Yep, auto loans are typically priced for prime loans (good FICO, DTI, LTV, etc) at 200 basis points over a 5/10 year treasury. So with today's rates and the fed funds at 5.00 to 5.25%, any loan that fails to cover this spread is immediately underwater. So Tesla allows its financing side to take a small loss originating the loan to make the purchase more attractive to the buyer.
This is a good tactic to use, since it effectively reduces the prices of new vehicle transactions without eroding the value of the underlying collateral. When Tesla drops retail (list) pricing, it can significantly de-value the loans they previously originated; since the LTVs of those loan portfolios shoot up. I really hope we see Tesla doing less overt pricing reductions going forward, and instead do rate adjustments or other things that have value; but leave the price of the vehicle alone.
@skytom88 has the right idea... the old guidance of putting 10% to 20% cash down on a vehicle purchase was something the auto industry was pushing... it wasn't really good financial advice. The smallish down payments allowed merchants to sell stuff like "GAP insurance" or effectively trap buyers to a particular brand while still originating loans to move their inventory. This ratio should be re-visited as we enter a recession; and 40% to 50% down payments (40% to 50% LTV after accounting for financing the taxes/doc-fees) makes more sense today.
PS, also be very careful around auto leases. I've seen some ridiculous money factors being applied on leases... some leases are really attractive/good while others are total rubbish. It's on the buyer to be careful since it's hard to distinguish without loading those lease offers into calculators and seeing the implied rates.
