Should you finance the purchase of a timeshare?

While there are many ways to actually purchase a timeshare, a question normally arises on whether you should finance the purchase.  While a home purchase will almost always involve a mortgage, a timeshare is different.  While the various programs tout that the timeshare is a deeded real property interest, as explained here,  a timeshare is a different type of real property and is completely different than a home purchase or other real property where you own the ability to use it 365 days a year.

All the major developers of timeshares do offer some type of financing option.  Upon review of a few major developers, most will offer financing to qualified purchasers for a ten year fixed rate term for about an 11-15% interest rate.  As a comparison, mortgage loans are currently around 3.5% for a 30 year term.

I believe that a timeshare is a luxury item that should only be purchased by those that can afford the initial fee and the ongoing maintenance fees.  While financing options are available, the interest rates are very high and any monthly fee that you will be required to pay the loan will be in addition to the maintenance fees.  This can make the timeshare purchase not affordable or even more expensive that renting hotel units or other condo properties. 

Generally, you should not finance a timeshare purchase.  There are many ways to purchase a timeshare and whatever way you choose, you should be able to afford the initial price.  As argued in my other posts, the initial purchase should be treated as a sunk cost or looked at as a initiation fee or membership fee.  You should be able to afford that price without financing.  If you cannot and you go forward with a financing option, the monthly payment for the initial loan and ongoing maintenance fees will likely be a financial hardship and it will be difficult to maximize the ownership of the timeshare with a large financial overhead.  

A timeshare is a luxury item but it is also vastly different that true real property.  I believe that timeshares are worthwhile to own but financing the purchase is generally a bad decision.

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