Q. I cannot afford my timeshare loan anymore. What do I do? Can I just walk away?
A. Unfortunately, you are limited on options. If you financed through Wyndham, your timeshare has a lien on it. It has to be paid off before the lien is taken off. You cannot get rid of it until the lean is removed. Yes, you could trash your credit and walk away. Change your number and hope they don’t take you to court. Court action is unlikely, but not out of the question. Trashing your credit will cost you more in the long run, in the form of higher interest rates. If you are looking for a new apartment, a lot of potential landlords or property management companies do credit checks. Sometimes jobs require credit checks too. Some car insurance companies also charge higher rates for people with poor credit. Credit affects more than just loan and credit card interest rates. Here are the options you do have. They might not be ideal, but you should consider them because trashing your credit is not ideal either. It may seem easier to walk away, but in the long run, it’s not.
- Get an unsecured personal loan to refinance at a lower rate. If you’ve only had it a year or two, there is a slight chance the payment will be the same because it’s not a 10-year loan that Wyndham does. I have not seen a 10-year loan at a decent rate. Most are 8 years or fewer loans. LightStream does timeshare refi’s, but the max term is eight years. You could try your local credit union to get a lower interest rate too. Lending Club is another option for personal loans.
- Refi your home or get a HELOC. I do not recommend this option, because it ends up costing you more in the long term. The interest rates may be lower but the term is longer. Plus, you are tying up equity in your home that you cannot use for emergencies. It could make it harder to sell your house too, if the new loan puts you at, or close to market value. There are commissions and other fees that have to be paid when you sell your home. Just because your house might be worth $250,000, doesn’t mean it will sell that much.
- Borrow from your 401k or TSP. Again, I don’t recommend this, because this is supposed to be savings. That is money that will not be earning any interest too. Plus, if you leave your job, you might be required to pay it back within 60 days.
- If you get a personal loan, HELOC or another way to pay off the Wyndham loan, there will not be a lean on your timeshare, so you are free to try and sell it (you likely won’t get much), give it away, or turn it back into Wyndham through their Ovations program. It sounds crazy to pay on something you do not own, but when you get rid of it, the maintenance fee payments stop. So even if your rate does stay the same, you can use the money you are not paying for maintenance fees to pay down the loan faster. It’s no crazier than trashing your credit intentionally.
- Stick with what you have and do your best to pay it down as fast as you can. Rent your points to friends and family, to offset the costs of maintenance fees. Remember, if you get behind on your maintenance fees, Wyndham could and likely will, cancel your reservations. You don’t want your friend or family member to lose that reservation and their money.
- Ask for help from family or friends. Maybe let them take over the timeshare loan and maintenance fees for a while. Let them use it, while they are paying on it. Wyndham loans are non-assumable, meaning it cannot be transferred to them, so they would have to pay the loan and dues on your behalf.
- Call the Wyndham Cares line at 866-434-9046. They can offer deferment options while you get back on your feet. They might be able to make a suggestion not listed here, that could help you.
I know the idea of walking away from it seems enticing because it seems easier but again, it’s not. Constant debt collector calls and mailings, ruined credit, lost job opportunities, limited lending options, higher car insurance rates, higher interest rates and more will cause more trouble in the long term. You are not alone in considering walking away. Some do, but some realize it’s not a good idea. The ones that do are usually people in their 80’s who don’t care about credit.
And for the love of God! Do not buy into the timeshare exit companies who promise to get you out of the financial obligation you agreed to pay. Best case, they take your money and run. Worst case, they tell you to stop paying and ignore the calls and destroy your credit. Then, take your money and run. Technically, they did get you out of your timeshare. They just trashed your credit, all for the low price of $5,000. If someone wants money upfront, don’t. Just don’t. Even if they say it’s for “Administrative costs”. If they are so good at getting people out of timeshares, they would have made enough money to cover the administrative costs upfront. Any reputable lawyer will tell you right off the bat, that the chances of getting out of a financial obligation without any proof of wrongdoing are slim to none. If it were easy to get out of financial obligation, many more would be doing it. This is a tough pill to swallow. Especially if you are dealing with some serious financial difficulties. The fact is, the timeshare industry as a whole is chock-full of shady people and companies. Some people will get you coming in, while others will get you going out. You are not alone. The options I listed here may not be what you wanted to hear, but trashing your credit or relying on some shady timeshare exit company is much worse.