It is not often disclosed by the timeshare developers that the loans used in owning a timeshare are very different from the debts recognized by traditional banks: secured debt, unsecured debt, revolving debt, and mortgages.
Timeshare financing is a distinctive debt; although it is technically classified as a mortgage, the timeshare property is not considered collateral. Why? In foreclosure, a lender would not expect to receive money to cover the loss since timeshares have little resale value. Because of this, refinancing a timeshare tends to be highly complicated, and loans are looked at as an unsecured debt instead of a mortgage. When purchasing, you had to make a down payment because the loan needed collateral, and other than your down payment, the loan remains mainly unsecured.
Consider this example: You purchase a $20,000 timeshare and make a 10% deposit, leaving $18,000 to be financed. If you never make a single payment and default on your loan, the lender will not get back anything close to the balance, leaving the $2,000 deposit to cover their losses and expenses.
Options Available for Refinancing Timeshare Loans
The risks associated with timeshare loans and debts are complex; most traditional lenders will not refinance, even the most responsible borrowers. In some select cases, a few alternative lenders and loan agencies can be used to refinance. However, they require a higher range of good to excellent credit ratings. Additionally, borrowers seek refinancing as a financial break that could lower their loan payments. If a borrower is approved through an alternative lender, they may see a significant increase in their monthly payments.
“…but our timeshare agent said our monthly payments would be lowered?”
Unfortunately, we hear this every day when we speak with potential clients and customers who are fed up with the finances tied up in their timeshares. At Timeshare Legal, we offer a way out. We have helped thousands of clients cancel millions of dollars in timeshare debt. We understand the financial burden that timeshare companies leave their owners to carry; Timeshare Legal offers a no-money-upfront option for candidates who qualify. With over 150 5-star reviews, there is a reason we are the leading timeshare cancellation company.
