Do Timeshares Have an Upfront Cost?
Buying a timeshare is one way to enjoy a vacation every year in the destination of your choice. If you are considering purchasing a timeshare, you will have to deal with some upfront costs in most cases. You will also have to pay for maintenance costs as well as the total price of the timeshare.
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Function
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The purpose of a timeshare is to provide a way for people to buy a portion of a piece of real estate in a desirable location. Many times, developers will build timeshare resorts near popular travel destinations. People can then purchase the right to use a piece of property for a certain amount of time each year. Most timeshares provide owners with one or two weeks of vacation time on an annual basis.
Financing
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Timeshare companies generally offer financing to allow consumers to purchase one of their units. This financing allows the consumer to break their purchase up into monthly payments over a term of up to 10 years. The interest rates on this financing is generally higher than what someone with good credit could get, but it is generally very easy to get approved. The financing will cover only the purchase price of the unit and none of the other fees.
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Down Payment
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Many timeshare sellers require buyers to put down some type of payment on the front end of the transaction. Since the timeshare seller will finance the purchase of the timeshare, he wants to make sure that the buyer is invested in the deal in some way. Requiring a down payment keeps the buyer accountable to the transaction. The down payment is generally negotiable and it could be as low as $100 or as high as thousands of dollars.
Maintenance Fees
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When you buy a timeshare, you will have to pay maintenance fees to the resort. These fees ensure that the property is taken care of and that your timeshare unit is always in good shape when you visit. Depending on which company you work with, you may need to pay some of the maintenance costs upfront for the year in which you buy your unit. Annual maintenance fees are generally a few hundred dollars.
Considerations
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Making a larger down payment on your timeshare purchase could actually work to your advantage. Since the rest of your purchase might be financed with high interest rates, you could actually save money over the long-term by making a large down payment. If you borrow less money from the timeshare company, you will have to pay them back less money in interest.
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