Anyone who has attended a timeshare presentation will remember some sort of pitch that tries to justify the high cost of a timeshare. Often the salesperson will ask the customers how much they spend on their holidays every year and then multiply that number by 10 to show a figure close the amount of money they will be asking for at the end of the presentation.
If for example a family estimates that it spends £2,500 per year on holiday breaks, the sales person will tot that up to an expense of £25,000 over 10 years. The reasons that they will highlight in order to convince you that that money would be better spent on a timeshare may include:
- More flexibility and choice (certainly not true in today’s digital age)
- Higher quality accommodation (possibly in some cases)
- It is an investment that will always appreciate in value (blatantly untrue)
- You will always be able to sell and get back what you paid (totally false)
This sort of mis selling has been the norm in the industry since it began and paints a picture of a value for money system, which gives better choice and quality, and allows you to exit at any time with your money intact and perhaps even a profit. Unfortunately, even if this pitch was even remotely true – which it is not – there are still a number of other costs that make owning timeshare a very expensive way to holiday.
The Extreme Cost Of Loans
One of the key hidden costs when purchasing a timeshare is the interest rate. The vast majority of customers don’t have the cash on hand to pay for the product and are persuaded to take out loans. These arrangements are usually over 10 – 15 years and carry huge Annual Percentage Rates which, if paid over the full term, can cost the buyer far, far more than the original purchase price.
There is also the major problem of ever spiralling maintenance fees. For a resort to operate properly it needs to charge an annual fee to cover all aspects of maintenance – from the gardening and swimming pools to apartment furniture and resort facilities – and to keep the apartments and public spaces in good order. When people bought timeshare they were usually told that these charges would never rise beyond the level of inflation and were anyway set by an Owners’ Committee who had the interests of all the owners at heart.
However, as years went by and the resorts got older many owners saw the cost of the yearly fee rise acutely, far above the rate of inflation. Reasons for this increase included a slowdown in sales and new customers entering the resort, older clients passing away and no longer paying their fees as well as owners, who were able to find a way to leave the system, again leaving fees unpaid. As the resorts deteriorated over time more work was needed to keep them in good order. This situation led to the substantial hikes that have left owners furious.
The American Resort Development Association (ARDA) estimates that the average timeshare owner is paying around £760 per annum in maintenance fees. They also estimate that fees are set to rise at a minimum of 5% per year – and this figure is recognised as an optimistic assessment – meaning that what you pay out in fees will soon outstrip the original cost of the timeshare. Take for example the cost of maintenance over the next 20 years:
As you can see the annual cost of maintenance rises significantly every year with the totalled sums costing more than the original purchase price after 20 years of use. This situation becomes even more alarming when you consider that the timeshare contract will almost certainly be in perpetuity, meaning that it goes on for ever and is passed on to future generations when the owner passes away.
If you add up the original purchase cost, the interest on the loan and the yearly fees then timeshare does not look such a value for money concept. Indeed, similar quality holidays can be picked up for less than half that price on the internet and don’t require a lifetime commitment to an expensive and increasingly antiquated system.
If you want to relinquish your timeshare then get in touch with the Timeshare Help Centre today for a free impartial consultation.