessed an exchange fee to swap your timeshare or allow another to use it.
Sadly the timeshare limits you on where you can go for vacation, locking you forever into resort-based vacations as opposed to anything else. This means restaurants and activities will be more expensive than they would be otherwise. Often the ‘discount’ benefits offered along with your timeshare result in you paying more than a consumer would normally pay.
In addition to all the above listed costs, some of our readers have informed us that a timeshare owner can expect to pay property taxes as well as any assessments which accrue from renovations.
