Financing your next timeshare may not be on your radar, however paying cash up front may not be the best financial decision either once you read the best reasons to finance your next timeshare purchase below.
Why Financing is Preferable
Having cash in hand and sending it to the escrow company at closing is great if you can afford it, but the fact is that many people scrimp and save for several months or years to pay for their timeshare. If saving has been this difficult for you, it’s not a good idea to pay for the interval or points in full.
Taking on a loan allows you to spread out some of that cost, so you aren’t parting with all of your money at once. You can use a hefty chunk or as little as 20% of the purchase price as a down payment, but wiping out your savings is ill advised. This is because it’s a much wiser decision to leave an emergency fund in your savings account for those unexpected costs that may arise.
Furthermore, you could use some of that pay-in-full cash to actually go on vacation and enjoy what you just purchased. This is called “balancing the fun with the funds”. Why pay $10,000 today for 10 years of future accommodations when you can pay $1,000 each year (plus a small amount of interest) for ten years and enjoy the same accommodations for the same amount of time.
Financing will also allow you to get the vacation package that you otherwise cannot afford upfront. This way you have your choice of premium accommodations and best seasons more suited for your family’s lifestyle, rather than settling for something not perfect and trying to upgrade on much later.
This doesn’t mean you should take on a loan bigger than you can afford. Your resale broker should be able to provide you with a few options and price ranges on the vacation package you want. Use this easy payment calculator here https://www.vacationclubloans.com/rates-calculator/ to see prices vs. down payment which result in different monthly payment amounts. You should pick the one that you are most comfortable with without stretching your budget.
Timeshares Are Not Investments
Although this factual statement is true, investing in your family’s happiness is priceless. If you are planning on vacationing as often as your lifestyle and careers allow, purchasing a timeshare is a great choice. It’s well known that the superior accommodations over hotels will bring many happy memories and avoid many discomforts of sharing small spaces with little amenities.
As individuals we purchase assets that depreciate all the time. Take a car for example. We purchase and they always depreciate (unless it’s a million dollar sports car). If you are comfortable with the fact that a vacation is an expense, just like your car payment, why not save your cash and finance the larger purchases?
It’s implied in the “cash only model” is that all debt is inherently bad. This is not wholeheartedly true. If you paid cash for everything you would not build any credit and this can hurt you. Having good credit when applying for car insurance or a job can verify you are responsible and able to follow through on your commitments.
Financing a timeshare purchase can also help increase your credit score. By using a lender that reports to credit bureaus you will benefit from making those payments on time.
Regardless of the price and down payment you choose, make sure your loan does not have additional monthly fees or a prepayment penalty as this adds to the cost and can erase all the savings you made on your original purchase. You should be able to make your monthly payments on just the principle and interest and add additional principle payments anytime you like.
Contact www.vacationclubloans.com for a free credit evaluation and quote if you want to learn more.