One of the main enquiries from many readers regarding their purchase of timeshare has been the loan agreements to conclude the purchase. These are invariably brokered by the sales staff themselves and are a very important tool in their arsenal to ensure a timeshare sale. After all, most timeshare sales reps only get paid commission on successful sales, so the loan agreements will boost sales from those who could not actually afford the purchase price. Plus they will also receive a commission for brokering the agreement, so for the timeshare sales reps, this is a very lucrative tool.
You have all been there, attended a sales presentation either for the first time or for an “upgrade” meeting with the in-house reps. The product is laid out before you, the sales patter begins and you are now in the grip of a rep who has only one goal, to sell you a timeshare or an upgrade.
You can claim until you are blue in the face that you cannot afford the timeshare or upgrade, but that will not cut any ice with your rep.
The product will be shown in its best light, they will pressure you into wanting the timeshare or the upgrade, that it is something that will only give you great holidays and enormous amounts of pleasure. You really can’t do without it.
Enter the final part of the sales pitch, “what if I can make this affordable”?
I am sure you have all heard that one.
The sales rep or his manager will explain very briefly the loan agreement, that it is “guaranteed” to be accepted, once you sign the agreement, by the time you arrive back home from your holiday you will receive a letter welcoming you to whichever company and for taking out a loan with them.
Not bad, a quick loan and you now own the timeshare or have upgraded. There is only really one big problem, can you actually afford the repayments, did you complete an “expenditure v’s income” report to show that the prepayments are affordable and do not leave you short?
In all the loan agreements which Inside Timeshare has come across, these reports which are a basic part of taking out any loan have never been done. The question we have to ask is what sort of credit checks have been made after all these loans are very substantial, the average is around the £20,000 mark?
It should also be noted that it is not just the cost of the timeshare that needs to be taken into consideration, but it is also the very high-interest payments. In most cases that we have seen the amount to repay back is almost or more than double the original purchase price, so why have there not been stringent credit checks and affordability checks?
The answer is pure and simple, greed.
One question that Inside Timeshare has asked on many occasions, especially the older purchasers, had you gone to your bank for a loan of this size to purchase timeshare, do you think your bank would have given it to you without all the stringent affordability checks, or even due to their age. Every answer was the same, no they would not have approved the loan.
It is also a fact that Shawbrook Bank back in July 2016 announced they had found “irregularities” in their “due diligence” on approving loans for timeshare. They had not done the usually required credit checks or affordability of repayments. They set aside £9 million to offset any defaults on these loan agreements. The CEO of Shawbrook at the time had to also resign.
This is not a subject that is new to Inside Timeshare, below are links to other articles on this subject, one of the biggest finance companies which have found themselves the subject of many court cases is Barclay Partner Finance. They infamously provided all the finance agreements for one of the biggest frauds in timeshare history, the loan agreements for the Silverpoint “investment packs”. On average the purchase of these packs have reached over £60,000 and that is without the interest!
There are ways that these loan agreements can be challenged, but that does need the case to be taken to a UK court by a competent and experienced lawyer in this field. The one-piece of legislation which is being used is Sections 140a & 140b of the Credit Consumer Act 1974.
Basically, this covers the “unfair relationship” between the broker (sales staff) and the loan provider. The fact the sales staff require the loan agreement to make the sale creates a very unfair relationship against the consumer. After all, he needs to earn his commission.
Inside Timeshare has also come across readers who have made an arrangement with BPF to reduce the amount being repaid, this does sound like a good idea if you are struggling, the unfortunate thing is that BPF will place you on a defaulters register and that will affect your credit rating. One reader is going through this at the moment, it is stopping them from getting a mortgage, so the wonderful image of a timeshare purchase for this reader has turned into an even bigger nightmare.
Inside Timeshare just wonders how many thousands of people have been caught up with purchases made by loans brokered by the sales staff, we also wonder how many of these have now lost all credit ratings due to being unable to afford the loans. This is a problem which has been going on for years and yet we see nothing from any of the regulatory authorities such as the Financial Conduct Authority siding with the consumer, they just seem to be siding with the finance industry. (See yesterday’s article)
The sooner the finance companies do what Shawbrook Bank has done and admit they have made very serious errors in their “due diligence”, the better it will be for all those caught up in these high-interest loan agreements.
Past articles on the subject of loan agreements