How to refinance your timeshare loan

Couple sitting at home, looking up timeshare refinance on their laptopImage: Couple sitting at home, looking up timeshare refinance on their laptop

In a Nutshell

You may consider a timeshare refinance if you want a lower interest rate. But finding the best lender may require some work, and not everyone will qualify.
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A timeshare refinance isn’t easy, but if you’re willing to put in some research, finding a lower rate could make the work worth your time.

According to recent data from the American Resort Development Association, the average purchase price of a timeshare is $22,942, not including annual maintenance fees or property taxes. Your interest rate could range from 6% to 17% with typical timeshare financing, depending on your creditworthiness, says Jason Gamel, president and CEO of the ARDA.

While you may save money with a timeshare refinance, there are some things to consider before applying for another loan. Here’s what every timeshare owner should know.



Can I refinance a timeshare?

When you buy a timeshare, you typically have the option to finance your purchase through the developer. While developer financing may be convenient, it may not be the cheapest option.

One distinction between a timeshare loan and a home mortgage is the term length. Gamel says the term for timeshare loans is generally seven years. With shorter terms than a home mortgage, you’ll generally see higher interest rates.

“The interest rates can range quite a bit,” Gamel says. Depending on your credit profile, you may see rates ranging from 6% to 17%.

If you’re struggling to afford high interest rates, try exploring loan options. You may be able to make your monthly payments more manageable by locking in low rates. Generally, the higher your credit scores, the more likely you are to qualify for low interest rates and more repayment flexibility.

Just keep in mind that if refinancing involves extending the length of your loan term, you may wind up paying more than you had planned over the life of the new loan.

Where can I find timeshare refinancing?

Timeshare refinance options could be a good idea if you’re eager to lower a double-digit annual percentage rate. Here are some possibilities to consider.

Unsecured personal loan

“Those looking to refinance through a third party may consider applying for an unsecured personal loan,” Gamel says.

Here are three online lenders that consider unsecured personal loans (which don’t require collateral) for timeshares.

  • LightStream — LightStream offers competitive rates and no fees for borrowers with good credit.
  • Best Egg — Best Egg offers the ability to prequalify with a soft credit check.​​​​
  • Upstart — If your credit isn’t great, you may want to consider Upstart, a lender that considers more than your credit scores.

To qualify for an unsecured personal loan, lenders may review your credit scores, income and debt-to-income ratio. Generally, a few factors, including higher credit scores, higher income and less debt, make it easier to qualify for a timeshare refinance loan.

Unfortunately, not all lenders will approve an unsecured loan for a timeshare refinance. If you can’t find one that works for you, you’ll have to consider other options.

Home equity loan or home equity line of credit

If you don’t qualify for an unsecured personal loan, you may consider refinancing with a secured loan, which requires collateral. A couple of examples of secured loans include a home equity loan or home equity line of credit, or HELOC.

“It’s a popular way to refinance without refinancing,” Gamel explains.

He says timeshare owners typically own a primary home, with the ability to tap their home equity. You may score a lower interest rate than an unsecured loan by using your home as collateral. But refinancing with home equity is risky because you could lose your primary home and the timeshare if you can’t make the payments.

How does a timeshare refinance work?

When you refinance a loan, you apply for a new loan with a lower interest rate. Once approved, you can use the new loan to pay off your existing one. You may also benefit from smaller or fewer monthly payments.

There are differences between a mortgage and timeshare refinance, though. When you refinance your mortgage, you generally need an appraisal to determine your home’s fair market value. Your home’s value serves as collateral if you default on your payments, making it less risky for the bank. But some timeshares may not have the same market demand, and lenders may be less likely to refinance a timeshare loan.

What are the pros and cons of a timeshare refinance?

Before applying for a timeshare refinance, you may also want to consider some pros and cons.

Pros

  • You may qualify for a lower rate, paying less in interest over the life of the loan.
  • You may lower your monthly payments, making the timeshare more affordable.
  • If you’re considering an exit, paying off your timeshare mortgage may provide more options.

Cons

  • You could save more money over time by paying off the timeshare loan early.
  • There may be origination fees for a new loan.
  • Tapping your home equity to refinance could put your property at risk.

Alternatives to refinancing a timeshare

If you don’t qualify for a timeshare refinance or prefer to explore other options, consider one of these alternatives.

Pay off your timeshare loan early

Gamel says you can save on interest by paying off your timeshare loan early.

If you can make a lump sum payment without negatively affecting your other financial goals, this could be a good option. Just be mindful of potential prepayment penalties.

Try renting out your timeshare

If you’re too busy for trips and don’t plan to use your timeshare, you may offset some of your costs by renting the timeshare to other vacationers. Gamel says you can try to rent it yourself or work through your developer or homeowners association.

The Coalition for Responsible Exit, a program from the ARDA and its developers, suggests comparing each rental advertising package and fees before making your choice.

Work with your current lender

Gamel says another option to try is working with your timeshare developer. If your credit has improved since the original purchase, ask if it’s possible to lower your interest rate.

Plan your timeshare exit strategy

If you’re looking for ways to move on from your timeshare, you can start by contacting your timeshare company to learn about your options, like taking back your timeshare to resell. But owing money on your timeshare loan could affect the options from your timeshare company.

If the timeshare company isn’t willing to work with you, you may consider a third-party reseller. You can vet third parties by searching for complaints through the state Attorney General and local consumer protection agencies.


Next steps: Be proactive when buying a timeshare

While sales pitches can be tempting, Gamel says you need to fully understand your timeshare contract before signing the dotted line. You should watch for things like timeshare maintenance fees, property taxes, commissions, finance charges and closing costs.

You should also be comfortable with your timeshare loan interest rates, without planning to refinance later.

“You shouldn’t bank on your ability to refinance,” Gamel says. “Refinancing may or may not be available to you in the future.”

If you change your mind after the purchase, there may still be time to walk away. Gamel says you typically have a three- to 15-day recission period to cancel your timeshare purchase without paying a penalty.


About the author: Kate Dore is a Nashville-based personal finance writer and Candidate for CERTIFIED FINANCIAL PLANNER<s… Read more.