Does Buying a Tesla Make sense for me?

[wkkimball043]

Hi all, I've been a huge fan of Tesla for a long time and have obviously wanted to purchase a Model 3 since they first came out. Despite my strong desire, the practical side of me has prevented me from making the purchase.

However, over the past few months I have gained a 20k per year increase in salary which has had me reevaluate things.

I currently have $15000 at 3.9% left on a 2019 Civic Sport (with a manual transmission) that I have been paying extra on each month. With this raise, I had planned to earmark about $1500 per month to pay off the car as quickly as possible, then my plan was to sell the car privately and purchase a Tesla around the end of the year.

After thinking about this, I realized that instead of paying the $1500 per month to pay off a car I already want to replace (not that it's a bad car by any means, I love driving it) I could just sell the car, buy a used Model 3 and have a payment that's half of what I was planning on spending on a car per month. Interest rates for used cars *seem* to be similar to what I have with my current loan though I know that is subject to wild fluctuations and cannot be predicted.

Some considerations that I have:
1.) With the Model Y coming out in the next few months, I expect Model 3's to be dropping in price by the end of the year (which was my original timeframe).
2.) I currently live in an apartment complex. While we do have a parking garage, there is only one parking spot that has a 110 outlet (and that's $50 per month to reserve the spot so it negates any savings in gas). Fortunately I live about 6 miles from the Brentwood, TN supercharger and my new job will be 95% remote so I don't really see this as an issue.
3.) I would like to purchase a house in the next year or two. I'm in my apartment lease through December so it would most likely be in the 2ish year time frame when considering saving up + the potential of marriage in the same timeframe.

Any feedback would be appreciated. I *will* be purchasing a Tesla before too long that is not the question, but I want to be smart about it when I do it.

 

[holmgang]

Ill refrain from commenting on personal finances, but I can add 2 points:

(1) market dynamics of Model 3 makes buying used mostly senseless. just buy new if you want one

(2) by the time you apply for a house loan, having an auto loan balance 2x 3x todays size, may negatively impact your loan rate. it might be something nominally small like 10 basis points, but will have huge impact on bottom line

 

[Runt8]

It never makes financial sense to buy a new car (I’m assuming the Civic was new when you bought it) and sell it after a year. You’re basically paying the depreciation so someone else can drive a practically new car.

That being said, I don’t see a huge benefit to waiting the the end of the year vs now. I would be leery of relying on supercharging as my only method of charging so I would definitely reserve the spot with the outlet. Personally I would reverse the order and buy a house first and then a Tesla.

 

[mongo]

Hi all, I've been a huge fan of Tesla for a long time and have obviously wanted to purchase a Model 3 since they first came out. Despite my strong desire, the practical side of me has prevented me from making the purchase.

However, over the past few months I have gained a 20k per year increase in salary which has had me reevaluate things.

I currently have $15000 at 3.9% left on a 2019 Civic Sport (with a manual transmission) that I have been paying extra on each month. With this raise, I had planned to earmark about $1500 per month to pay off the car as quickly as possible, then my plan was to sell the car privately and purchase a Tesla around the end of the year.

After thinking about this, I realized that instead of paying the $1500 per month to pay off a car I already want to replace (not that it's a bad car by any means, I love driving it) I could just sell the car, buy a used Model 3 and have a payment that's half of what I was planning on spending on a car per month. Interest rates for used cars *seem* to be similar to what I have with my current loan though I know that is subject to wild fluctuations and cannot be predicted.

Some considerations that I have:
1.) With the Model Y coming out in the next few months, I expect Model 3's to be dropping in price by the end of the year (which was my original timeframe).
2.) I currently live in an apartment complex. While we do have a parking garage, there is only one parking spot that has a 110 outlet (and that's $50 per month to reserve the spot so it negates any savings in gas). Fortunately I live about 6 miles from the Brentwood, TN supercharger and my new job will be 95% remote so I don't really see this as an issue.
3.) I would like to purchase a house in the next year or two. I'm in my apartment lease through December so it would most likely be in the 2ish year time frame when considering saving up + the potential of marriage in the same timeframe.

Any feedback would be appreciated. I *will* be purchasing a Tesla before too long that is not the question, but I want to be smart about it when I do it.

Your current car is depreciating and you are paying interest on it. If your plan is to sell it, the sooner the better. Trade in is ~$15k so you are pretty good there.
Model 3 prices may not be dropping substantially, and there will theoretically not be any Tesla leased cars.
Do you claim mileage on your remote work travel? $0.575 a mile adds up quickly and will offset charging at superchargers.

I'd recommend getting the 3 you want now (~$774 for base long range AWD) and keeping it for a long time.

 

[tvad]

I believe your present living situation, Model 3 price assumption, and desire to purchase a house in the near future suggest deferring purchase of a Model 3.

 

[ElectricIAC]

Hi all, I've been a huge fan of Tesla for a long time and have obviously wanted to purchase a Model 3 since they first came out. Despite my strong desire, the practical side of me has prevented me from making the purchase.

However, over the past few months I have gained a 20k per year increase in salary which has had me reevaluate things.

I currently have $15000 at 3.9% left on a 2019 Civic Sport (with a manual transmission) that I have been paying extra on each month. With this raise, I had planned to earmark about $1500 per month to pay off the car as quickly as possible, then my plan was to sell the car privately and purchase a Tesla around the end of the year.

After thinking about this, I realized that instead of paying the $1500 per month to pay off a car I already want to replace (not that it's a bad car by any means, I love driving it) I could just sell the car, buy a used Model 3 and have a payment that's half of what I was planning on spending on a car per month. Interest rates for used cars *seem* to be similar to what I have with my current loan though I know that is subject to wild fluctuations and cannot be predicted.

Some considerations that I have:
1.) With the Model Y coming out in the next few months, I expect Model 3's to be dropping in price by the end of the year (which was my original timeframe).
2.) I currently live in an apartment complex. While we do have a parking garage, there is only one parking spot that has a 110 outlet (and that's $50 per month to reserve the spot so it negates any savings in gas). Fortunately I live about 6 miles from the Brentwood, TN supercharger and my new job will be 95% remote so I don't really see this as an issue.
3.) I would like to purchase a house in the next year or two. I'm in my apartment lease through December so it would most likely be in the 2ish year time frame when considering saving up + the potential of marriage in the same timeframe.

Any feedback would be appreciated. I *will* be purchasing a Tesla before too long that is not the question, but I want to be smart about it when I do it.

-Don’t expect any miracles regarding Model 3 values Y or no Y.
-Charging is charging no matter the source, don’t worry about it that much.
-Cars will always be available but this last one is really dependent on your housing market.

 

[Wooloomooloo]

It looks like your Honda is probably worth about $18k in a private sale, so maybe a little less with a trade in, which covers your loan. I agree with others that the math of paying off the loan, selling at the end of the year and then getting a Model 3 probably doesn't work out in your favor - you're looking at $600 or so still in interest even at the accelerated rate, at least $3000 depreciation and whatever you're paying in gas.

The only thing in my mind that would significantly reduce the cost of a Model 3 is if the tax subsidies are brought back, and the chances on that are slim this year - I think the used market will be super competitive for years to come.

As for you other concerns, well I also live in an apartment and you just bake charging into your routine so it's not really an issue.

 

[ItsNotAboutTheMoney]

My mantra: never borrow for fun.

The smart financial advice is almost always to keep your current car. Only if you're driving a guzzler or have gone overboard, is it worth switching.

Given that you aren't driving much at all, it's really not financially smart to put a lot of money into a car.
If you do anything, it would be good to sell it and buy a _cheaper_ car.

Otherwise, get the loan paid off.
Then keep saving that 1500 per month.
Or, if you have other high-cost debt, work on paying it off.
Then focus on the house.
Then think about the Model 3.

 

[C141medic]

Practical, schmactical. Buy, buy, buy.

 

[coconutboy84]

Yes. Now use my referral.

 

[Darmie]

You are on the right track not making the purchase. The home is always important and takes the priority over a car.
Consider the baby steps from the below link. The money owed on the car and any other debt should be paid down the soonest.

Dave Ramsey's 7 Baby Steps

Your additional income will also be a tax burden if not properly invested in IRA or 401. Depending on age, you can invest a good amount in 401 and that is all tax deferred. You won't like my idea but that would be to sell your car out right. Find a much cheaper car to commute, invest the difference in Tesla stock along with any free income to buy more. Wait 5 years, roll the stock into a free Model 3.

 

[ewoodrick]

A $20k raise means you get half of it.
Pay off your existing car, save $15k and then look at the Tesla

 

[rickdogg82]

The fact that you can't (or choose not to in this case) charge at home would be a deal breaker for me.

 

[wkkimball043]

I appreciate all of the input so far. Just for some more context: my current car is the only debt that I have at the moment and the $1500 per month currently allocated to pay off my current car is after investing (with employer match) 15% of my income.

 

[JasonR67]

Everyone has made great points above. my 2 cents. The model 3 used market is pretty tight right now. I suspect once the Model Y starts shipping in quantity that that will change with 2-3 yo model 3s being sold/traded for Model Ys.

110 Charging is not optimal. I did it for several weeks and it lead to charge anxiety (different than range anxiety.). I would get yourself in position to get the house, add charging capability to the garage, and then get the Tesla.

 

[tvad]

Everyone has made great points above. my 2 cents. The model 3 used market is pretty tight right now. I suspect once the Model Y starts shipping in quantity that that will change with 2-3 yo model 3s being sold/traded for Model Ys.

110 Charging is not optimal. I did it for several weeks and it lead to charge anxiety (different than range anxiety.). I would get yourself in position to get the house, add charging capability to the garage, and then get the Tesla.

Good point about the Model 3 used market once the Model Y is shipping.

Regarding 120v charging...I would offer our differing perspective. For us, charging at home exclusively on 120v has not been an issue. We only put about 30 miles on the car per weekday. An overnight, 12 hour charge yields minimum 48 miles (at 4 mi range per hour). On weekends, we put around 90 miles on the car. So, assume a total weekly usage of 240 miles. We charge 12 hours per day, 7 days a week for a total range of 336 miles. Therefore, a net yield of 94 miles.

In 6.5 months of our Model 3 Dual Motor Long Range ownership, we have Supercharged by necessity only twice.

The take-away is to keep track of your daily/weekly miles. Assume you will achieve a minimum charging range of 4 miles per hour (could be up to 5 miles), and determine how many hours per day you will (or can) charge...keeping in mind Telsa recommends always connecting the charger for optimal battery conditioning. Determine if you will have a weekly mileage net yield or deficit. You might be surprised about what you actually require.

 

[Fresnel]

Some considerations that I have:
1.) With the Model Y coming out in the next few months, I expect Model 3's to be dropping in price by the end of the year (which was my original timeframe).
2.) I currently live in an apartment complex. While we do have a parking garage, there is only one parking spot that has a 110 outlet (and that's $50 per month to reserve the spot so it negates any savings in gas). Fortunately I live about 6 miles from the Brentwood, TN supercharger and my new job will be 95% remote so I don't really see this as an issue.
3.) I would like to purchase a house in the next year or two. I'm in my apartment lease through December so it would most likely be in the 2ish year time frame when considering saving up + the potential of marriage in the same timeframe.

Any feedback would be appreciated. I *will* be purchasing a Tesla before too long that is not the question, but I want to be smart about it when I do it.

Nice job thinking it through.
1) I don't think Model 3s will drop much more in price but there will be a lot more used Model 3s on the market when the Y gets released soon.

2) Charging on 110 is for the most part way too slow. I guess that doesn't matter since you don't hav that option anyway. Charging off supercharging alone isn't the best mainly because you aren't supposed to fast charge the battery a lot, but.... Since you work remote and if you don't drive a ton of miles it might be okay.

3) When you do get a house, your charging price will drop considerably when you charge at home vs supercharging.
That's a lot of fun things happening at once. Congrats!

 

[Need]

Keep the civic and buy the house first. Then you could decide when to get the Tesla!

 

[jroydog]

While you should never look at a house or a car as an investment, consider that houses generally tend to increase in value over time while cars generally lose value (despite people who say otherwise) over time. Your purchases, particularly big ones, should be driven by your goals, such as saving for a house to live in so you don't have to keep paying rent increases, deal with noise, etc. Does getting the car help you reach a goal or is it the goal? Consider the opportunity costs of doing one before the other.

 

[gigawhattt]

You are not in a good financial situation to buy a model 3. Savings on gas is negated by high insurance. Pay off your current car and drive it without a payment for as long as possible. Save $ for home and your future Tesla. When you get max value from driving your current car then can get a Tesla. Or just be typical of everyone and finance the lifestyle you want. 20k raise is around 10k net a year after taxes...