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Tesla financing rates
Photo by Carolyn Fortuna/ CleanTechnica

Cars

Tesla Financing Rates Are The Lowest In The Industry

So you want to finance a Tesla but don’t know where to go? You’re not alone. With so many companies appealing to us to put our financial faith with them, it’s hard to know where to turn. The answer? Tesla.

Why are Tesla financing rates and terms more appealing than other companies? Perhaps, like so many Tesla endeavors, it makes sense to the company to keep as many services and products as possible in-house.

Tesla’s electric vehicles are premium-priced, but their financing deals make them quite compelling against their rivals in the EV market. CarsDirect outlines some very good news for potential Tesla buyers: If you choose a Tesla, you could be getting a surprisingly good deal, thanks to the lower interest rates for the most popular all-electric cars than for other EVs or legacy cars.

What’s the Bottom Line on Tesla Financing?

You can go to a Tesla showroom to see and test drive the cars to envision yourself behind the wheel. You’ll also feel the visit is different than other trips you might have had to legacy car dealers, as there is no conflict of interest.

Tesla sells directly and eliminates a dealership markup, so, as a Tesla buyer, you experience some savings as a result. Dealerships that sell other cars make a commission on each car sold, which gives them the incentive to raise the prices over what it costs them to buy the vehicles so that they can make a nice, hefty profit.

Tesla’s website helps new car buyers to understand the available payment methods to get started in the EV-buying process. To have a Tesla of your own, you can purchase or lease your vehicle through the following Tesla in-house options:

  • Lease — You can lease a Tesla over the terms of 24 to 36 months. Leasing is available to qualifying customers. A lease may not be for you for any number of reasons, including that Tesla’s leasing program doesn’t any longer allow for buying the vehicle at the end of the lease — all Tesla vehicles delivered on or after April 15, 2022 are not eligible for purchase, and third-party dealerships and third-party individuals are not eligible to purchase leased vehicles.
  • Cash — You can purchase a Tesla by paying upfront in cash for your new vehicle. There are several options available for making your final payment in time for delivery. But, then again, not everybody has enough cash on hand to purchase a Tesla outright.
  • Finance a Loan — You can purchase a Tesla by securing a loan with a Tesla financier (or a third-party lender) over the terms of 36 to 72 months. Tesla lending is available for approved applicants, depending on state. For most individuals, a car loan is the logical step toward Tesla ownership.

Tesla’s online payment calculator reveals that its vehicles are available for finance with an interest rate of 3.24% APR. The term for this loan is 72 months. That means a nearly $50,000 Tesla Model 3 when financed at 2.99% for 72 months would cost about $4,500 extra in interest. The Tesla quote includes a $1,200 destination fee but excludes taxes and other fees, and, who knows? Maybe you’d get some kind of EV rebate.

Note: Just so you know, a Tesla purchase doesn’t qualify for a US federal $7,500 tax credit. US federal tax credits for plug-in electric vehicles have a volume threshold, so, as soon as a company sells 200,000 plug-in electric vehicles in the US, the federal tax credit starts to get phased out over the coming year. Tesla sold 200,000 all-electric vehicles in August, 2018.

Tesla’s financing rates do undercut other EVs, even in this fluctuating marketplace. For example, Ford’s 6-year interest rates for the Mustang Mach-E can be as high as 5.9% APR on the GT trim.

What’s Important to Know When Buying a Tesla

What’s the way to get the best interest rate on any personal vehicle loan? Buy a new car, as they have historically provided the lowest interest rates. You’ll need to have a solid credit score, and you should shop around for the best finance deal you can find. And, remember: it’s the total loan repayment amount, not the monthly payment, that should drive your final decision.

How can you keep the monthly payment down? Many people choose longer loan terms to keep the monthly payment down, especially when they move into the premium car class.

What will be the costs to own a Tesla over its lifetime? EVs are generally expected to cost less to maintain because their electric motors and other drivetrain components have fewer moving parts than internal combustion engines (ICEs), and they don’t require fluid changes. A guest contributor to CleanTechnica described how, in the first 100,000 miles of ownership of a Tesla Model S, repairs totaled about $1,050. A Consumer Reports analysis of real-world maintenance and repair cost data shows that battery electric vehicle (BEV) and plug-in hybrid vehicles (PHEV owners are paying half as much as ICE owners are paying to repair and maintain their vehicles.

What variables affect the purchase of any EV right now? While interest rates can have a big impact on a consumer’s costs, they’re not the only variable. Buyers purchasing from a dealer may be subject to markups amid a global chip shortage or other supply chain shortages. Even though Tesla doesn’t use a traditional dealer network, the company has responded to supply chain issues with some price increases.

What are the most important reasons to buy an EV?

  • The total cost of ownership of an EV is far cheaper than an equivalent ICE car.
  • You’ll have increased convenience from not having to deal with all the service appointments and repairs associated with an ICE (internal combustion engine).
  • You’ll be joining with other environmentally-conscious individuals who know that we can’t use fossil fuels any longer for personal transportation. In 2020, greenhouse gas emissions from transportation accounted for about 27% of total US greenhouse gas emissions, making it the largest contributor of US greenhouse gas emissions.
  • An EV uses much more of the total energy it is “fueled” with. An EV electric drive system is only responsible for a 15% to 20% energy loss compared to 64% to 75% for an ICE; the rest of the energy is lost to engine inefficiencies or used to power accessories. EVs also use regenerative braking to recapture and reuse energy that normally would be lost in braking, and they waste no energy idling.

Many observers are wondering how Tesla led the way to all-electric transportation with such dominance. Tesla offered innovative all-electric transportation before it came into vogue, and it continues to do so, with the field of competitors well behind and the likelihood for catching Tesla anytime soon rather remote.

And with Tesla’s finance charges more reasonable than other sources, what could be better than purchasing a new Tesla model from Tesla?

 

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Written By

Carolyn Fortuna (they, them), Ph.D., is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavy Foundation. Carolyn is a small-time investor in Tesla. Please follow Carolyn on Twitter and Facebook.

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