Help Justifying my purchase

[omarti]

Gotta be careful about deducting interest on HE loan/line when used to purchase a vehicle. Supposed to be for home improvement or purchase of a home/2nd home. Just FYI.

EDIT: I was mistaken and properly corrected by Max* in next post.

 

[Max*]

Gotta be careful about deducting interest on HE loan/line when used to purchase a vehicle. Supposed to be for home improvement or purchase of a home/2nd home. Just FYI.

Are you sure?

I recall that you can deduct up to $100k on a HELOC not related to a house/2nd home/renovations/etc.

 

[gavine]

You will think it is silly that you actually used to like your TL once you own the Model S. That pretty much applies to most other gas-powered road car so I'm not picking on your Acura.

 

[omarti]

Are you sure?

I recall that you can deduct up to $100k on a HELOC not related to a house/2nd home/renovations/etc.

I stand corrected!! You are correct. $100,000.00 married filling jointly. $50,000.00 married filing single.

 

[xav-]

Sounds like you can easily afford it..

 

[kirkbauer]

Hello Everyone,

I am new to the forum but have been following Tesla since the roadster. I'm looking to order a Model S 75D later this year (About September for hopefully November delivery) but I'm trying to justify the purchase. This will be the most expensive vehicle I have ever purchased. When I was much younger and did not value money as I do now I purchased Audis and BMWs for usually around 30-40K (Certified). I drive about 600 miles a week for work and put alot of miles on my car. I currently drive a 2010 Acura TL AWD (really like the car) and was going to purchase the Model S when the car is paid off (Approaching 95K miles and owe 14K.

My thought process was that I trade in the car now since it's actually worth what is owed and put the 14K towards the Model S. My financial situation is as follows:

Salary: $170K+ (Household $270k+)
DTI: 30% without car 38% with car (Household 20% with car)
I pay a $400 note & $400 in gas per month. The additional cost for the car will be an additional $500 a month (which is not a problem)
We have solar panels which should offset some of the cost for charging the car (Especially utilizing TOU rates at night)
The car cost is $93250 (including fees).
I would prefer that it is financed 100% since the rates are so low.

I already have a mortgage and typically keep cars for 8 years (When they last that long ) What do you think?

Also if yo can chime in regarding financing with Alliant I would appreciate that as well (Auto Fico Score in Mid 700s).

Thanks

One question; if you owe $14k on your car and it is worth $14k then you won't end up with any cash in the process. Just an FYI.

I'd say it is a no-brainer to buy a MS. The reason I say this is that you are paying $400/mo in fuel that is just going down the drain. With interest rates as low as they are effectively you'll be transferring wasted money on gas into principal payments on your MS loan. Which means in 5 years you'll save almost $25k in fuel and you'll own free and clear a MS worth $40k+. And you'll have a better car and a more pleasant life

If you want me to I can run a quick financial analysis. I would need to know what interest rate you can likely get on the MS, how much down payment you'll put on it, how much interest you are earning on that money now, and the original terms on your current vehicle loan, and how many payments you have made. Also clarification of the likely sales price of your current car.

 

[sorka]

Hello Everyone,

I am new to the forum but have been following Tesla since the roadster. I'm looking to order a Model S 75D later this year (About September for hopefully November delivery) but I'm trying to justify the purchase. This will be the most expensive vehicle I have ever purchased. When I was much younger and did not value money as I do now I purchased Audis and BMWs for usually around 30-40K (Certified). I drive about 600 miles a week for work and put alot of miles on my car. I currently drive a 2010 Acura TL AWD (really like the car) and was going to purchase the Model S when the car is paid off (Approaching 95K miles and owe 14K.

My thought process was that I trade in the car now since it's actually worth what is owed and put the 14K towards the Model S. My financial situation is as follows:

Salary: $170K+ (Household $270k+)
DTI: 30% without car 38% with car (Household 20% with car)
I pay a $400 note & $400 in gas per month. The additional cost for the car will be an additional $500 a month (which is not a problem)
We have solar panels which should offset some of the cost for charging the car (Especially utilizing TOU rates at night)
The car cost is $93250 (including fees).
I would prefer that it is financed 100% since the rates are so low.

I already have a mortgage and typically keep cars for 8 years (When they last that long ) What do you think?

Also if yo can chime in regarding financing with Alliant I would appreciate that as well (Auto Fico Score in Mid 700s).

Thanks

I don't think you need any justification. You're clearly doing fine.

You're not the student renting a room who wants to by an MS and help pay for it by renting it out. Seriously, we've seen those here!

 

[Julesp313]

Once I stopped trying to justify the purchase, I ordered one. By that, I don't mean I couldn't afford it and just said "the hell with it" and bought it anyway - I mean I stopped trying to justify why I would be better off with a Model S than my Lexus at half the cost. I have the means and I really wanted the car (wanted one for a few years now) so I got one. It's not nearly as reckless as it sounds, honestly! Just I work hard for my income and I am comfortable spending some of those funds on this car.

If the additional spend is within your current budget and won't put an undue stress on your mental well-being, I think you're in good shape.

 

[TEUNTSLA]

go have a look here,
Tesla Model S Cost of Ownership vs. Honda Odyssey

the cost of a Tesla is much more affordable than most ICE cars at 70% of the cost.

 

[RogerHScott]

you'll be paying a lot in non-deductible interest using a 0% down loan

Define "a lot". 1.5% (compounded) of principal? You have to compare that to (after tax) whatever else you could do with that same principal.

 

[RogerHScott]

Seriously consider the 60/60D. These are pretty sweet deal right now and honestly they're all the Tesla most people could ever want.

 

[Pando]

Number-wise you'll be ok, but, I'd get a CPO for 50k+ if you can find a good deal, and pay the mortgage off sooner from the rest you'd otherwise waste on quick depreciation on a brand new car...

 

[Chopr147]

Seriously consider the 60/60D. These are pretty sweet deal right now and honestly they're all the Tesla most people could ever want.

I agree. Go with the 60D and lower the purchase price somewhat. 75kwh can always be upgraded in the future if you feel you need it. Remember the 90% and 100% charging difference as well regarding actual miles per charge.
I don't know where in NY you are but your situation is very similar to mine. I am on Long Island with similar household income and mortgage in addition to super high taxes. My 60D is on order for August delivery. Sounds like you will be just fine covering the monthly cost. Funny thing is we may be in the top 3% for earnings but living here I certainly don't feel like it I wanted this car badly but did not want to change my life for it. I have not had a car payment for 4 years and it's a good feeling. But I crunched the numbers every which way and I will not feel squeezed. Tesla giving me a decent trade-in value was a bonus.

 

[Engineer1971]

Number-wise you'll be ok, but, I'd get a CPO for 50k+ if you can find a good deal, and pay the mortgage off sooner from the rest you'd otherwise waste on quick depreciation on a brand new car...

I was originally lokking for a CPO. But since I live upstate I need all wheel drive (horrible inters at times) and most of the Model D cars are 82K to 88K. My thought process is that I might as well spend the extra 5K and get the car in the color with the options I want.

 

[James Anders]

My advice is (and I'm not trying to be flippant here) if you need help in justifying this purchase then don't do it.

 

[Engineer1971]

I agree. Go with the 60D and lower the purchase price somewhat. 75kwh can always be upgraded in the future if you feel you need it. Remember the 90% and 100% charging difference as well regarding actual miles per charge.
I don't know where in NY you are but your situation is very similar to mine. I am on Long Island with similar household income and mortgage in addition to super high taxes. My 60D is on order for August delivery. Sounds like you will be just fine covering the monthly cost. Funny thing is we may be in the top 3% for earnings but living here I certainly don't feel like it I wanted this car badly but did not want to change my life for it. I have not had a car payment for 4 years and it's a good feeling. But I crunched the numbers every which way and I will not feel squeezed. Tesla giving me a decent trade-in value was a bonus.

I'm about 70 miles from the city upstate NY (Dutchess County). I looked at the 60D but there will be days that I have to drive to our office that is in central jersey. On those days my commute will be @ 110 miles each way (I must be crazy right ) but I really like my job, kids are older and I'm an early riser anyway (up by 4:45 AM anyway). So I need to make sure I can get to work and stop for a charge on the way home. Luckily I pass two superchargers on the way home so 15 Minutes for an additional 100 miles is no big deal. Plus I rather finance the upgrade now than have to pay cash for it later on.

And I totally agree with you regarding our salaries and living in NY. I have friend that live down south and make 100K but live better than we do. But I guess it all equals out when we sell our house and move down south later in life.

 

[Engineer1971]

My advice is (and I'm not trying to be flippant here) if you need help in justifying this purchase then don't do it.

I respect your honesty. Not taking it that way at all. I may have used the wrong term by stating "Justify" I probably should have used "Help me feel more comfortable with this purchase". As I stated earlier I would never put this amount of money into a vehicle normally. So I need some encouragement on this purchase. And based and the input from everyone I am definitely more comfortable.

I appreciate the insight everyone has given me. Sometimes one has to turn to strangers to hear the "real" truth.

 

[ABCCBA]

Are you planning, or can you foresee moving out of your current house in the next 5 to 6 years? If so, the $1,800 to $2,000 monthly car note and insurance will severely impact your purchasing power for a new home.

I would prefer to put it just in my name (We may want to use her income one day to pickup some investment property just in her name). All of the other debt is in both of our names (Excluding student loans). And to be honest we did not go through this exercise when picking up her vehicle (We probably should have since she also drive 600 mile per week to get to work). Living in the woods is great but getting to work can be a pain sometimes. That is the price one pays if the want to work in the city and not pay city prices.

 

[Superloud]

Debt to income doesn't tell the whole story. As you mentioned, some of your debts (i.e. Student loans) are going away sooner than later.

My question would be how many years are left on your mortgage, and what's your interest rate? If you have 20 years left, then even if you get a cheap loan for a tesla, that's money that could instead be put against your principle, which can save a ton of money lost in interest over decades.

 

[S4WRXTTCS]

You asked a place where you knew the answer they'd give you.

So we know you've already justified it.

For the record deciding on the car is the easy part. The hard part is the options; when to buy, and the waiting part.