Can I refinance my timeshare?

Many times Cancel Timeshare clients ask us how having timeshare debt changes credit scores. Many of our clients want to know if timeshare debt can hurt their credit scores. We have heard and seen every situation imaginable when it comes to timeshare debts hurting our clients and wanted to give other timeshare owners resources to address the timeshare trap.

Here is what we can share with you that may help you prevent from taking a hit to your credit score from timeshare debts.

💳 Timeshare debt is considered unsecured debt 😐

Although you have a 'deed' or 'points certificate' timeshare debt is generally considered Unsecured Debt (Read more about types of debt here on Investopedia). The reason is that the debt has no real collateral from the perspective of other lenders. This means if a borrower stopped paying the loan then a bank or lender would not be able to recover the loan amount by selling the timeshare. Therefore most timeshare loans are directly from the timeshare developer.

Read more about timeshare financing here

🏦 Why are timeshares nearly impossible to refinance?

Because timeshare debt is considered unsecured debt, most lenders will not refinance timeshare loans. This is especially upsetting for many timeshare owners because timeshare loans have notoriously high interest rates and are on exceedingly long terms (usually 10 years). Many timeshare owners would like to pay lower interest rates and have other options for the term of the timeshare loan. Yet, to date there are only two options that offer timeshare owners advantages over timeshare developer financing

There are only two options to refinance a timeshare loan and both require Good to Excellent Credit Scores

Home Equity Lines of Credit - In this situation the borrower uses their home as collateral to move the timeshare loan from the timeshare developer to their local bank or credit union.

Pros: Lower Interest Rates

Cons: Must have a home with equity > needed amount, Need Good or Excellent Credit Typically.

LightStream® - A lender that specializes in alternative financing. Although typically the terms are shorter and the interest rates are still close to timeshare financing interest rates.

Pros: May offer lower interest rates

Cons: Shorter terms means higher payments typically. Hard to get approved.

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*Lightstream rates and terms as of June 17, 2021

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