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Did most of you take Tesla financing, or your own outside bank?

Did most of you take Tesla financing, or your own outside bank?

Two things are making me want to choose my financing externally:

1) Lower rate (like 2.5% instead of 3.3% from Tesla)
2) Finding out that annual Tesla service required for buyback guarantee

If I don't expect depreciation to be my main concern, then these two conditions cost me an extra >$3000 in loan and service costs. And my logic is that if Tesla is guaranteeing buyback, should I ever need to sell it, that will already provide a floor to the resale, whether to Tesla directly or not.

I imagine there should not be too much concern about being able to sell it externally (i.e., not worrying that I will rely on Tesla to buy it as a last resort).

What do you all think -- have you gone with Tesla financing, or your own bank?

Thanks!

Gizmotoy | September 26, 2013

@Brian: Certainly, but there's no way you're getting a pass on including that in your monthly responsibilities just because it's rent rather than a mortgage payment.

Or maybe you do. I think it would be stupid of them not to, but I'm not the one loaning the money. That was kind of my question, though.

GDH | September 26, 2013

If anyone finds a low 84 month (under 1.95%) please post the bank.

Thanks.

MaxEntropy | September 27, 2013

@gizmotoy: As a former loan underwriter, we would often split the joint rental/mortgage payment if you were the only loan signer, providing that your spouse also has income. We had to put that caveat in after realizing that some non-signing spouses don't work (e.g. stay-at home parents) and are therefore not contributing to the rental/mortgage payment. You would just need to indicate to your lender that your spouse works and give them her income information so the loan officer can make a note explaining this to the underwriters. Hope this helps.

Gizmotoy | September 27, 2013

@Max: Thanks for the info. That seems more reasonable. My wife make quite a bit more than I do, so I guess technically it would be easier to just put it in her name, but it's my car! Sounds like I'd be OK on my own, though.

MaxEntropy | September 30, 2013

@Gizmo: If your credit is solid (740+), most lenders, for luxury car loans, will allow your debt-to-income ratio to be around 45%. I've worked for three financial institutions and every one used gross income in that calculation. This benefits the customer greatly, especially if you, like me, pay for things like health insurance, life insurance, etc. through your paycheck and not your spouse's, thereby diminishing your net income. Just be prepared to e-mail or fax over 2 of your most recent paystubs for proof of income purposes. You may be required to provide 2 years of W2s if a large portion of your total income is made up of bonuses/commissions. If you are self-employed, you will likely need to provide 2 years of tax returns.
If worse comes to worse, you can always add her to the loan application for her income, yet the car can be titled in just your name. Hopefully, her credit is as strong as yours (if not better). Sometimes, lenders take the score from the primary wage earner instead of the primary signer for exactly the same reason as I previously posted.
Sorry to be so long-winded. I just love to teach people the "behind-the-scenes" in lending.

Brit.l.T | September 30, 2013

Tesla financing. I did 60 months through wells fargo. 25% down for 1.99% on two ms.

Gizmotoy | September 30, 2013

@Max: Thanks again for all the insight. Extremely helpful.

My company pays for insurance, so that's not directly applicable, but on average about 35% of my income is from bonuses, which I wasn't including in the above calculations. I figured since bonuses aren't guaranteed, a lender wouldn't even consider them. I've only been with this company about 18 months (3 bonus cycles, only one W2), though, so I'm sure that'll factor in. Last I checked my score was 748, but that included a "95% utilized" on a card I pay off every month that ended up with atypical expenses on it. With zero balances now, I'm probably a bit higher than that.

Her credit it typically higher than mine, presumably because most of the spending goes on cards where I'm the primary, but who knows.

Sounds like one way or another it's probably not going to be a big deal, but it's nice to have good information going in. Thanks!

kWh pwr | September 30, 2013

Went with Alliant. 1.49%, 72 months, super easy. Financed a little less than half the cost, down payment for the rest. John Yu is the guy I worked with there - very professional and efficient, highly recommended.

pchawla3 | March 5, 2014

Seems like Alliant is now 1.74
Anyone offering lower rate?

wtna | March 6, 2014

PenFed offers 0.99 for 3 years, but they require 500 deductible for both comprehensive & collision, which may cause your insurance premium substantial jump.
Alliant has 1000/1000 policy.

MaxEntropy | March 6, 2014

@pchawla3- Keeping things in perspective, the bump was almost inevitable given their deposit rate is also at 0.7%. The margin on their top credit tier had to have been virtually nil. Also keep in mind that the 1.74% rate is still good all the way up to 72 months. The difference in the monthly payment (using a $90k loan as an example), when comparing 1.49% to 1.74%, is right around $10/month, a fairly insignificant increase.

pchawla3 | April 5, 2014

Thanks guys for great feedback.
Went with my credit union, Digital Federal Credit Union
They gave 0.99 for 65 months and financed 90% of the car.

Brian H | April 5, 2014

Great deal.

P85D | April 5, 2014

holy crap that's an amazing rate.

Alliant is 1.74% for up t0 72 months.

ShibbyRomes | April 16, 2014

With these credit unions, is there an early pay off penalty? For example, pay off in 4 years with a 6 year term?

amitb00 | April 16, 2014

This is a great deal. Penfed also gave 0.99% but that was for three years, making monthly payments huge.

madbuns | April 16, 2014

@pchawla3 - Wonderful deal you got.

I have Alliant @ 1.49% for 72 months (approved circa late Aug 2013).

@ShibbyRomes - no early pay penalties for my loan.

NKYTA | April 16, 2014

@Shibby, there wasn't a penalty to pay off early with my CU (San Mateo CU).

TomServo | April 16, 2014

My military CU is offering 1.49% for 63 months 100% financing. PFCU is at 1.49% as well.

rxtesla | June 6, 2014

Alliant's quote has gone up. I just received 1.74%, for 72 months for a loan of $56k.

JAD | June 6, 2014

I paid extra to use Tesla financing and get the resale guarantee. I never finance cars, but rates are ridiculously low no matter which method you use, so I kept my money in investments. The process was much easier using Tesla financing as well which also has value.

Applied online, next day got approval, spent 15 minutes signing paperwork while looking at my new car at delivery :) and since it was ready a couple days early, no hassle trying to get a check from the bank holding up delivery.

bryenz | June 6, 2014

I'll add a data point for Digital Federal Credit Union. I got 0.99% for 65 months and the process was a piece of cake. All the DCU docs were docusigned, they sent the check directly to Tesla, and it was applied the next day. There are some hoops to get the 0.99% (namely you have to set up a direct deposit into a checking account there) but it's worth it for sub-1% financing.

They do seem to want to advance only 90% of pre-tax price but this was not a big factor in my decision.

Gadfly | June 6, 2014

Agree with JAD... The small marginal cost of the Tesla program is in effect a very cheap Put option.

BiffandSully | June 6, 2014

I just got 1.74% for 48 mos through my local credit union. Financed about 35% of the car and expect to pay it off in about 18 mos but took a longer term just in case. This was after I swore I'd never take out a loan on a car ever again. But, never anticipated buying a $99k car.

Fins | June 7, 2014

So I got 2.2% from tesla and 2.4% from state farm bank... Both are higher then what you guys are talking about

Tesla gives (buy back garrantee)
StateFarm (gives GAP insurance)

My question is insurance GAP and Replacment anyone have good stories or harror stories on insurance... I live in South Florida and people can't drive...

BiffandSully | June 7, 2014

@ Barryfins - did you get those rates just recently or in the past?

Telsa told me the rate through their lending partners is 3.5%. Are these rates negotiable? If 2.2% is available from Tesla I'd do that, even though I plan on keeping the car for much longer than 39 mos and would try to sell it myself for higher than their buyback rate.

Thomas N. | June 7, 2014

I did half cash and half finance at 1.5%. After a year of payments I was just going to pay this off and noticed that the interest is something like $60 a month! That's nothing! I can make quite a bit more than that with that money so I decided to just keep making payments. My liability will be less if say my car gets totaled through no fault of my own. I'd rather have the insurance company fight with the bank than with me.

JacquesBeaudoin | June 7, 2014

Paid Cash. no loan.

Fins | June 8, 2014

Biffandsully

No I did not negotiate with tesla this is just the rate I got in Florida

bryenz | June 8, 2014

DCU offered gap at $295 flat. Their gap only covers up to $100,000 loan value.

CalabasasKid | June 9, 2014

I went with Alliant and financed less than 80% of my total purchase so gap ins. wasn't necessary. The 1.49% rate for 6 years was too good to be true.

CalabasasKid | June 9, 2014

I meant "too good to pass up"

fosh | June 9, 2014

I went with DCU -- .99% @ 65 months. I financed 60% of the car. Initially I was not going to finance that much (or for that long), but at that rate it's a no brainer.

BTA22 | June 9, 2014

@fosh - that's a great package, if I can ask, what is your approx credit score?

fosh | June 9, 2014

I haven't checked it in awhile (and didn't ask DCU), but the last time I checked it was north of 780.

On DCU's website, the lowest published rate is 1.24%. Fuel efficient cars get another .25% drop (resulting in the .99% rate). Other qualifications include DCU membership (I'm new to DCU and didn't satisfy the traditional employee or institution memberships, but did become a member by donating around $15 to a school related charity (it's on the DCU website)). To qualify for this rate, you also need to do autopay, receive statements electronically and direct deposit.

Haggy | June 10, 2014

I assumed that I was going to pay cash, but with interest rates so low, the chances of not doing better by keeping the money invested is slim. Even being conservative and putting the money in a bond fund with a 3.8% yield would make me more money than paying for the car outright. Of course yields can change and might fluctuate from month to month. But it happens slowly enough that I could always simply pay off a loan at any time.

There's also the cash flow issue. If you liquidate investments and get hit with a 15% capital gain on parts of it or almost all of it, that will cost more than the interest. But if you pay it month by month, chances are you will have the cash there without making a dent if you are in position to buy it outright anyway.

My original plan was to buy $10,000 worth of Tesla stock at $30/share, sell it in a couple of years when it was high enough to more or less pay for the car, and then get the $10,000 back in rebates. But my wife said no. Then she said yes when it was about $200/share but I said no. Then it dropped to $120 and I said yes, bought the shares, and wrote puts to make my cost even lower. But I've gained only enough to pay for a few percent of the car. So the loan seems like the best option.

ICUFly | October 14, 2014

I was not considering the buyback program due to the larger APR. After last weeks announcement though and seeing what is happening to others, I am more prone to going that route. I would have to go through TechCU since I live in Texas. Doing the math it looks like a $1,000-3,000 premium depending on rate and term. Their site is listing lower rates that are nominally higher than DCU, but I do not know if that applies to the Tesla deal or not. We will see.

Has anyone else done this?

karmamule | October 14, 2014

I financed thru Tesla (Chase Bank at 2.39% for 72 months). The amount of my resale value guarantee will be more than what I owe when 3 years rolls around, and that's what I was hoping for.

My S85 "Hobbes" was in that small window of cars that had the new steering stalks, but did NOT have any of the new sensor hardware needed for the autopilot features, so I'm quite happy I went this route because I'm sure that would have made it harder to get a good price for my car 3 years from now when I look to upgrade.

Plus, having done this helps me maintain peace of mind as I watch my (already beloved) Hobbes fall further and further behind the leading edge Tesla is on. I'll welcome rather than be annoyed at any and all changes as they occur over the next 3 years.

Seeing the wide eyes of those I show my car to now also reminds me it's an absolutely fantastic vehicle, even if it isn't quite the latest and greatest. 3 years of delighted driving in front of Hobbes and me, and then who knows how many more years in his successor. Great times!

Sam_S | October 14, 2014

I got an 8 year loan at 1.11% from Energy Federal Credit Union.

I got the maximum term for the loan because I don't think paying cash or principal amount earlier is wise if you can make over 1.11% annual return on investments.

Ruby110 | October 14, 2014

I got a TechCU loan in order to get the Tesla Buy Back Guarantee. The loan rate was 2.99%. That was about twice what it would have been from Navy Federal CU but I convinced myself that the Buy Back was worth the premium. Reading about various trade in offers some people have received makes me glad I got it.

BTW, if I remember correctly, you have to have clear title to exercise the Buy Back:

"Prior to or in conjunction with our purchase of the Vehicle, you will need to provide proof of ownership and clear title for the Vehicle. To obtain clear title on the Vehicle, it is your responsibility to clear all outstanding obligations with the lender, including any principal amount, late payments, penalties, and other fees that may be due to the lender. "

ICUFly | October 14, 2014

Here's looking at the numbers:
It would be a $4000 premium over the life of the loan to go from DCU at 1.25% to TechCU at 2.99%. If I look at an amortization schedule (and only made necessary payments) on an $80,000 loan I will be at $32,646 by the end of 39 months, which is the end of the buy back.

If Tesla cannot retain a 35% residual value over 3 years, there are bigger problems.

Looks like I am going to stay with DCE for now, but I have a month to decide.

Pungoteague_Dave | October 14, 2014

@Sam S - relative earnings power of alternative investments is a fools game unless risk is adjusted accordingly. You are guaranteed to pay $92 or $102k or whatever of your MS. That's all you will ever pay. Saying you can finance that and invest the money is to not understand basic finance - your investment alternatives can just as easily lose $10% or 15% in the next year. My broker bought a bunch of stocks a month ago that are down 12%. Risk and returns must be matched to be equaled. IMHO anyone financing any depreciating asset doesn't get it and will end up paying the man in the end - having less to show for it - unless they are very lucky market timer (and luck is all it is). I prefer to be on "the man's" end of that equation. No one is giving you free money - you just aren't recognizing the non-priced costs yet.

Pungoteague_Dave | October 14, 2014

These cars will depreciate faster than any car in history. You can buy my 20-month-old S85, fully loaded, cost $92K, for $52K, right here, right now. Of course it is worth only $41k. This obsolescence will only accelerate.

judimasters | October 14, 2014

0.61% with Energy Credit Union because they have a 1% discount for EV.

2050project | October 15, 2014

Definitely worth checking out Credit Unions on this front; a good option:

http://evannex.com/pages/ev-financing

ICUFly | October 15, 2014

@judimasters - Thank you for that! I just got off the phone with Federal Energy CU and they confirmed. even at 72 months it is only 1.11%. Going with the 60 month .61%, which is less than my savings account pays.

Does anyone else know what the guarantee at 36 months on a MS85 is through the Tesla guarantee. I still do not see the savings. With these new figures it looks like the amount owed after 39 months is below $30,000 financing 80K.

shipkj.fl.us | October 15, 2014

@judimasters - any contact you can share for Energy CU?

Ruby110 | October 15, 2014

I guess I'm missing something. What difference does it make how much you still owe at the end of 36 or 39 months? The car is worth x dollars no matter what you owe. The Guarantee price sets a floor on what you can get for the car at the end of the period.

I intended to pay cash but saw this as a way to not worry about what the car would be worth in 36 months. I calculated the net cost and, for me, it was worth it. YMMV.

Ruby110 | October 15, 2014

@ICUfly, the Guaranteed Resale Value is calculated as:

" This value is equal to 50% of the base purchase price of the 60kWhr Model S at the time of your purchase of the Vehicle, plus 43% of the original purchase price for all options including the upgrade to the 85kWhr battery pack (exclusive of taxes, fees and accessories)."

Ruby110 | October 15, 2014

Oh, I should say that the T&Cs are from my agreement. The current agreement may be different. It has changed before!

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