Opinion on what to do with timeshare loan?

Hey guys, 

I would like an opinion on what we should do. 

My DH and I have a timeshare loan that's almost paid off. (A bad decision from way before YNAB) The loan is in USD and the monthly payment is charged to my CC every month, the USD monthly payment never changes.

However, since it's in USD and we are Canadian and our finances are in CAD this means the monthly payment on our end varies depending on the conversion rate, and we also need to pay bank fees for the US charge. Lately with what's going on in the economy and the difference between USD and CAD, the monthly payments on our end seem like they will start getting a lot higher ($300 or more a month after conversion charges and such) And to top it off, I've just gotten a 20% pay reduction at my job, and neither DH or I are sure our companies are going to survive the next few months. 

DH has a line of credit for $20k CAD that we haven't used at all. We only got it as  a backup as we purchased our first house a year ago. What we're considering doing is using the LOC to pay off the timeshare loan, and then continue paying off the LOC just like we have been paying off the timeshare loan. 

The main reason is that it would help remove the possible fluctuations in how much we need to pay based off the currency exchange, and if we get in trouble as a last resort we could reduce the amount we're paying it off by if other bills need to be paid. BUT the goal is to continue paying off in CAD the same amount, unless one of us ends up needing EI or something. I just don't like the fluctuations in payment on top of my cut in pay and right now would like to feel like I can have some flexibility if I need it. 

The Timeshare loan has $1,757.76 USD to pay off, with 10 payments remaining. We're paying $207.31 USD each month, and it's interest rate is 17.90%. 

The Line of Credit in CAD would be somewhere around $2,500 I think, if I made the payment today. It's minimum payment would be about $50/mo, but we would aim to pay $280-$300 CAD per month. And it's interest rate is 4.53% over prime, so right now I believe the total interest rate at the moment would be 6.98%. And this will fluctuate with Canada's prime rate. 

What do you guys think? Should we move it to the Line of Credit, or leave it as is and keep paying it off. If we don't do anything it should be paid off by Feb anyways. But making the change also feels like a huge step and kinda freaks me out. 

Thank You :)

-Mel

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  • Hi! I personally would pay the timeshare loan with the line of credit. It seems like you have a good plan in place and with the uncertainty of the economy, seems a little easier to handle the payment in CAD instead of USD. Let us know what you decide to do!

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  • It seems logical to pay off the loan with the Line of Credit.

    I hear you on the timeshare mistake. The best thing about getting a divorce is we were able to surrender the timeshare. Cost us $1500 but was worth every penny.

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  • Make that three votes for using the LOC. The lower interest rate and non-fluctuating monthly payments are worth it, especially since you're going to pay more than the minimun on the LOC with no penalties.

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  • We did it :) Moved it over to the Line of Credit! 

    Still kinda nerve wracking. It's funny, this is something we've been paying off for so long, and it's no longer even near the biggest debt we have, since now we have a townhouse. But It's still kinda stressful moving the money around. Maybe just from the general life stress these days? 

    Thank you guys for helping us make the jump. :) 

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      • dangerosity
      • Aquamarine_Piranha.9
      • 5 mths ago
      • Reported - view

      Mel this will be less stress in the long run!

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      • Wiecked
      • Happy Happy
      • Orchid_Tiger.5
      • 5 mths ago
      • Reported - view

      Mel So glad you did this! Great move on your part!

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  • In the long run, get rid of the timeshare! 😉I know that's easier said than done. They are a financial burden that limit your options. But I know you already know that based on your parenthetical at the top. At least the loan is gone. So congrats there. Good luck!

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  • Hey everyone :) Thank you for the wonderful comments. :) I really appreciate the support!

    I just wanted to post a quick update... and a bit of a durp on my part haha

    I realized about week ago, while I had used the correct credit card to pay off the timeshare. The money I moved from the Line of Credit to the credit card, I actually moved to the wrong credit card. Big sigh. We have 2 credit cards, and I moved the money onto the wrong one. 

    So, to equalize it out a bit, I'm now doing some money shuffling to put more payments onto the one that was actually used to pay off the timeshare and less payments on the one that got an accidental large payment. It's really not a big deal and will be fine in the end, but I seriously facepalmed when I realized I did that. 

    I'm not surprised I did it... that's the kind of mistake I would make when concentrating and carefully considering something... haha But it's a pain in the butt I did it. ah well 

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