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Monday, July 21, 2008

Timeshare Condo No Go

A free trip and $100 American Express gift card if I would just go to a timeshare presentation. My parents have a timeshare. Hmmm, sure, why not?

They made me leave a $20 deposit. I guess they do that to know if you might be serious about going rather than waster their time setting appointments. Sure, why not? they said I would get it back.

So I showed up on Saturday morning with a lovely migraine as my guest. I wasn't in the best of moods for a presentation, but I've been thinking I should vacation more than I have been. At least I would get the free one and who doesn't need $100??

Why they do things the way they do...
Offering free vacations is cheaper than paid advertising on television.

You are pre-qualified--you have to make enough money or they won't bother to have you listen to the presentation.

They use heart-felt stories about how well kids remember vacations.

They get you to participate in the sales pitch by asking questions.

They have you do a worksheet with them to show you how much you'll be "saving" by "owning".

They use the idea of "ownership" as a ploy. You won't end up "owning" anything but a week of time. If the whole resort were to burn down, it's not like a 100 unit high rise condo where you own the value of 1% of the land. You own less than that. It's like owning a week of that 1%. What is 1/52 of 1% worth?

Why it's a bad idea
On a "point system" more expensive hotels cost more points, therefore more money. You may not end up saving very much, the points system disguises that.

There are also fees for exchanging to another week/location.

I pay less for a room because I stay at places like Extended Stay America which is usually very reasonable.

They are trying to pry you away from youur money and charging you alot of interst to finance (13% in this case) so they can fund building new resorts "debt free". They save themselves from getting loans by have YOU bankroll their developments.

Sales: You can always refinance at the bank later and we don't charge interest for the first 90 days.

How I got out...

Savvy: I would like to check with my bank about this first. I don't have $10,000 ready to go in cash. Honestly, I'd rather invest my money at my bank which gives me 5% interest than give THEM my money where they get an extra 13%.

Savvy: Do you have a calculator? Of course he didn't. Scratch paper? I worked it out that in simple interest per year, I would be paying out over 1300 each year. I could vacation with that.

Sales: You can't do it like that. So now my math was wrong too? I doubt it.

Savvy: Right, it's compound interest, which means it's even more, but in simple interest, it's $1300. I'm just not comfortable with that.

Sales: I can see that. Let me introduce you to the guy who can give you your free gift for coming in.

He passed me to someone who was willing to sell a one-year trial membership to me where he promised he didn't get anything out of it. Hmmm....except I had to listen to this prepared presentation he had. I asked for a calculator. It worked out to about $90 a night--in the offseason for where I wanted to go.

Hmmm, thanks anyway. Why would I give them my money in advance??

A typical sales technique is to creat a sense of urgency. Act now and get...
Sales: If you sign up today for this special, it locks in the amount we promised you today. Riiight. Whatever. I know where the office is. It's not going to dissappear. I'll bet someone would be dying to let me buy it tomorrow for the same price if I just showed up.

In any case, I decided that I'll go to another time share presentation another time. Why not? I don't mind getting free stuff. Of course, I'll have to make sure I get the deposit back, etc.

Helpful article on About.com:
Timeshare Ownership
Timeshare Freebies--Are they for real?


mattzpublic said...

Exactly. There are so many hidden costs that the timeshare cos. want to hide behind ultra-aggressive (almost intimidating) salespeople and first-time vacation euphoria. People think "this place is SO wonderful, I'm sure I'd love to live here", and end up signing on the dotted line.

And later they realize they haven't visited in months and are still paying fees, with barely a market to unload it onto.

Why else do timeshare relief agencies do great business?

Frugal Wench said...

The worst part about timeshares is that they are very hard to sell if you want to later. My aunt was stuck with one in Florida, because they could only be sold by the property owner, and they wouldn't even try to sell one that was already owned. They were too busy selling the empty slots. She finally got it sold, but she didn't get her money back out of it, after you figure out all the regime fees she had to pay every year. She said she would have come out better just renting a motel room every year, then at least she could have gone when she wanted to.

Frugal Wench said...

Another drawback is how hard a timeshare is to sell once you have it. My aunt had the hardest time getting rid of hers, because the contact said it could only be resold by the company she bought it from, and they never even tried to sell it. She finally got rid of it, but she never even recouped her money, after counting in all the regime (maintenance) fees she had to pay every year.