What Are Timeshares & How Do They Work?

woman lying on resort bed with tray of orange juice and pastries

If you’re asking the question “what are timeshares”, you’ve either been someplace where you were offered to attend a timeshare presentation. Or you’ve heard about timeshares through friends or some other avenue and want to get more details about timeshares.

In order to help you, I’m not just going to answer “what are timeshares” but also explain how timeshares work. This way you can be informed before you go to a timeshare presentation.

How Do Timeshares Work?

A timeshare is a vacation resort style property that allows “owners” to vacation at that property for a set number of days or by the use of “points”. Most timeshares are managed by a timeshare exchange management company. This makes it possible to stay at another timeshare property within the network other than the one that was purchased. In addition to paying for the use of a timeshare, owners are also required to pay maintenance fees for the upkeep of the property.

That’s what a timeshare is by definition. But there’s more to it than that. There are other questions that need to be answered before considering buying a timeshare, including:

  • Can you live in your timeshare?
  • Do you pay monthly for timeshares?
  • What happens when you pay off your timeshare?

There are other questions that are related to buying a timeshare. We answer some of these questions in this article.

If you are dead set on getting a timeshare, you’ll want to read this article on how to get a timeshare for FREE.

But for now, let’s focus on these three questions. Why these questions?

Well, if you “own” a property, you would think you could do what you want with it. So if you “own” a timeshare, a logical question to ask is whether you can live in it.

As for the next two questions, it stands to reason that if you “own” something as expensive as a timeshare, you’ll need a way to pay for it. And you likely don’t have an extra $30,000 sitting around for a vacation property.

So let’s take a closer look into these questions to help you see if a timeshare is for you.

Can You Live In Your Timeshare?

woman lying on resort bed with tray of orange juice and pastries
Image credit:
Toa Heftiba via Unsplash

The short answer is, no, you cannot live in your timeshare. The reason you cannot live in your timeshare is because timeshares are not long-term rental properties. When you sign your contract, you are agreeing to stay at your timeshare property for a specific number of days or weeks. Although you are told you “own” your timeshare, it is not the same as if you “owned” a vacation property at the beach.

This is a good time to explain this concept of timeshare “ownership” since we’ve mentioned it quite a few times now.

When you go to a timeshare presentation, you may be told that you are purchasing a “deeded timeshare”.

What is a “deeded timeshare”? A deeded timeshare is a type of timeshare that promises that you “own” a specific unit on that property. You will have access to that property for a fixed week. Meaning that you will have access to that property, in a specific unit on the same week every year. The other weeks of the year will be “owned” by other people who bought into the property.

An important point about deeded timeshares should be addressed here.

You’ll be promised that you can “pass down” this timeshare to your children. The salespeople try to make it sound like an investment.

What they don’t tell you is that your children will be financially obligated to this timeshare. It could wind up being more of a burden than an inheritance.

Now back to our discussion.

As you can see, if you only have the rights to a specific unit one week out of the entire year, it’s not possible to live in your timeshare.

There is another type of timeshare called “fractional ownership” . It’s similar to fixed week timeshares. The difference is that you can usually stay for more than a week.

The only problem is that having 4 to 12 more weeks to stay at a timeshare doesn’t allow a person to live at the timeshare property.

In view of this, if you were planning on spending your money on a timeshare so you could retire there, I unfortunately have bad news.

For the amount of money you’ll spend on a timeshare, you could use that money as a deposit for a vacation home that you own outright. Then you could decide what weeks you want to stay at a property you actually own.

And don’t forget. In addition to the cost of the timeshare, you’ll have to pay maintenance fees .

That leads us nicely into the next topic….

Do You Pay Monthly for Timeshares?

If you are financing your timeshare, then yes, you will be paying monthly for your timeshare. The average cost of a timeshare is north of $22,000. And if you are financing it, you’ll be paying interest too. You could also pay for a timeshare by taking out a personal loan. In either case, you will be paying monthly for your timeshare until the principle is paid off.

parents with two young children and a teenage boy on beach
Image credit:
Ransford Quaye via Unsplash

If you bring this up during the timeshare presentation, you can expect they will have an answer to make the payment less burdensome.

Since you will likely be on vacation when you attend a timeshare presentation, you’ll be asked how much you’re paying to stay at the property you are vacationing at.

Then they’ll ask how many people are traveling with you. The purpose of this is to make those monthly payments seem more reasonable.

For example, it you are vacationing as a family of four, you’ll be asked how much it costs to stay in your hotel room. You’ll then be sold the promise of a bigger room in a timeshare that can accommodate your entire family easily.

And you might be surprised by me telling you that this is a true statement.

Timeshare rooms are usually bigger than the average hotel room. They’re more like extended stay properties. You will in most cases have a full kitchen complete with a stove, refrigerator, and a dishwasher.

You’ll also have silverware, dishes, drinking glasses, pots and pans provided. This, you’ll be told, will reduce your vacationing costs because you’ll be able to prepare and eat your meals in your timeshare room.

And that can translate into a large savings depending on the size of the group you vacation with. You’ll have to decide if that makes the timeshare worth the money.

Another fee you’ll have to pay has already been introduced to you. The maintenance fee.

The timeshare maintenance fee is usually an annual fee. So you won’t have to pay it every month. Expect this fee to be about $1,000 per year depending on the property.

It can, however, be much higher. Closer to the $5,000 per year range.

Additionally, your maintenance fee can go up every year. And if you want to continue using the property, you’ll have to pay the increases.

What Happens When You Pay Off Your Timeshare?

Ok. You’ve decided purchasing a timeshare is right for you. You’ve determined that the maintenance fees are something you can live with.

What happens when you pay off your timeshare?

After you pay off your timeshare, no more monthly payments are required if you financed the timeshare purchase. When you book your stay at the timeshare, you simply arrange for the specific dates you want to travel and go. You won’t be hit with any additional costs or fees. You will, however, have to keep paying the annual maintenance fees. Maintenance fees will never go away if you own a timeshare.

That can be a good thing. Especially if you feel that you are getting all that a timeshare promises.

Keep in mind, though, that it can take many years to pay off a timeshare.

Therefore, the question you have to ask yourself is, “Am I going to get the value from the timeshare while I’m paying for it?”

Remember, you will be going to the same place every single year when you take a vacation. If you’re ok with that, then it’s a no-brainer.

But if you would like to add some variety to your vacation schedule, it could pose a problem.

Timeshare companies know that being committed to the same place year in and year out might cause some fatigue.

So, if you are serious about paying for a timeshare, make sure it’s part of a timeshare exchange network.

Being part of a timeshare exchange network will give you the flexibility to trade weeks or points at your home timeshare to stay at another timeshare property you did not purchase.

If you’d rather take your vacation on a cruise, you can trade your weeks or points for that as well. This gives you variety and doesn’t lock you into one place to vacation every year.

The two biggest timeshare exchange networks are Interval International and RCI (Resort Condominiums International). They have hundreds upon hundreds of timeshare properties around the world you can select to trade weeks with.

Should You Purchase a Timeshare?

If you’ve made it this far, you probably are seriously considering a timeshare. If that is true, I highly recommend reading this post that examines timeshares as a financial investment.

The next post I recommend reading shows you how you can stay at a timeshare property without having to carry the financial burden of paying monthly. It also shows you have to can get a timeshare for free.

Assuming you’re one of those that do not think anyone should purchase a timeshare, I hear you.

There’s a reason why there are so many ads for timeshare exit companies.

Timeshare presentations are high pressure sales tactics designed to force an individual to make a snap decision without taking into consideration all that is involved in the purchase.

My goal is to provide people who might be considering purchasing a timeshare the knowledge they’ll need before going into a presentation. These salespeople can be quite convincing to the uninitiated.

Hence, if a person knows what to expect going in, that individual can spot the landmines and not step on them.

I’ve been to dozens of timeshare presentations over the last 25 years. From Mexico to Myrtle Beach, from the Poconos to Vegas. I’ve heard the pitches from high demand areas and low demand areas.

And while it’s my assessment that a person should not spend money on a timeshare, I recognize an important fact. It’s not my money. I can’t spend your money for you.

What I can do is give you what I hope is useful data for you to make an informed decision about purchasing a timeshare. If that decision is to purchase a timeshare, you’ll go into the presentation fully aware of what they will do and what will be expected of you. And I show you how you can get a timeshare for the least amount of money.

If after reading, the decision is to stay away from timeshares, then my desire is to help you make the most out of your vacation. You might even decide to take another type of vacation.

If you’ve already bought a timeshare but want to get out, this post will walk you through what you’ll need to do and look out for.

Whichever the case, if you found this post useful, share it with your friends and others on social media. That way they can make the best decision for themselves for their next vacation.

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