Why are timeshares generally considered a “scam” or “rip-off”?
Do any legitimate timeshares exist where the deal works as advertised?
Generally, Timeshares are talked about in the context of a joke and are rarely taken seriously, but they must have been, or at least to appear to have been, viewed and taken more seriously at some point.
In: Economics
Lets say that you want to go to Disneyworld® once a year for the next 30 years. You also want to stay in one of the top tier hotels each time you do this. You have two choices for how you can accomplish your goal:
1) You can spend >$5,000 per room, increasing for inflation, each year.
2) You can take out a loan to buy a Disney Vacation Club® timeshare for a tiny fraction of the yearly cost.
As long as you use the timeshare every year, the Disney Vacation Club® saves you a lot of money in the long run (you typically break even after about 10ish years of use on a 30 year timeshare).
You can also factor in that the Disney Vacation Club® doesn’t just let you stay at Disneyworld, it lets you stay at any Disney® property in the entire world – and there are a several Disney® properties that aren’t located at a theme park. So even if you get bored of Disneyworld® you can still use your timeshare to take a vacation to places like Hawaii or to go on a cruise.
That’s basically the argument for a timeshare – if you go on a vacation once a year, every year, and you stay in the timeshare then you end up saving a lot of money. Assuming that the timeshare has a good network then you also have a lot of options for where you can go or stay.
The argument against the timeshare is that if you decide you no longer like the timeshare network, you’re basically stuck with it – potentially for several decades. During that time you need to pay maintenance fees and potentially make loan payments on the timeshare. If you’re not using it, then you’re basically paying money for nothing since timeshares don’t build equity – you lose 100% of your “investment” into them at the end of the timeshare, which is typically 30 years. The only way out of that is to find someone to buy the remaining time on the timeshare from you, which is often hard to do.
So that cool timeshare you bought into in Mexico 15 years was new and hip at the time. But now its old and dated, it has a shitty network of similarly old and run down hotels in places you never want to go. And its also costing you $500 a year in maintenance fees. You probably want to spend that $500 on something else, but you can’t because the only way out of that is to find someone else who wants to get the dubious honor of paying $500 a year to stay in a run down hotel in a bad part of Cancun.
That’s the timeshare nightmare and a not insignificant amount of timeshares fall into that category.
Latest Answers