Model 3, Tesla said they'd rate match my 2.99% from their 3.99% as a difference in check

[tracerit]

But it doesn't seem like a good deal. I checked the FAQ on Tesla.com and it says they'll pay you the difference in monthly payments between the two rates as a check, but your actual rate on contract would still be 3.99%

Loan $35,000
Loan for 60 months

Credit Union loan at 2.99%
$628.25/mo payments
Total interest paid $2724.41

Tesla's 3.99%
$644.42/mo payments
Total interest paid $3,665.22


So the difference between Tesla's 3.99% and my CU's 2.99% monthly payments is $16.17 x 60 = $970.20. So now if I take that check and make an immediate payment on month 1, the total interest charge would still be $3,457.08. A mere savings of $208.14. It seems like you're saving money, but the 3.99% compounded will still do its damage on the total interest over teh course of the loan.



Am I understanding this correctly?

 

[jjrandorin]

Just go with your credit union... no reason to rate match unless you need to have the loan with tesla for some reason.

 

[tracerit]

Just go with your credit union... no reason to rate match unless you need to have the loan with tesla for some reason.

yup, that's the plan now. i just want to understand correctly.

 

[feurie]

The whole idea is that over the course of the loan you'd pay the same amount. It's to entice you to not have to worry about scrambling to get a loan elsewhere but they'll match.

If you match before the loan paperwork is finalized, Tesla will just match your rate.

 

[davewill]

So the difference between Tesla's 3.99% and my CU's 2.99% monthly payments is $16.17 x 60 = $970.20. So now if I take that check and make an immediate payment on month 1, the total interest charge would still be $3,457.08. A mere savings of $208.14.

The refund is exactly the right amount the way I see it. If you pay that $970.20 down on the loan upfront you lowered your interest by $208.14, but you also lowered the principal you have to pay back, which you didn't account for.

I suspect that if you looked at all the angles getting the refund check would actually be better since you are getting that money upfront instead of over the life of the loan.

 

[dsvick]

Am I understanding this correctly?

No.

You already figured in the affect of compound interest when you calculated the total amount of interest you'd pay in each scenario. In fact, if you take the check and make a payment on the principle of the loan you'll pay even less interest over the loan, as well as reduce the number of payments so you'd be even further ahead. You could also take it and put it in a CD for 5 years and likely come out even further ahead - depending on what rate you can get. An even better option would be to pay down some other, higher interest rate, debt you may have.

 

[tracerit]

No.

You already figured in the affect of compound interest when you calculated the total amount of interest you'd pay in each scenario. In fact, if you take the check and make a payment on the principle of the loan you'll pay even less interest over the loan, as well as reduce the number of payments so you'd be even further ahead. You could also take it and put it in a CD for 5 years and likely come out even further ahead - depending on what rate you can get. An even better option would be to pay down some other, higher interest rate, debt you may have.

Yeah so paying the principal down would be similar to having a 34, 030 (35,000-970) loan. The 3.99% rate then would have 3,564 in total interest fees.

 

[dsvick]

Yeah so paying the principal down would be similar to having a 34, 030 (35,000-970) loan.

Sort of, the original loan terms would still apply as far as payment amount but the amortization schedule and interest charged each month would change, you'd essentially end up paying it off two or three payments early.

 

[biggeral]

take the refund and go refinance it when the rates are lower...or negative interest....yikes.

 

[davewill]

Yeah so paying the principal down would be similar to having a 34, 030 (35,000-970) loan. The 3.99% rate then would have 3,564 in total interest fees.

Plus the fact that there's $970 in principal you didn't have to pay. In my judgement, the interest savings that you do see are all gravy.

 

[Gigaron]

When I was in my local California dealer today, they told me the rate was 4.25% And no more matching.

 

[feurie]

When I was in my local California dealer today, they told me the rate was 4.25% And no more matching.

Best Rate Guarantee

 

[Gigaron]

Best Rate Guarantee

Thanks. I just sent an email asking if the offer still holds and got back an automatic reply that the team will answer me in 2-3 business days. The T&C state that only approval is good and not pre-approval. I don't quite understand the difference.

 

[patbateman]

Many banks will let you "recast" a loan once without a fee, or a very low fee. Basically it adjusts your payment when you put a big chunk towards principle and want a lower payment. Probably not worth going through all that unless you really want to give Tesla the business.

 

[mreynolds767]

Does not sound like a bad offer to me.
If you don't like it go with the CU instead.

Personally if you already have other banking with the CU, I would think it would be easier to use them and not Telsa's financing anyway.
If you got this rate from a credit union but don't currently use them / are not a current member than I would go with Telsa's offer.

 

[dsvick]

The T&C state that only approval is good and not pre-approval. I don't quite understand the difference.

Usually, pre-approval is more informal and just means that they looked at your income, expenses, and the loan you are looking - plugged it into a calculator and decided that it looks like you can afford it. Actual approval is more formal and involves you filling out the application and them running your credit report and checking to make sure you meet all of the criteria for the loan.

 

[Gigaron]

Thanks. I just sent an email asking if the offer still holds and got back an automatic reply that the team will answer me in 2-3 business days. The T&C state that only approval is good and not pre-approval. I don't quite understand the difference.

Rate matching is still available, and they will contact my local showroom to let them know. Meanwhile, I am approved by my credit union and see no reason to have Tesla rate match. I’ll just go with the CU.