The High Cost of Vacation Ownership

Timeshares are expensive items.  So expensive that you'll end up taking on a mortgage that could last up to 15 years.  In addition to those monthly mortgage payments, you are responsible for what's called "Maintenance & Tax" fees.  These fees can be as high as several hundred to several thousand dollars each year.  Oh, and lets not forget the "hidden" costs such as exchange fees, yearly membership fees, interest, and travel expenses.

Supposedly, you will purchase a timeshare to save money on your yearly vacation.  After all, the most expensive part is the lodging.  During the sales pitch, the salesman will do some math and work it out so it appears you'll be saving money by carefully omitting the hidden costs.   

A scam is always well designed to look like it's beneficial to the "sucker".  The math while valid and convincing is merely an illusion.  It attempts to solve a problem that does not exist.

Let's do some math of our own.

  • Timeshare Cost: $20,000 for a two bedroom villa.
  • Yearly tax and maintenance fees: $700
  • Monthly mortgage (15 years): $178
  • Exchange Club Yearly Membership Fee: $90
  • Exchange Fee: $180

Lets say you travel to the same place each year for 1 week (7 days and 7 nights).  With your timeshare, you pay nothing to stay at your destination, just the maintenance and tax each year.  The standard best available rate at this destination for the general public is $175 a night for the same unit.

With tax, the above comes out to a little over $1,300 for the 7 night stay.  So far so good, you've saved $600 this year... or no?

It's easy to forget that your paying a 15 year mortgage on this thing:

Add up the total spent on the monthly mortgage, tax, maintenance, and membership fees.   All of a sudden, your spending more that double on a vacation each year.

Assuming you decide not to take a trip one year, you are still responsible for the mortgage, tax, maintenance, and membership fees.  You'll pay more than double for a vacation you'll never take.  The salesman will mention you have the ability to rent out your unit to someone else.  Thing is, who would pay YOU almost $3,000 to stay at a hotel or resort they can book themselves for less than half the cost?  Oh, and did you know their is an additional fee for renting out your unit?  Lets also not forget this is considered additional income that you must declare on your tax return.

Sure, the mortgage will be paid off in 15 years.  However 2 things to point out:  The resort, will sooner or later pitch an "upgrade" offer to your unit.  Sure, go ahead upgrade to a 3 bedroom lock-off unit and lock yourself into another 15 year mortgage.  Secondly, how are you so sure you are going to be vacationing for 1 week every year for the rest of your life?

Hmm... this math isn't working out so well.  Unfortunately It gets worse.

Exposing the truth in timeshare and vacation ownership scams.
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