Financing Model 3 need input.

[Rawlings2019]

Okay, so my wife and I are getting ready to purchase our Model 3. We aren't fully decided but we are looking at financing options and scenarios. I have good credit at 780 and should rise to over 800 in the next month as I just paid off a card from our honeymoon from 2018. We both bring in 7300 a month combined before taxes, after taxes its about 5800 a month a have a w2 job while she has a w2 part time and a 1099 full time teaching online (she started doing this 1 year go). I am giving this info for feedback as I'd like to know if lenders would lend to us, which I think they should since we have a low DTI and I have decent credit history at 28 years along with her at 27 years old.

Our DEBT will be this when we decide to apply:
Mortgage $1,350 (15 yr )
Credit Cards monthly $100 (balance 4,000 , 2 cards)

Total Debt 1350 + 100 = 1450
Before Tesla DTI Gross 19% DTI NET = 25% (not sure if they look at Gross or NET)

Tesla Loan = $50k (I want to get the LR AWD)
Payment calculator says payments for 72month with 5k down will be $716 with 5k down (no AutoPilot) or $794 with 5k down with Auto Pilot.

The most I would like to give down is 5k though I could give 7500 tops.

So say with Tesla Loan our new DEBT would be

1450+794 (if i grab AP) = $2244 DEBT and our Income being $7300 Gross ($5800 NET)
SO DTI Gross would be 30% or 38% if they look at NET. Which do they look at when making decisions, and do they look at current DTI or the proposed DTI after loan.

We won't have any more car loans when we go with getting Tesla. My current lease will be up ($517 and my wifes car loan will be paid off since she will finish her 60 month loan in April) Which is why we would only have Mortgage and Tesla Loan and DTI would be good in my opinion but I don't know everything these banks look for. I get consistent overtime for the last 5 years so will they take the overtime and will they take all of my wife's income or just the w2 income, even if she can prove her 1099 income is consistent and paid bi-weekly?

We have 5800 NET income to play with and with Tesla our Debt would only be $2244 per month. We are simplistic couple, with no children (we won't have children for another 3-5 years) and we don't spend much on going out etc, we do like to travel 3-4 times a year which is what we use the excess monthly profits for as well as our 401ks health etc. Is it too crazy for us to think we can afford this? I mean for the last 5 years we have had 2 car payments for 330+517, combined >$800 so would a bank notice that and allow us to have a tesla loan for $700-790 as our only new loan? We have 100% payment history and both 780 and 750 score which will likely be in 800+ by the time we apply. Would we still be candidates for <4% interest? I have had 0.9% interest before on a previous car years ago before I leased my current one.

 

[jjrandorin]

Its a lot easier than this to figure out if someone would loan to you... simply apply for the loan. When you are car shopping, any applications you make within a 2 week period are counted as "1" for the purposes of how much it lowers your credit score, so whether you apply for 1, or 5, doesnt matter as long as you do it within a 2 week period. If you are close to deciding to purchase but just wondering what you would be approved for, simply apply at bank / credit union of choice. They will run their own numbers and approve you or not.

Many times its an online application, and online approval. I did mine through navy federal (my primary financial institution), as a bank draft (so pre approved check).

No matter how much information you give here, it wont matter what any of us think so its best to just apply and see. If you are not ready to buy, wait until you are, then do it and see.

 

[Glamisduner]

We are not the financial police, but I would really give some thought or talk it over with someone you trust more than our free online advise will provide.

I can say I probably shouldn't have bought my performance when I was originally shopping for a LR but then decided on AWD, and I'm not going to pretend it was a sound financial decision but I do enjoy the car!

Just please don't rely on the banks to determine if you should be able to get the car. Also look into insurance before you purchase.

I can give you one piece of advice though, pay off those Credit cards in full before you throw down money on a tesla. It will also increase your credit score.

 

[Rawlings2019]

We are not the financial police, but I would really give some thought or talk it over with someone you trust more than our free online advise will provide.

I can say I probably shouldn't have bought my performance when I was originally shopping for a LR but then decided on AWD, and I'm not going to pretend it was a sound financial decision but I do enjoy the car!

Just please don't rely on the banks to determine if you should be able to get the car. Also look into insurance before you purchase.

I can give you one piece of advice though, pay off those Credit cards in full before you throw down money on a tesla. It will also increase your credit score.

Yeah, I wasn't necessarily asking if it was a sound financial decision, it probably isn't I mean I could easily buy a car for 10k cash and not buy a new car and so can majority of people but then we would see everyone with 5-10 year old vehicles and this isn't the case. We understand this is a luxury, having a new vehicle, I see it more as a bill like a phone monthly bill or food expenses etc. We have been paying close to 900 in car payments + almost 200 per month in gas. With her finishing paying her car we will only pay 700-800 per month on Tesla (less than our current 2 car payments which won't exist anymore) and much less on gas as she will only spend 80 and I will spend 30-40 on electric. So we would actually be saving some money this way cause of the electric feature. Our insurance will be about 85 dollars more per 6 months so not a huge climb.

I guess I posted this mostly to hear from people what these lenders look at such as DTI before the loan or what the proposed DTI will be...and if they look at Gross Income or Net Income. Any experience from any of you would be appreciated. I should have our credit card balance (4000 mostly paid off by time we decide to buy but our credit utilization is very low at only like 5% because we have almost 70k in available credit card balance and our min credit card payments are only 100. I guess I am thinking if we gross 7300 and our debt is 2100-2300 with the tesla, are we in good position to apply and not be in high risk of being denied :/ I am really stoked for this car.

 

[jjrandorin]

I doubt you would be denied, but that doesnt mean you can afford it. I dont know if you can or not, I am only good with managing my own wants / finances lol. My advice was more along your question which was "will I get the loan". I suspect you would get the loan. Now, whether you can actually "afford" the payment even though they will give you the loan is another matter and thats for you to decide.

One thing I know is, you seem to know where your money is going which is step 1 in having luxury items like this. Step 2 is understanding that, its OK to want to pay for something "because you want it" as long as you make the sacrifices necessary to get said item.

Everyone has "something" they like that they splurge on. For some, its car(s). I like fancy cars, so tend to buy / lease cars that are somewhat above what I would say is financially sound for someone with my income. Thing is, I know what I am spending, dont carry a balance on my credit cards, am funding my 401k, have a decent mortgage payment for where I live, etc etc.

I also dont spend money on travel / vacations. I "could" but both my wife and myself would rather have a fancier car than go on a trip. Some people are the opposite, or like cuban cigars, or playing golf, Jeans, Sneakers / Shoes, etc etc.

My vices are fairly upscale cars and electronic gadgets. Knowing what you are willing to spend money on and not, once you have whatever you consider your "basics" covered, is a different matter than "will I be approved for this 50k loan". I suspect you would be approved, but its easy to apply and find out, after you have decided that you can afford it, that is

 

[Rawlings2019]

I doubt you would be denied, but that doesnt mean you can afford it. I dont know if you can or not, I am only good with managing my own wants / finances lol. My advice was more along your question which was "will I get the loan". I suspect you would get the loan. Now, whether you can actually "afford" the payment even though they will give you the loan is another matter and thats for you to decide.

One thing I know is, you seem to know where your money is going which is step 1 in having luxury items like this. Step 2 is understanding that, its OK to want to pay for something "because you want it" as long as you make the sacrifices necessary to get said item.

Everyone has "something" they like that they splurge on. For some, its car(s). I like fancy cars, so tend to buy / lease cars that are somewhat above what I would say is financially sound for someone with my income. Thing is, I know what I am spending, dont carry a balance on my credit cards, am funding my 401k, have a decent mortgage payment for where I live, etc etc.

I also dont spend money on travel / vacations. I "could" but both my wife and myself would rather have a fancier car than go on a trip. Some people are the opposite, or like cuban cigars, or playing golf, Jeans, Sneakers / Shoes, etc etc.

My vices are fairly upscale cars and electronic gadgets. Knowing what you are willing to spend money on and not, once you have whatever you consider your "basics" covered, is a different matter than "will I be approved for this 50k loan". I suspect you would be approved, but its easy to apply and find out, after you have decided that you can afford it, that is

Thank you for your response, I absolutely agree with what you are saying and I wanted to post this because I wanted to see if others think similar to us. We don't go out and eat, we cook at home we spend literally hundred less on food than most of our friends if we do go out and eat we will do it somewhere nice once in a while rather than throwing our money out eating fast food during work lunch ours, I cook and meal prep and take food to work because I know over the month that is going to save me money which goes towards other things we would rather save and spend on such as vacations etc. We don't splurge by any means but we do like to travel, but when we do travel places that we have we do free or cheap tourism like instead of getting all paid for packages we find cheap alternatives like planning our own routes, going to the beautiful places of this earth which are cheap to visit (20 dollar national park entrance rather than spending going to some huge city overseas) For example we went to Iceland this winter and it was just 1200 for both us for 1 week including air bnb, plane tickets, food, car rental, gas everything. Several of our peers are like how on earth do you spend so little going overseas every time we go its like tons more...well we don't spend on alcohol, much at all and we don't spend hundreds on some helicopter glacier tour, we do our own hikes rather than paying a guided tour etc. anyways the point you made is exactly how we feel we are very simplistic we have a decent mortgage only 1350 a month for 15 years near st louis in a very desirable area. I was lucky to find a home at a very good price and completely renovated ourselves without paying thousands to a contractor, this is how we have saved so much money and able to put it towards some of those vices you speak of while still having money set aside for retirement some emergency funds etc. I really enjoy getting perspective from others, its not financially a sound decision that I know but when I look at our last 4 years I have had a car that costs me 517 bucks plus the gas and maintenance cost... I would rather save on gas and get more car (with MODEL 3) the money I am throwing away to Oil companies would go to having a better car, that is also better for the environment. And I guess when we ran the numbers our finances would not really change much at all so it sounds like I am making an educated decision, sure I can buy a used car and put all that money leftover towards more investments but then I am getting older and sacrificing some of TODAY and now, at least I don't know if tomorrow I will die. I tend to definitely think about the future but I also put the present as important.

 

[LPLP]

I guess I posted this mostly to hear from people what these lenders look at such as DTI before the loan or what the proposed DTI will be...and if they look at Gross Income or Net Income. Any experience from any of you would be appreciated. I should have our credit card balance (4000 mostly paid off by time we decide to buy but our credit utilization is very low at only like 5% because we have almost 70k in available credit card balance and our min credit card payments are only 100. I guess I am thinking if we gross 7300 and our debt is 2100-2300 with the tesla, are we in good position to apply and not be in high risk of being denied :/ I am really stoked for this car.

I am sure this will vary state to state and lender to lender but in my experience (financed by a credit union) they pretty much just asked for my gross income and mortgage payment before running my credit (I figure they just got the specifics of my debt from the credit history) because they didn't even ask for my student loan debt or anything else really. I applied and got approved over the phone and signed all documents via email. I just had to go in person to open up an account once I got approved.

 

[Glamisduner]

Use the loan spreadsheet on the forum, it's a great help. Also you need to decide if you want another car payment instead of being able to go out and do things more often, travel etc.

 

[Rawlings2019]

Use the loan spreadsheet on the forum, it's a great help. Also you need to decide if you want another car payment instead of being able to go out and do things more often, travel etc.

Yeah we are still thinking but we are pretty set on it, we will have same level of car payments as we have had for over 4 years, and we have been able to travel, save and pay all bills so I think spoiling ourselves with a Tesla may not be best financial decisions but we wouldn't be sacrificing any of our current lifestyle either.

 

[Diesel123]

Why does one carry $4,000 of credit card debt at XX% (I’m assuming it’s double digits) and able to come up with $5,000 down payment on a new car?

Pay off your cc debt, save another $5,000 - and then maybe look for a loan.

Sorry, you asked.

 

[Knightshade]

Why does one carry $4,000 of credit card debt at XX% (I’m assuming it’s double digits) and able to come up with $5,000 down payment on a new car?

Pay off your cc debt, save another $5,000 - and then maybe look for a loan.

Sorry, you asked.

This.

Buying a new car while paying insane CC interest is nonsensical.


Given your debt and income you should have no issue being financed for the car- but you should pay off the cards first.

(or at least roll them over to a 0% interest for 12-18 month card and plan to pay it off with the tax credit you get for the Tesla)

 

[Rawlings2019]

Why does one carry $4,000 of credit card debt at XX% (I’m assuming it’s double digits) and able to come up with $5,000 down payment on a new car?

Pay off your cc debt, save another $5,000 - and then maybe look for a loan.

Sorry, you asked.

First of I've never paid interest on credit cards in fact credit companies have paid me in so much miles and bonuses I've actually come out winning. First of all I always have 0% interest cards I pay w.e I'm going to pay cash in 0% interest. We have over 65k of available credit so 4000 out of 65k available is 6% credit utilization. I used 0% interest cards to renovate our home when I got it and paid the cards out flat out I never had to get a traditional loan to find fixing my home up, I also earned over 70k in equity on our home and out of all fixes I've only got 4000 on credit card after a wedding, honeymoon, house renovation, etc. Like I said I also earned a ton of equity on a home purchased for 126k now worth almost 200k after using 20k on credit cards and fixing the home myself .I never paid interest on the credit cards and paid them off within 21 months. We are actually able to pay them off completely now but we'd rather pay the remaining 4k within the next 3-6 months while keeping more cash since these 4k are 0% until November of 2019. Balancing this part between credit and cash is important and you can actually make money off of it. So no I'm not paying 24% on my credit card. In fact I earned almost 1500 bucks in the last couple years on miles, bonuses etc. Pretty much paid for our trip to Iceland all together. All from our house renovation points. Also I wouldn't be thinking of buying this Tesla if we didn't have more than enough money to save every month as I noted we bring in over 7300 a month gross and 5800 net. Our debt with Tesla would bring us to 2100-2300 a month, our bills food and wife's gasoline would cost us another 600-800 and so we would have over $2000 leftover every month to save, invest, travel on top of what we already have. We aren't close to well off but as many people have posted some people earn 6 figures but live worse then some couples earning 80k a year. We earn close to 90k a year combined and we also do own some small side businesses that I don't count into the 90k figure since they are new gigs . 90k is our fixed income and we have several friends with 150k in income who hardly can afford a mortgage and a normal 20k sedan. It depends where you live and how you live. Didn't mean to get personal but wanted to explain our situation before being judged.

 

[jkoya]

@Rawlings2019

Have you already decided on where you are going to charge your new Tesla ? You may want to also budget for an EVSE or Tesla HPWC..along with any other accessories you may want such as all weather floor mats, ppf, cargo liners, etc. It all does tend to add up in the end. There are also rumors that a Model 3 Leasing program will start in the future. Congrats on the Tesla decision if you do decide to get one.

 

[Rawlings2019]

@Rawlings2019

Have you already decided on where you are going to charge your new Tesla ? You may want to also budget for an EVSE or Tesla HPWC..along with any other accessories you may want such as all weather floor mats, ppf, cargo liners, etc. It all does tend to add up in the end. There are also rumors that a Model 3 Leasing program will start in the future. Congrats on the Tesla decision if you do decide to get one.

I will be adding a 50 amp inside our garage. We also own a 1978 Crown school bus which we are converting into a Skoolie (motorhome) it already has a 50 amp hook up I hooked up on the bus, so I'll need a 50amp hook up in the house in case I ever want to hook our bus up or Tesla. I've also gave a thought that when we travel if I pull our Tesla if it would charge in campgrounds with the 50 amp hook up though I've heard many of them are not very good or they will charge you for a whole other hook up at the site. As far as accessories I don't think I'll do a wrap I'm thinking possibly ceramic coating and maybe a wrap just on the front number. I'm not lucky with paint and I've had cars for usually 3-4 years and never had horrible issues with paint. I definitely want an electric vehicle and I'm sort of torn between going for the model 3, currently I have a 2017 Lincoln MKC which my lease is up June. So I'd order the Tesla in May. Though I'm waiting eagerly for the Model Y announcement if the Y is set to have 40-50k version I would probably buy out my current léase and wait a year for model Y but I don't want to wait longer than 1 year...ahhh decisions decisions. Our mkc is not a big crossover but it does help having a full trunk vs a sedan trunk...though we don't use it all but I know the one day i'll need to put a wood pallet in the car to make a bench at home or something I'll be cursing at the model 3

 

[Diesel123]

Thanks for update cc interest situation - understand doesn’t make sense to pay off early - and you are already thinking ahead of paying the lump sum when it comes due.
You are in a much better financial position (you should have mentioned CC debit at 0% for XX months!!!)



You should also take into consideration that life does change when you least expect it.

A Kid can be only 9 months away it, down turn in the economy / layoffs, repairs on other vehicles, house expenses/ further upgrades, saving for retirement, etc.
I hate seeing people taking on a house debt AND an expensive(more than we all really need) car (depreciating asset we all know) on a loan or worse leasing (unless you can write it off)

 

[jkoya]

Have you considered a Jaguar I-Pace ? I think they have 0% financing going now.

For me personally, I think my Model 3 will be my only Tesla. My delivery experience was less than stellar and I had to wait 2.5 months for a Tesla approved body shop appointment to get some major paint defects corrected. I parked next to another Model 3 at the body shop on Monday and she had been waiting since October to get her car fixed because of parts issues. I will say the Model 3 Performance is my 4th plug in car and the acceleration and handling are amazing !

 

[Knightshade]

I hate seeing people taking on a house debt AND an expensive(more than we all really need) car (depreciating asset we all know) on a loan or worse leasing (unless you can write it off)

If he can get the loan around 1-2% (which you still can based on the current loan spreadsheet) it'd be a no-brainer to do that instead of paying cash even if you have the cash.... that's what I did.

If you can borrow money at/below inflation you're repaying the debt with less valuable money down the line.

 

[Diesel123]

You are not saying that if this individual qualifies for a $100,000 loan, he should go out and buy a P100D because one can borrow at below inflation?

You appear to AFFORD to be able to buy an expensive car/Tesla with cash - this individual does not. He’s asking to see if someone would even consider lending him enough to buy a model 3.


Cars are a depciating asset. Getting a lower interest rate just eases the pain!

Once you have accumulated a significant amount of wealth / assets (house / savings / rainy day funds), taking on a small amount of debt is fine.

 

[Rawlings2019]

Thanks for update cc interest situation - understand doesn’t make sense to pay off early - and you are already thinking ahead of paying the lump sum when it comes due.
You are in a much better financial position (you should have mentioned CC debit at 0% for XX months!!!)



You should also take into consideration that life does change when you least expect it.

A Kid can be only 9 months away it, down turn in the economy / layoffs, repairs on other vehicles, house expenses/ further upgrades, saving for retirement, etc.
I hate seeing people taking on a house debt AND an expensive(more than we all really need) car (depreciating asset we all know) on a loan or worse leasing (unless you can write it off)

So idk how people taking on 1 house loan and 1 car payment which is what we would have. We would gross 7300 gross (5800 net) our house payment 1350 and Tesla payment 750. That's 2100 in debt per month. 5800-2100 is 3100 for bills, food, savings etc. We have 401k already that's pre tax .We would clear minimum 2000 a month after all expenses for putting towards saving, etc which is what we have been doing. So while there is a risk for job loss or having a kid, I think financially we are in decent form if we save even 1,000-1200 out the 2,000 we clear after all expenses and we live very simplistic the last year we have been able to set aside 1500 per month. So if I were to lose a job I do have some emergency funds to cover our house or Tesla and bills. We also have side gigs these I don't count but I do work as a soccer coach and I make anywhere from 4-6000 additional for 8 months of coaching. I usually set that aside for travel money and some to savings. The comment about taking a house loan and car loan, well don't people take on student loans and pay much more in rent in other places..for me a house loan, it appreciates in value. My house loan was 120k and my house is worth 200k now and I recently changed to 15 year loan so we will have much more equity quicker and could have house paid off in 15 years. I think getting the Tesla as our sole car loans wouldn't change our finances that we have led over the last 4 years with 2 car loans and throwing away 200+ in gas for both cars. Basically right now we spend 850 in car payments and 200 in gas cost plus 150 in insurance. With my wife having her car paid off and me just taking on Tesla we would only have 750 Tesla loan, 80 in gas, 40 in electric for Tesla and 185 in insurance monthly. So idk that to me sounds like a really slightly better than our current situation while having a better vehicle in all aspects. The reason I see this as an option is we make 7300 gross and would have 2100 in debt. While there's couples that make 7300 gross in California and almost 4000 in debt for a house loan over there plus 2 cheap car loans... That's why maybe some people can't grasp why some of us would think of having a 750 Tesla loan ... Well the money I would waste living in places like California I can have more house for less and much more car because of savings due to living somewhere like Midwest.

Having kids can be avoided somewhat if you're responsible and job loss is always a risk which you can always offset by having emergency funds and paying down your loans quicker which we could do. As long as I'm not upside down on Tesla or have enough cash to cover the difference what's the worse that can happen if I can't keep it 3 years from now if I lose my job, trade it in, cover the difference and get cheap realiable car? I think we are pretty safe only having 1350 mortgage and both of us being young and relative me in the tech industry I like to think I will always find a job somehow maybe for less but not whole lot less I would hope.

 

[Diesel123]

What interest rate were you able to secure on your house at $126,000 and a payment of $1350 per month for 15 years?
Are you upwards of over 8%?


Your projected monthly vehicle expense would be well under 20% of monthly net - Which really is acceptable in today’s day and age.


I’m just old school, and purchasing a car worth > than your yearly “individual” salary on a depreciating asset and having to finance it over 6 years - isn’t the most responsible thing to do when you are young and free, but no one wants to hear that these days.