Given that the average upfront cost of a timeshare purchase for weekly interval use was $20,170 in 2020, and timeshare developers and companies generally charge very high finance fees and interest rates, it’s understandable why you might want to refinance. Here’s how to do it.
How To Refinance a Timeshare
If you took out a loan to buy your timeshare and you’re not happy with your payment amount or interest rate, one possibility is refinancing your timeshare loan. We’ll walk you through how to do this, step by step.
Step 1: Where Can You Refinance a Timeshare?
There are few companies that advertise timeshare-specific refinance loans, but that doesn’t mean you’re out of options. You’re generally able to use many different types of loan products to refinance your timeshare, including:
Personal loan: A personal loan can be an affordable way to refinance your timeshare loan, especially if you have good credit. Home equity loan: This tends to offer much cheaper rates and is a good candidate if you have equity built up in your home—but make sure you’re able to make the payments. 0% APR credit card: If you can pay off your current loan balance with a new 0% APR balance transfer credit card, you can pay off your loan quicker—but watch out for when interest starts accruing again. Home equity line of credit: A HELOC can be a great way to pay off your current loan balance at a low rate, but be sure you’ll be able to make your payments or you could lose your home.
Step 2: Consider Your Alternatives
If you’re not happy with your timeshare loan, refinancing isn’t your only option. There are a lot of things you can do to change it, depending on your goals. It’s worth considering these options first:
Sell your timeshare: If you won’t be using it anymore, see if you can sell it back to the developer, or through a reputable secondhand timeshare sales website.Rent your timeshare: If you want to keep it but won’t be using it for a bit, then renting out your timeshare to recover some of your costs can be a good option.Pay off your timeshare: If you have enough cash and want to keep it, consider paying off the remainder of the loan.Get help from a timeshare exit company: If you want to get rid of your timeshare and can’t sell it, a timeshare exit company may help, but be aware they can also be expensive and require careful vetting.
Step 3: Check Your Credit
If you apply for new financing, your lender will check your credit report. It’s a good idea to check this in advance yourself so that you can make sure it’s accurate and isn’t unfairly penalizing you for an error.
Step 4: Shop for Rates
Once you know what type of financing product you’ll use to refinance your timeshare loan, it’s time to go out and get quotes. Most lenders offer rate quotes without a full credit check, which preserves your credit. Still, just in case, it’s best to get all of your rate-shopping done within two weeks. During this time frame, FICO treats all of your credit inquiries the same and bundles them into a single inquiry, which won’t hurt your credit as much.
Step 5: Complete the Application
Once you find the best lender, it’s time to apply for the loan. Make sure you include all required documents and stay in close contact in case your lender has any more questions. This can speed up your loan decision time so you can complete your refinance even faster.
Should You Refinance a Timeshare?
If you’re frustrated with your timeshare loan, refinancing can help—but it’s not always the best option. Depending on your goals and your situation, here are the factors to consider.
When You Should Refinance
If you want to keep the timeshare: If you’re using your timeshare regularly, it doesn’t make sense to sell it, so refinancing can be a good option. If you can get a lower interest rate: If you have solid credit, you can generally get much better rates than what the timeshare developer initially gave you. If you want a lower monthly payment: Refinancing a loan for a longer period of time can decrease your monthly payments, but be aware it’s usually more expensive over time because you’ll be paying interest for longer.
When You Shouldn’t Refinance
If you have bad credit: The rates you can get for a new loan might not be that much cheaper than what you’re already paying if your credit isn’t the best. It doesn’t hurt to check, though, as long as the lender does a soft credit pull. If you want to ditch the timeshare entirely: If you’re finished with the timeshare, it doesn’t make sense to refinance it when instead, you might really need to get rid of it.
The Bottom Line
Timeshares often get a bad rap, and one of the reasons is the high-pressure sales tactics that can funnel you into a more expensive loan than you need. If you want to keep your timeshare, you’re not necessarily stuck paying those rates, however. By applying for a new loan to pay off your existing timeshare loan, you may be able to save money and get more-manageable monthly payments. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
