Timeshares are a ubiquitous part of beach towns and destination cities everywhere, with many resorts even offering free perks if you’re willing to listen to a timeshare pitch. Typically, these pitches involve a hard sale, where you’re presented with a one-time opportunity to buy a timeshare on the spot.
Here’s the problem, though: whether you’re buying in Orlando or Oahu, timeshares aren’t cheap. Most would-be timeshare owners aren’t prepared to put down thousands of dollars at the end of a sales pitch.
The salespeople offering these timeshares may refer you to partner lenders to solve this problem, but these lenders don’t always offer competitive rates.
Fortunately, if you decide to buy a timeshare, you aren’t obligated to take out a timeshare loan from the lender that your salesperson recommends. Here’s a look at some of the alternative ways you can finance the purchase of a timeshare.
In this guide:
- What is a timeshare loan?
- Should I use a timeshare loan?
- Are there better timeshare loans than what’s offered by the salesperson?
- Which financing option is the best for buying a timeshare?
- Are timeshares a good investment worth financing?
What is a timeshare loan?
A timeshare loan is any loan used to purchase a timeshare. The loan can come from the lender that the timeshare salesperson recommends, or from a third-party lender.
The loans provided by the lenders that are promoted by timeshare sales teams often come with very high interest rates and long repayment terms.
Private personal loans, by contrast, can come with lower rates and more flexible terms, if you qualify. They can be used to buy a timeshare, and may even save you money in the process.
So, if you’ve decided you want to purchase a timeshare, you should research and compare a few personal loan lenders offering timeshare loans to make sure you don’t get stuck with a bad rate.
Should I use a timeshare loan?
A timeshare is an arrangement where you purchase a share of ownership in a vacation rental property, such as a house, a condo, or a room in a resort. This arrangement grants you access to the property for a certain period of time each year—you’ll just need to cover the cost of getting there, such as airfare.
Some timeshares give you access to a specific property, while others involve buying credits or points that can be used at various properties within a timeshare network.
Depending on the company you buy from and even the type of property purchased, you may be expected to share certain expenses with the other timeshare owners, including maintenance fees and even scheduled renovations.
Between the initial timeshare buy-in, annual fees, and maintenance expenses, many buyers find themselves considering a timeshare loan to fund the purchase.
When you’re buying a timeshare from a salesperson, they’ll usually have specific lenders they recommend. Remember, these lenders may work with the property, but they don’t necessarily have the best loan terms or lowest interest rates, so you’ll still want to shop around before making a final decision.
Some benefits of using a timeshare loan include:
- Ease. Working with the lender(s) your salesperson recommends can often be the simplest option. These lenders are willing to provide financing for vacation ownership, and you won’t even need to shop around.
- Speed. Financing can be provided quickly when secured through your timeshare salesperson. In some cases, you can even get approved on the spot.
- Affordability. Your salesperson’s timeshare loans may have long repayment term options, which can make monthly payments more affordable and budget-friendly.
But before you impulsively sign on any dotted line, it’s important to keep some considerations in mind:
- Rates. The loan offered to you by a salesperson may be convenient, but it probably isn’t the cheapest. The loans often come with higher interest rates and can cost you more over the life of the loan. Shopping around for the best possible loan is always a wise move, even if it takes a bit longer.
- Terms. By accepting your salesperson’s recommended loan, you may be limiting yourself to certain repayment terms. Consider whether another loan might cost you less and still fit within your budget.
- Investability. While timeshares can be fun and enticing, they aren’t usually considered a good long-term investment.
Are there better timeshare loans than what’s offered by the salesperson?
Your timeshare salesperson may offer simple financing options on the spot, which can be enticing simply because they are convenient. Rather than shopping around or delaying your purchase, you can use the timeshare-recommended lender to complete the transaction and lock in whatever incentives are being offered.
However, because these lenders aren’t always the best option in regard to interest rates and repayment terms, you might want to consider taking out a personal loan instead. This can be used in place of a timeshare loan.
Here are a few of our picks for loans that can be used to purchase a timeshare.
Figure
HELOC
- Rates between 4.24% and 11.16% APR
- Draw up to $400K
- Check your rate without impacting your credit
Figure is an online lender offering personal loans and home equity lines of credit (HELOCs). If you have equity built up in your home, using a Figure HELOC can be one way to quickly secure the cash you need to buy a timeshare.
Figure offers fast approval and funding, with an application process that is 100% online. They require a credit score of 680 if you’re buying an investment property (or a credit score of 640 for primary homes in most states).
- Credit score category: Good
- Soft credit pull to check rates: Yes
- Deposit time: As fast as five business days
- Origination fee: Up to 4.99%
- Repayment terms: 60, 120, 180, or 360 months
LightStream
Personal loan
- Rates between 5.73% and 19.99% APR1
- Funds are available as soon as the same day
- Must have a good-to-excellent credit score
LightStream offers timeshare loans to customers with good-to-excellent credit scores. Ranked as LendEDU’s best overall personal loan partner, the company offers low rates and a program in which they will beat the rate a competitor offers you by 0.10 percentage points3.
- Credit score category: Excellent, good
- Soft credit pull to check rates: Not available
- Deposit time: As soon as the same day
- Origination fee: 0%
- Late fee: None
- Discounts: 0.50% interest rate reduction for enrolling in autopay
- Repayment terms: 24 – 84 months2
Upgrade
Personal loan
- Rates between 6.95% and 35.97% APR
- No prepayment penalties
- Check your rate without impacting your credit
Upgrade offers personal loans that can be used to pay for timeshares. The credit minimums are lower than those of many other lenders, making Upgrade a good option for borrowers with poor credit history.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 1.85% – 8%
- Late fee: $10
- Repayment terms: 24 – 84 months
Upstart
Personal loan
- Rates between 6.12% and 35.99% APR
- Eligibility model includes more than just your credit score
- Check your rate without impacting your credit
Upstart is an online lending platform that partners with banks to provide personal loans that can be used for almost anything. Upstart’s lending model considers education, employment, and many other variables when determining eligibility. This model leads to significantly more approvals and lower rates than traditional models.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As fast as one business day
- Origination fee: 0% – 8%
- Late fee: $15 or 5% of payment
- Repayment terms: 36 or 60 months
Which financing option is the best for buying a timeshare?
There are a number of different ways that someone can finance the purchase of a timeshare property, whether that means using the salesperson’s recommended lender or finding a loan on your own. Here are a few of the pros and cons to each, so you can make the best decision for you and your financial situation.
Pros and cons of using a personal loan to buy a timeshare
Personal loans, which are offered by banks or online lenders, can be used to purchase just about anything, including a timeshare.
These loans may offer lower interest rates than those available from a timeshare’s designated lender, especially for borrowers with good or excellent credit. And since personal loans are unsecured, your assets won’t be used as collateral for the loan and cannot be seized if you default.
With that said, personal loans often have higher credit score requirements because they are unsecured, so not all borrowers will qualify. They may also come with higher interest rates than other types of loans, such as HELOCs or home equity loans.
Depending on the lender and factors like your credit score and income, you may also struggle to find a personal lender that offers a large enough loan to finance your vacation rental.
Pros and cons of using a home equity loan or HELOC to buy a timeshare
Existing homeowners who have built up equity in their primary home may be able to obtain a home equity loan or HELOC to purchase a timeshare.
These types of loans are secured by the equity in your home (which acts as collateral), so larger loan limits and better repayment terms may be possible. Since the loan is secured, you’ll often find lower interest rates as well, and your interest payments may even be tax-deductible in some cases.
However, by putting up your primary home’s equity as collateral, you’re taking a risk. If you were to default on your new loan, your home could be seized. Using that equity could also put you in a tough spot if you suddenly need to sell your home. Additionally, variable interest rates on HELOCs can be unpredictable and may rise over time.
Are timeshares a good investment worth financing?
We’ve already talked about the benefits of timeshare loans and how you can finance a timeshare purchase, but there’s still one big question to consider: whether or not timeshares are worth buying in the first place.
Timeshares can be fun for couples and families alike, giving you access to specific properties or brand portfolios on an annual basis. Depending on your timeshare agreement, you may even be able to rent out the property to others during your allotted time, which can provide a source of income if you can’t travel.
Getting out of a timeshare is notoriously tricky, though. You’ll want to carefully read and consider the stipulations involved with selling your timeshare, if you decide that you no longer want it or can’t afford to keep it.
These rules may limit your ability to sell or transfer the timeshare, and might influence your decision to purchase in the first place. (Note that you can transfer your timeshare ownership to your heirs when you die, but you’ll want to refer to your agreement for the specifics on how this is handled.)
Timeshares are generally not used as investment vehicles, as they are tricky to get out of, sell for a profit, or rent out for meaningful income. However, for those seeking convenience or a fun vacation spot the whole family can return to each year, they can sometimes be a good option.
If you’re considering a timeshare for personal reasons, be sure to look into all of the financing options available. Even if a lender is being recommended during a sales presentation, they may not be the best choice for you.
1 Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
2 Payment example: Monthly payments for a $10,000 loan at 5.95% APR with a term of three years would result in 36 monthly payments of $303.99.
3 LightStream will offer a rate .10 percentage points lower than the rate offered on any competing lender’s unsecured loan provided that you were approved for that lower rate (with the same loan terms offered by LightStream) no later than 2 p.m. Eastern time two business days prior to loan funding. The Rate Beat Program excludes secured or collateralized loan offers from any lender, and the competitive offer must be available to any customer with a similar credit profile. Terms are subject to change at any time.
If you believe you have been approved by another lender for a lower qualifying rate, contact LightStream customer service. We will work with you to determine your Rate Beat eligibility and obtain the necessary documentation.