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Are you financing to get the Model S?

How much, if any, are you financing for the model S?

  • Yes I am financing for the bulk of my purchase

    Votes: 75 36.1%
  • Yes I am financing, but for less then half of the purchase

    Votes: 21 10.1%
  • Yes, I am financing for nearly half

    Votes: 31 14.9%
  • I am not financing at all

    Votes: 81 38.9%

  • Total voters
    208
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Seriously, who cares how other people are paying for their cars? Some finance, some lease, some pay cash.

True.

Surveys are useful tools, however, because they allow people to glance at the spectrum of possibilities. Perhaps the OP wanted to know where he was on that spectrum. I believe there is a strong urge to know whether one falls within the norm.

To say some people finance, lease, pay cash or any combination of those is to state the obvious.

The patterns are more interesting data.
 
Would the lower 1.99% APR loan that gg found make more sense?

The trick in my case is that I'm paying interest-only. That's why the monthly payment is so low (only $162 per month for a $50K loan).

I've always leased my cars so I'm used to having never ending monthly payments. At the end of the lease term, usually 36 months for me, I turn it in and get into the next lease.
 
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I have a different scheme in mind for paying for the car. I'm putting it "on the house", using $50K from a home equity line of credit that carries a 3.25% interest. I don't have to pay principle, and can pay interest only which comes out at about $162 per month. Principle becomes due at the end of the home mortgage term, but that still is 25 years away. I will have sold the house well before that, so it is not an issue for me.

Today, I pay $375 per month for my leased Kia Optima. By getting out of the lease and buying the Model S, our monthly payment will actually go down by $213. Plus, there are fuel savings of about $180 per month (my Kia does 22 mpg on average and I drive 1,000 miles per month), while my electricity bill will go up by maybe $40 a month. And finally, the home equity interest payments are tax deductible, uncle Sam giving me back about 1/3 so that's another $54 savings per month.

So, if you do the math, I'm actually able to lower my monthly car costs by over $400. Yes, I may need to replace the battery after 8 years, but till then I'll enjoy $400 savings per month, and, be driving a Model S instead of a Kia!

My wife still scratches her head when I explain it to her, and keeps saying something smells fishy. :wink:

Edit: forgot to mention that I invested $20K in TSLA shares (hopefully worth $25K or more by early next year) which will go towards the car as well.

The reason is smells fishy is because it is :). You are paying for the depreciation of your Kia through the lease. You are deferring the depreciation of the Tesla and end up with a debt to pay off at the end. If the Tesla is worthless or worth little after 10 years - you still have to keep making loan payments until you sell the house. When you do sell the house - you still have to pay the entire $50K from the proceeds. If you had prepayed the Kia Lease (probably about $12K) using a loan on the house and only paid back interest then you would only be paying $32/month.
 
My original plan was to just pay cash, dumping the TSLA stock I have that's basically acting as savings. The theory being I didn't want both a loan on a Tesla and the money that could pay it off tied up in TSLA since a complete Tesla meltdown leaves me in an exposed position (loan on a car by an obsolete vendor and decimated savings).

However, if the things are looking really good for Tesla (reservation rates are high, no major recalls, etc), then I may decide to finance a big bunch and let my TSLA float for longer figuring the ROI on the stock is better than the interest payments.
 
^ ckessel, that's somewhat my logic too although I've much less in TSLA (which I can 'afford' to lose) and should be able to put a substantial downpayment towards the Model S without selling the stock.

At 1.99%, a principal of say, $70k over 5 years adds up to "just" ~$3,600 in interest - even less so effectively if you factor in inflation over that period. Emotional factors such as not wanting to have debt apart, I don't see a financial pitfall in taking the loan while leaving alone savings or good investments (TSLA? :)).
 
I'm not financing because I don't believe in financing a depreciating asset, but it is definitely a large chunk of money to part with. Heck, I'll probably get nauseous the day I write the check.

One view I take is that I'm avoiding future expenditure. You can do various analysis to show how the Model S saves you money vs a comparable car and reason that spending the money now just avoids those large (fuel) costs in the future. If you keep it long enough, the Model S will ultimately be cheaper -- against a comparable car.

When I got a solar quote for my house, part of their pitch was that energy prices would keep rising (it was the only way they could make their math work :smile:). If I could write a check now an have power for the rest of my life, I might just do that. I see the Model S similarly.
 
A house is a depreciating asset, too; the ground beneath it is not, but most real estate value is tied up in structures, not land. Proof: if you don't spend about 4% of your structure's value annually in upkeep, it's probably going downhill.

People get hung up on borrowing vs. cash finance. Don't forget that writing a big check may leave you without sufficient liquidity in the case of an emergency. Make sure you have reserve liquidity, even if that means you need to borrow. There's nothing morally reprehensible about borrowing, provided it's borrowing within your means.
 
A house is a depreciating asset, too; the ground beneath it is not, but most real estate value is tied up in structures, not land. Proof: if you don't spend about 4% of your structure's value annually in upkeep, it's probably going downhill.

People get hung up on borrowing vs. cash finance. Don't forget that writing a big check may leave you without sufficient liquidity in the case of an emergency. Make sure you have reserve liquidity, even if that means you need to borrow. There's nothing morally reprehensible about borrowing, provided it's borrowing within your means.

+1. Well spoken.
 
A house is a depreciating asset, too; the ground beneath it is not, but most real estate value is tied up in structures, not land. Proof: if you don't spend about 4% of your structure's value annually in upkeep, it's probably going downhill.

People get hung up on borrowing vs. cash finance. Don't forget that writing a big check may leave you without sufficient liquidity in the case of an emergency. Make sure you have reserve liquidity, even if that means you need to borrow. There's nothing morally reprehensible about borrowing, provided it's borrowing within your means.

Exactly. I am much more worried about cash flow (liquidity). You can always pay down your loan early. But you can't really get a loan after you plunk down the cash (at least not a good loan).
 
I'll end up financing ~$70k of the purchase, assuming I can scratch up another $25k for the down payment. On the bright side, the longer Tesla takes to ramp up production the bigger down payment I'll have!

I am in the same boat. In fact, I even put off putting in my reservation for a few months after I decided to buy the car, just to give me more time to save up before I have to cut a check. (on a side note, it is always good to see another Cincinnatian buying a Model S)
 
Obviously every persons finances are different. I am doing the same thing and is the main reason I am waiting to reserve in November. I could reserver right now, but I am paying off my current car first, which should be in September. Don't want to plan on anything with current debts in tow. Also, I am telling myself if I can muster to save 10k before I reserve, then mentally I REALLY want this car. I am pretty fickle when it comes to my attention span for purchases, though following this car for years probably means I want it good enough. :)
 
not being able to lease the Model S is probably the biggest achilles heel for Tesla. Personally I have never leased or financed a car (if Tesla could capture the "financing" crowd in house this would be a huge coup), but I think most of the people who may leave their BMW's or Mercedes' for Tesla expect to lease and to a lesser degree finance their car in house (hassle to line up third party financing etc). From what I heard something like 80% of Volt sales are leases. With the unknowns about battery longevity etc I think it could be a iffy proposition for the EV rookie. A lot of my friends and family look at total monthly cost for a vehicle rather than long term value.

I could have this all wrong and the people actually purchasing most of the Model S' initially, will be Prius, Leaf and eco-car defectors (who are stretching their budget, eco-geeks, or never cared about what the drove till the Model S). I am not sure what the lease, own, finance rate are with these cars?
 
Shouldn't an enterprising bank come up with a special loan package for the Model S? There could be a primary loan, backed by the car; and a secondary loan, backed by the expected cash flow from the $7,500 from Uncle Sam.
This way, one could fully pay off the second loan as soon as his/her tax refund came through.

I like this much better than using one loan, and using the tax money to pay down the principle, save for monthly payments or refinance the loan.
 
Shouldn't an enterprising bank come up with a special loan package for the Model S? There could be a primary loan, backed by the car; and a secondary loan, backed by the expected cash flow from the $7,500 from Uncle Sam.
This way, one could fully pay off the second loan as soon as his/her tax refund came through.

I like this much better than using one loan, and using the tax money to pay down the principle, save for monthly payments or refinance the loan.

I plan on financing a lot of my car. Really low interest rates make it silly not to. I plan on taking my tax breaks in 2014 and doing some serious home improvement project (rooftop solar, ground source heat pump, or kitchen and floors). An auto loan seems to give me the better rates than general loans.
 
Agreed; although I could sell some stocks and write a check, my financial adviser and I agreed that, with the low interest rates available, it's probably better to get a loan for a portion of the payment.

Yes, I now have a home equity line of credit at %2.99, I also applied to PenFed, that's up to $70K at about %1.5 right now, and my third option is borrowing up to $50K of my own money from my 401K at %4.25

The home equity allows you to deduct the interest (for now anyway, well see what happens after the election), PenFed is the lowest cost loan, the 401K is a higher interest rate, but you are paying yourself the interest.. Downside is, if you leave the job you must pay back the loan in full within 60 days, or it's taken as an early withdrawal (%10 penalty) plus you owe ordinary income tax on the amount outstanding. That's what the home equity line of credit could be used for, CYA if you need to payback the 401K loan. If you are younger (I'm not), another negative on the 401K loan is, the money isn't invested in the market that you are borrowing, but that's just fine with me.

I think I'm fully covered to be able to buy the Model S with all of the above available and in place.
 
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The amount of cash that I'm willing to part with without significant loss (either paying short term capital gain or taking a loss) happens to be around $40k. I plan on getting the non-performance, 85KW model with most of the options. This means I'd have to finance ~55k of it. Granted, between now and when I'd actually purchase it (I'm in the 11k reservation numbers), I'll likely have more cash I can part with, with the interest rates as they exist now, I'd be better off doubling down on some of the stocks that have dropped with that cash instead.
 
the 401K is a higher interest rate, but you are paying yourself the interest.. Downside is, if you leave the job you must pay back the loan in full within 60 days, or it's taken as an early withdrawal (%10 penalty) plus you own ordinary income tax on the amount outstanding.

A co-worker changed jobs and he was able to pay the 401K loan off monthly without any penalty. He had a choice of paying it off all at once or paying it at the same rate as when he was employed. Because it's Federal it should be the same everywhere but perhaps it varies by plan policy.