Timeshare Math 101: The art of fuzzy numbers

Timeshare math isn't math, but sales tricks used to lure unsuspecting victims into the timeshare trap. In this article I will cover the real math behind timeshares - including purchasing costs and timeshare maintenance costs.

Our goal is that you can avoid being trapped into another timeshare purchase, and also can use this information to get a leg up on your timeshare company.

The easiest to cancel a timeshare is to never buy one.

Timeshares are a poor financial decision.

No matter how you skew the facts. Timeshares are not logical financially (this does not include secondary market timeshares/resale timeshares). That doesn't mean you should not buy a timeshare, but only do so knowing that you are paying a premium to own a timeshare.

The reality of buying a timeshare from a timeshare developer is such a ridiculous notion that timeshares are most often sold because of unethical timeshare salespeople lying to deceive timeshare buyers.

The biggest area these timeshare companies dupe people is with their math - or rather their lack of transparency regarding the cost.

When you add the cost to buy, the cost to maintain, and the cost to exchange your timeshare - while also factoring what you are actually buying (the actual features and benefits) it is one of the worst possible financial decisions.

The cost to purchase a timeshare

The first area timeshare companies grossly mislead buyers is the actual purchase cost of the timeshare. The biggest considerations they will not tell you on the timeshare presentation is that:

  • The timeshare is not an asset, but is actually a financial liability - this is because the benefits convey from the developer meaning the timeshare does not have a resale value anywhere close to the developer price tag. Check here to see what timeshares are selling for and you will see what the reality that timeshares have ZERO value on the secondary market.
  • The interest rates on timeshare financing are usually in the double digits - unless you pay cash for the timeshare you are going to spend almost double the purchase cost to finance the timeshare if you pay through the end of the loan term.
  • Example: Timeshare Financing Costs

    * Note: this is the actual price of an actual 'new owner' package with one of the biggest timeshare companies out there. Hint hint it starts with W 😉.

    Timeshare A costs $20,000 and has Down Payment Requirement (usually 10%) of $2,000.

    You cannot pay cash for the timeshare and decide to finance it. You have good credit and are offered 14.99% APR for a 120 month loan term (10 years is the timeshare industry standard loan term).

    Unless you pay off the loan early (best case scenario), you will end up with -

    Monthly Payment: $290.29 (does not include maintenance fees)

    Total Principal Paid: $18,000

    Total Interest Paid: $16,835.12

    Total Timeshare Loan Cost: $34,835.12

    Total Interest Percentage: 93.52%

  • The amount of points purchased will most likely not cover the vacation time you want to take, the unit size you need, or the season you prefer to travel during - over 71% of the timeshare transactions were from existing owner upgrades according to an industry report by ARDA who acts as the timeshare industry lobbying organization. The original argument by the salesperson when you bought the timeshare was that the cost to own a timeshare would be cheaper than renting hotels or condos - but we need to calculate a nightly rate with the financing included to see what we're actually spending.
  • Example: Calculating the Cost Per Night

    The first example is a real timeshare package that has a real point value assigned to it of 105,XYZ points (we cannot give you the actual total number b/c this timeshare company is a lawsuit trigger-happy, sleazeball organization - but I digress).

    With the package from above you could get approximately 3-11 nights per year (excludes any housekeeping costs or misc. fees) and is dependent on the unit size and season you want to travel. So will calculate best case and worst case Cost Per Night and an Average Cost Per Night.

    So first let's factor the total number of nights over the 10 years you will be paying for this timeshare -

    Worst Case Scenario (big rooms / prime season):

    3 Nights per Year x 10 Years = 30 Nights

    Best Case Scenario (broom closets in the beach in January):

    11 Nights per Year x 10 Years = 110 Nights

    Average of the two:

    110 Nights + 30 Nights = 140 Nights ÷ 2 = 70 Nights

    Next let's divide the total real cost (interest + principal) by the nights from each scenario -

    Worst Case: $34,835.12 ÷ 30 Nights = $1,161.17 Cost per Night

    Best Case: $34,835.12 ÷ 110 Nights = $316.68 Cost per Night

    Average: $34,835.12 ÷ 70 Nights = $497.64 Cost per Night

    I am not a rocket scientist, but I am guessing there are way better deals out there to stay on vacations without being subjected to a $300+ nightly rate.

    Also, please remember this doesn't cover resort fees, maintenance fees, taxes, club dues, housekeeping fees, reservation fees, or any of the other miscellaneous charges they will throw at you and your family.

Timeshare Maintenance Fees

The second (and often most hated part of owning a timeshare) is the never ending maintenance fee cost. When you think about the math from above it's already impossible to justify purchasing a timeshare directly from a timeshare developer, but maintenance fees just perpetuate the absurdity of the timeshare industry.

  • The maintenance fees never end - This is a cost that never goes away and is one of the biggest downside to owning a timeshare.
  • The fees go up almost every year - Ask any timeshare owner when the last time their timeshare maintenance fees went down.
  • Calculate timeshare maintenance fee costs and project your total cost over time.
  • The HOA is usually controlled by the timeshare developer - Check the quarterly filings (available for free here) for any of the publicly traded timeshare companies and you will find that they often money by managing HOAs (usually a 10% fee of the annual resort budget). Where it gets sketchy is that these sames companies usually maintain a controlling interest in each timeshare plan or resort they sell.
  • Learn how timeshare companies play both sides against the middle

    To keep it simple I will only discuss the Undivided Interest Deed (UDI) timeshare ownership model - which we will call points.

    Points in the Vacation Timesharing Plan are just like shares of stock. You can vote relative to the shares you own on decisions inside your Home Ownership Association (HOA).

    Because the timeshare company has a direct disincentive from losing control of the Vacation Timesharing Plan, they usually retain the majority number of shares. Think of it this way - they will sell 49% of the available shares and maintain control of 51% of the shares.

    This is where it gets highly unethical because the timeshare company can outvote the other timeshare owners on Maintenance Fee Increases and has a direct incentive to do so because they profit from the HOA.

    Also, the timeshare company manages the reservation system. Who do you think will get the better room - you or the timeshare company who is trying to rent out their 51% of the points to non-owners who they can then sell points to?

In closing

Whether you're looking to get into a timeshare for the first time or already own a timeshare. Follow these rules to make the best decision for your family. The last thing you want to have to deal with is terminating an unwanted timeshare.

❌ Do not trust the math the salesperson gives you

⏳ Take your time to examine the actual cost of the timeshare

💳 Avoid any and all timeshare financing

Tired of playing the timeshare game? Get a free, no pressure, no obligation consultation →

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