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Unable to pay your holiday timeshare instalments? Your credit score could be hurt

Moneycontrol logo Moneycontrol 18-06-2021 Venkatasubramanian K
graphical user interface: Unable to pay your holiday timeshare instalments? Your credit score could be hurt © Venkatasubramanian K Unable to pay your holiday timeshare instalments? Your credit score could be hurt

Many of us long for a holiday to choice destinations. Some have timeshare arrangements at select locations. The second COVID-19 wave is on its way out, but we are already talking about a possible third wave. In the mean time, paying annual maintenance charges and monthly instalments on timeshare membership is a challenge. Some have lost their jobs, businesses have been impacted due to lockdown or salary is reduced by the employer after the COVID-19 outbreak.

If you fail to pay your annual charges and instalments, your timeshare company could report the default to the credit bureau. That could affect your credit score as well.

In case you’re thinking of discontinuing your timeshare membership in the pandemic, here’s what you can do

Reach out to timeshare company

Anup Singh, 32, is a self-employed person from Delhi. He has held a timeshare membership since 2017. It cost home Rs 8.5 lakh for a 25-year term. He pays Rs 12,000 as a monthly instalment and the annual maintenance charges of Rs 10,000 separately, excluding taxes, to the company. Due to the pandemic, his business got impacted. Anup faced financial troubles in paying the timeshare instalments and annual maintenance charges. So, in June 2020, he reached out to the company seeking some relief. “The timeshare company allowed instalment deferral for 18 months after reviewing my financials and the impact of the pandemic on my monthly income,” says Singh.

“We did see some delays in the membership payments, but took an understanding approach towards the collection of our dues, realizing the COVID-related difficulties,” says M. Harinath, Vice President, Corporate Marketing of Sterling Holidays Resorts. We allowed some of our members to clear their dues after the lockdown was lifted, he adds.

You should immediately communicate with your timeshare company and discuss your financial constraints. “Some of the timeshare companies have multiple relief programs for their members who have medical emergencies, face financial constraints or lose their jobs,” says a spokesperson from the timeshare industry, requesting anonymity.

Apply for a downgrade in the membership

The timeshare membership has different categories according to the holiday destinations, membership years, room type, number of days for holiday, etc.

For instance, Country Club’s membership is available in three categories for 30 years – blue, white and red seasons. The membership fees is different for each category. The membership fee for the blue season is low, while that for the red season is higher.

Similarly, Club Mahindra has two membership plans:Premium and Classic, for 15 years. “You should apply for a downgrade if you hold a higher category of timeshare membership. Companies allow a downgrade due to financial constraints,” says Rakesh Sheth, co-founder of Udaan holidays, a travel organising firm.

Timeshare companies allow a reduction in the number of years of membership if you are unable to pay the instalments.

Also read: Want to cancel your house booking during COVID times? Know the steps involved

Transfer the membership

A few timeshare companies allow the transfer of membership to friends or relatives. This way, you can exit from the timeshare membership and do not have to pay any further instalments or annual fees to the company.

“The members who want to exit from our membership, do not have to incur a cost. They can simply transfer, sell or bequeath the membership to others. We do not levy a termination fee,” says Harinath of Sterling Holidays Resorts. The customer service of the company will help you in the transfer of the membership, in terms of collecting the membership certificate from you and issuing a new membership certificate to the transferee.

Negotiate hard for a good deal

It’s not easy to get a refund, if you wish to exit. Many companies do not give refunds. For instance, Country Club has mentioned in its terms and conditions that the charges are not a refundable deposit.

“In this pandemic, some companies have allowed members to exit from the membership, but there is no refund processed despite multiple applications from the members,” says Sheth. Instead, some of the timeshare companies have agreed to provide a credit on the membership to stay for a couple of weeks against the instalments paid till now. “But, it requires multiple follow-ups with the customer service to get such benefits,” Sheth warns.

What if I stop paying the instalments and annual fees?

Aman Kawali, 35, resides in Pune. He decided to stop paying the instalments towards timeshare membership and annual maintenance fees in May 2020 during the lockdown. He assumed that this was the way to discontinue the membership and exit. Later, he also ignored phone calls from the recovery team of the company who had been threatening to report him to the credit bureau for repeated defaults. His monthly instalment was of Rs 10,000 towards membership and Rs 6,000 as annual maintenance charges.

In December 2020, while reviewing the credit report, he was shocked to see that the timeshare company had reported defaults to the credit bureau and it had impacted his credit score.

“The ideal method to foreclose and exit the membership should be to inform the company through email and follow-up with a call to customer service stating your financial constraint. So, foreclose the membership. This way there will be no liability on you and your credit score won’t get affected,” says Sheth.

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