Help! Should I buy a model S??

[cucubits]

Not to belabor the math, but the math doesn't lie. It took 14 years to accumulate $100K, likely exponentially saved. With half it gone and chump change left over each month, to reaccumulate another $50 - 100K would realistically take longer than he's likely to own the car, and with aging kids, maybe forever.

I kept reading the OPs post again but I still can't see where the 14 years came up from. If it's an assumption, there could be one on the other end of the spectrum as well. With about $9k going out, I'd assume a good few $k go back into savings so then $50 shouldn't take that long to put back.

Your scenario could be true as well though, in which case yeah, such a huge downpayment on a new car doesn't make much sense.

 

[2101Guy]

Two Words: Delayed gratification.

 

[AMPd]

47.5k downpayment? NO! Don’t do that!
Definitely wait until you can purchase with 0 or a few thousand as your downpayment, reason being is if you were to total your car in a few months after taking delivery you’ll be lucky to recover half of that cash.

when purchasing expensive cars, especially new, you want to put down as little as possible and get GAP insurance, that way if your car is totaled, you’re free to walk away with minimal financial loss.

 

[house9]

If I were you at your age doing as well as you I would drop that money on a house instead. (I'm assuming you don't yet own a home )

100% this ^

If I was in your situation I would prioritize in this order

1) put money towards a home
2) save your money and continue driving your 2019 Nissan Morano until it is out of warranty, then get a Tesla
3) consider buying a Model 3 instead of Model S
4) get the Model S now and enjoy

Of course you probably shouldn’t take financial advise from random people on the internet

I just bought a LR AWD Model 3 which was a bit of a stretch, SR+ would have fit my budget better but I plan to keep the car for a long time and wanted the range. I replaced a 15 year old Jetta Wagon TDI.

 

[2101Guy]

47.5k downpayment? NO! Don’t do that!
Definitely wait until you can purchase with 0 or a few thousand as your downpayment, reason being is if you were to total your car in a few months after taking delivery you’ll be lucky to recover half of that cash.

Not valid logic (no offense) unless you are also encouraging GAP insurance. (option 3 below). Because the buyer (not the ins company) is 100% responsible for the full value of the loan.

Scenario 1:
- Paying 47k cash towards a 60k car. Car gets totaled. Insurance company payout is 48k. The Bank holds a lien so they get their first chunk of that 48k towards fully paying them their $13k.

Scenario 2:
- Paying 0 cash towards a $60k car. Car gets totaled. Insurance company payout is 48k. Bank gets the full 48k AND you the buyer are on the hook for paying them $13k owed. (And assuming you keep the car for years, you will pay many thousands in interest.)

Scenario 3:
- Same as above, but you pay extra for additional GAP insurance which covers any gap.

 

[r1200gs4ok]

Hey everyone! Been driving myself crazy and giving myself anxiety and feelings of guilt as well as going back and forth on this one and could really use some help!! I have ordered myself a model S long range, which is scheduled to be delivered in 2-4 weeks. Already paid a $2,500 deposit. My current situation is this: I earn $150k a year. I can easily afford the monthly payments of $1,200 for the model S however Tesla requires me to pay $47,500 as the down payment. I have approximately $100k in savings which is new and so pumped to be over the $100k mark and I am 29 years old. For some reason this guilt has been coming over me recently that I should not buy one as having $100k in savings removes all stress from my life financially, allows me to have more time with my family and live life in a much simpler way, however the same cannot be said for buying the Tesla.. I would have $50k left in savings (which is still good) but I would still have some financial stresses. Monthly outgoings are approximately $9000 right now. The Tesla won’t change the monthly outgoings as I have another car I would be trading in... it’s just about the $47,500 down payment. What’s the smart choice here? Or at least , is it for whatever reason a bad choice to get the Tesla? Choice 1) keep my 2019 Nissan Morano; still a nice car and enjoy $100k in savings, maybe spend a small amount on some nice experiences with my wife... or Choice 2) pay $47,500 (almost 50% of my savings) enjoy an awesome Tesla, be more ‘green’ and support an awesome company, but not have the same ‘freedom’ the savings would provide me on a day to day financial stress basis?? Sorry for the dumb question or if you think I should figure it out for myself but I’m autistic and struggle making decisions like this times. Any and all help would be appreciated? My wife supports my decision either way but I know she would be happier if I decided to cancel the order. Then again she is also ok with the Tesla. Ugh! Help!! Need outside opinions.... thanks!!

What interest rate do you have?.....even around 6.29% on $48,455 is only around $615....so how did you come up with $1200 monthly payment with that much down....

 

[AMPd]

Not valid logic (no offense) unless you are also encouraging GAP insurance. (option 3 below). Because the buyer (not the ins company) is 100% responsible for the full value of the loan.

Scenario 1:
- Paying 47k cash towards a 60k car. Car gets totaled. Insurance company payout is 48k. The Bank holds a lien so they get their first chunk of that 48k towards fully paying them their $13k.

Scenario 2:
- Paying 0 cash towards a $60k car. Car gets totaled. Insurance company payout is 48k. Bank gets the full 48k AND you the buyer are on the hook for paying them $13k owed. (And assuming you keep the car for years, you will pay many thousands in interest.)

Scenario 3:
- Same as above, but you pay extra for additional GAP insurance which covers any gap.

Yeah I added that part right after I posted in case there’s someone who doesn’t know about GAP

 

[GalacticHero]

So, only you (the OP) can soul search and decide if you'll truly get as much enjoyment out of having the S now will gave you versus what you can get out of other uses of the money. At your age I went ahead and bought a ridiculous expensive car with some of my computer tech fueled money. Although it was super cool to have it, I have long regretted not putting that money towards a house or just having it as part of my retirement. Having the house (or retirement) early would have provided so many more benefits than the limited time available to drive the car did.

I do own a Tesla now. At the end of 2018 my previous car dropped dead with a quarter million miles on it (after my younger experience with excessive cars I bought something more practical and drove it for 20 years.) I too could have afforded an S, and could just taste the allure of having Ludicrous mode. However, for 50% of that money I got an AWD 3 which gives me probably 90% of the functionality.

 

[agtdDelirium]

From many more decades of life experience than you have, I will tell you what I have learned about owning a car. Personal vehicles are a disposable item that depreciates rapidly and will be nearly worthless in 10 years' time (maybe a little longer for an EV). Certain things are worth buying on credit. A house, for instance, will almost certainly be worth more than what you paid at the end of your mortgage. It's a long term investment. Education is worth investing in; it more than pays for itself over time. A car is a pointless item to buy on credit. You are much better off driving a beat-up old junker for 3-5 years and put that $1200/month into an investable account until you reach the cash purchase price for the vehicle of your desires. Then buy that vehicle and enjoy while continuing to put that $1200/month into saving for the next. Repeat...

 

[cucubits]

You are much better off driving a beat-up old junker for 3-5 years

Sorry, I cannot agree with this mentality at all. It's pretty common but that doesn't mean it's right. He's young, he has some financial security, why wait and save forever? Yes, the car is just a tool but that doesn't mean he shouldn't treat himself to a really nice tool compared to one that just gets the job done.

As it was said already a few times, the OP should do what he feels is best for him and has the lowest chance to induce regrets, not listen to random people on the internet with very different backgrounds/experiences/mentalities.

 

[Big Toys]

I kept reading the OPs post again but I still can't see where the 14 years came up from. If it's an assumption, there could be one on the other end of the spectrum as well. With about $9k going out, I'd assume a good few $k go back into savings so then $50 shouldn't take that long to put back.

Your scenario could be true as well though, in which case yeah, such a huge downpayment on a new car doesn't make much sense.

Assuming he started working at 16, that give him about 14 years of savings, assuming he saved along the way, but most likely happened later in his work career.

He'd blow half his savings on a down payment for a car, and pay the other half payoff in X years + interest. A few thousand a month is good if you can keep it. With a growing family and kids that will be say 5 years older in 5 years, schools, things, maybe a new space to live, that's cutting it close, and it would not be my recommendation.

 

[Big Toys]

He's young, he has some financial security,

He is young, but blowing half your savings on a car + interest, with a family--and $1-2K left at the end of the month, assuming no other expenses. No, that is not financial security, at all.

 

[roblab]

I would wait.

At least until a newer, reworked Model S is released. In the meantime I would work on building up a credit history so that such a large downpayment would no longer be required.

The longer you wait, the better the Model S will be, and, assuming you start building a good credit history, the more favourable your loan terms will be.

My understanding is that Teslas are ALWAYS being improved. You could wait til doomsday for a final product, but it ain't gonna happen. Whenever you buy a Tesla, it's always the best Tesla has, until the next build, the next month. ONLY if they redesign the front end or make some dramatic change to the interior will most people think "OH, This is new...." But it's always new.

Of course, waiting for your income to increase might be good, but that's for you to decide. I agree you could buy used if you're unsure.

Personally, I would recommend you buy your dream car. And then enjoy it. Just remember, "BEST... CAR... EVER!"

 

[agtdDelirium]

Sorry, I cannot agree with this mentality at all. It's pretty common but that doesn't mean it's right. He's young, he has some financial security, why wait and save forever? Yes, the car is just a tool but that doesn't mean he shouldn't treat himself to a really nice tool compared to one that just gets the job done.

As it was said already a few times, the OP should do what he feels is best for him and has the lowest chance to induce regrets, not listen to random people on the internet with very different backgrounds/experiences/mentalities.

I absolutely agree that using disposable income is the choice everyone makes individually. What I spend money on may look wasteful to what others would do with the same. Needing to buy on credit means you don't have that money. Financing a car by choice because you have investments that you know will likely beat the car loan interest rate is an investment strategy choice. I would have no problem with that.

Use the "down payment" cash the OP has to buy a Model 3 or Y. That's "a really nice tool" compared to just about 95% of all vehicles available. In 5 years of investing $1200/month, you can afford the latest and greatest Model S, and still have that 3/Y to sell or keep.

At 30 y/o the world seems to cry for you to enjoy the best you can self rationalize. Wisdom would endorse a little patience and even more will become available to you in what is a very short time of your life.

 

[greatgatsby]

Thanks for all the replies so far everyone! However it’s important to know it’s not about the monthly costs or anything else like that as I am actually paying more per month in my current situation and finance on my current car. Trading that in and getting the model S actually will LOWER my monthly payments ... the concern is more to do with the concern of putting down almost half my savings on the down payment... that’s the situation that’s really frustrating for me. I mean, is blowing half savings on a car a ridiculous decision? Also worth mentioning I’m self employed and while I do earn 150k per year, that can fluctuate up and down but lately I’ve been more in the 200-250k range.

 

[Uncle Paul]

The math means the OP would be in the same net financial condition either way.

If he uses his savings, then he will have an equally smaller loan on the car.
If he were to not use his savings, he would need to borrow much more, and have more debt.

The psychological issue is having $100,000 in savings means a lot to him. It is an accomplishment that gives him comfort. This is what some call a miser. Keep making money, but being unwilling to spend any of it.

Saying is that you can't have your cake and eat it too. Can't keep all your money and buy a new Tesla too.

A similar thing happened to Malcom Bricklin. He sold a hardward chain for $1 Million after taxes. Said that if he even spent $1, he would no longer be a Millionaire . Built his gull wing, THE BRICKLIN, safety oriented car in Canada (New Brunswick).

The company eventually failed...but he remained a Millionaire.

 

[greatgatsby]

The math means the OP would be in the same net financial condition either way.

If he uses his savings, then he will have an equally smaller loan on the car.
If he were to not use his savings, he would need to borrow much more, and have more debt.

The psychological issue is having $100,000 in savings means a lot to him. It is an accomplishment that gives him comfort. This is what some call a miser. Keep making money, but being unwilling to spend any of it.

Saying is that you can't have your cake and eat it too. Can't keep all your money and buy a new Tesla too.

A similar thing happened to Malcom Bricklin. He sold a hardward chain for $1 Million after taxes. Said that if he even spent $1, he would no longer be a Millionaire . Built his gull wing, THE BRICKLIN, safety oriented car in Canada (New Brunswick).

The company eventually failed...but he remained a Millionaire.

this exactly lol. Thanks for understanding!

 

[Marvin]

Sorry, a bit offtopic but 9k outgoing per month!????! How much do you make as as 29 year old? I am impressed!

 

[rsg123]

The selfish side of me would tell you to buy it because as a used car buyer it would benefit me. You will probably be fine. But the nice side says DON’T do it. Based on your financials you should buy used.

 

[ucmndd]

If you have $12.5k coming in and $9k going out after taxes, it sounds like you’re already spending basically every penny you earn.

I dunno. Generally financial advice on car forums is worth exactly what you pay for it, and only you know the details of your situation. Personally, I would not halve my savings for a nice car.