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Economic cost of "put option"/resale guarantee lending option versus Digital Credit U

Discussion in 'Model S: Ordering, Production, Delivery' started by bigdomer, Jul 25, 2014.

  1. bigdomer

    bigdomer Member

    Joined:
    Feb 17, 2014
    Messages:
    171
    Location:
    Franklin, TN
    I am sure this was discussed way back when, but I thought I would re-post in case folks are considering the resale guarantee. My assumptions are as follows:


    • Tech Credit Union (since available in almost all states) vs Digital Credit Union (well publicized low rate)
    • $110,000 purchase price (not including sales tax since Tech CU will not finance that)
    • 15% down payment
    • 66 month loan term
    • 2.99% TCU
    • 0.99% DCU

    I found it interesting that the interest cost difference was over $4,200 at the 36 month mark. That is fairly expensive insurance. Basically, assuming you are going to finance the car anyway, you are paying a >4% premium to be able to walk away from it at a specified value in three years. I am not offering an opinion as to whether it is worth it or not, but just wanted to share the observation.

    I will note that for those that plan to finance at 72 months or 84 months, the difference is much lower since DCU's rate increases dramatically ($3,822 and $1,734 respectively). Thus, it is much cheaper insurance if you plan to finance over a longer term, but get rid of the car in 3 years.
     

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