Prices are slowly going up?

[Puma2020]

The real issue is all of us...
We have been WAY TOO VOCAL about our enjoyment of these cars!
We need to keep our mouths shut.
Have the non believers start buying the other EVs causing Tesla to realize there is some competition.
That will likely help reduce the sale price over time. Plus that leaves more inventory for us!

 

[Pyre]

"owing" or not has nothing to do with if you get the full credit or not- as explained earlier in some detail.

While inflation IS a thing, it's not enough of a thing to REMOTELY cancel out 33% cut in the value of the credit between when you take delivery and the minimum of 1-3 months or max of 12-14 months later when you do your taxes in the example you used.


That said, a lot of the talk around a new credit is exactly on doing a point of sale rebate, in part because of how badly so many seem to misunderstand how the credit works.

My comment was, "money now is worth more than money later TO ME." You are assuming the money someone saves from a point of sale rebate would sit idle and not be invested or spent on potentially appreciating assets. I agree it generally sits idle or spent poorly elsewhere, but not always.

I do think i do not understand the tax credit still though. So I just get all $7500 if i make over X dollars?

 

[Knightshade]

My comment was, "money now is worth more than money later TO ME." You are assuming the money someone saves from a point of sale rebate would sit idle and not be invested or spent on potentially appreciating assets. I agree it generally sits idle or spent poorly elsewhere, but not always.

Wait- who the hell pays cash in full for a car, when you can get 2% loans?

In which case "cash you have to invest" isn't changed at all (other than maybe a very few dollars a month difference in car payment amount).

I do think i do not understand the tax credit still though. So I just get all $7500 if i make over X dollars?

You get all $7500 if you have a tax liability of $7500 or more.

Which generally you do if you make over certain amounts (rough ballpark of 66k individual, or 90ish k married couple).

There's unique/common situations that can impact this... like if you had a bunch of OTHER non-refundable credits the same year then the liability would need to be higher to take all of them.


But how much you had taken out of your paychecks, or how big your refund is (or if you even get one) tells you nothing about how much of the $7500 credit you get, since that's a different number than your tax liability.




If you scroll back to post 109 I try and simplify it a bit- including which line on the 1040 form is relevant for what.

 

[play150]

Wait- who the hell pays cash in full for a car, when you can get 2% loans?

In which case "cash you have to invest" isn't changed at all (other than maybe a very few dollars a month difference in car payment amount).






You get all $7500 if you have a tax liability of $7500 or more.

Which generally you do if you make over certain amounts (rough ballpark of 66k individual, or 90ish k married couple).

There's unique/common situations that can impact this... like if you had a bunch of OTHER non-refundable credits the same year then the liability would need to be higher to take all of them.


But how much you had taken out of your paychecks, or how big your refund is (or if you even get one) tells you nothing about how much of the $7500 credit you get, since that's a different number than your tax liability.




If you scroll back to post 109 I try and simplify it a bit- including which line on the 1040 form is relevant for what.

Ooh re: cash in full do you mean it's better to get a 2% loan and invest the money that you would've spent on the car to get like 5% returns? (tbh I still like the sense of security from the car being completely paid off though)

 

[sroy]

.

Ooh re: cash in full do you mean it's better to get a 2% loan and invest the money that you would've spent on the car to get like 5% returns? (tbh I still like the sense of security from the car being completely paid off though)

That works if you can afford the monthly loan payment. But in essence yes. Unless that affects your borrowing power (i.e. looking at a mortgage soon).

 

[Pyre]

I dont know who got a 2% loan, i got 1.99% for 72mo though on a used vehicle...

 

[sroy]

I dont know who got a 2% loan, i got 1.99% for 72mo though on a used vehicle...

Interest is usually worst on a used car loan no?

 

[Pyre]

Interest is usually worst on a used car loan no?

I agree.

This credit union is offering 1.99% up to 72mo on any 2018 and newer at the moment. Ends the 26th. At least thats when they need to cut the check by otherwise I will miss out.

I am even going to help the wife into a 2021 pacifica if we can find the right one to utilize this interest rate.

 

[Knightshade]

Ooh re: cash in full do you mean it's better to get a 2% loan and invest the money that you would've spent on the car to get like 5% returns? (tbh I still like the sense of security from the car being completely paid off though)

Exactly... (well, ideally better than 5%, but certainly better than the 2 you're paying on the loan!)

Paying 60k cash for my car in 2018 would've "saved" me like $3400 in interest over the life of the loan.

If you'd put that 60 into even just a conservative investment like an S&P 500 index fund at the same time, you'd be up almost $30,000 versus the "savings" on not taking the loan.

If you'd put it into Tesla stock at the time you'd be up... well... about $660,000 as of close of market Friday....those are not typical market return results though

 

[Pyre]

Exactly... (well, ideally better than 5%, but certainly better than the 2 you're paying on the loan!)

Paying 60k cash for my car in 2018 would've "saved" me like $3400 in interest over the life of the loan.

If you'd put that 60 into even just a conservative investment like an S&P 500 index fund at the same time, you'd be up almost $30,000 versus the "savings" on not taking the loan.

If you'd put it into Tesla stock at the time you'd be up... well... about $660,000 as of close of market Friday....those are not typical market return results though

This is acknowledging a point of sale rebate is not the same as a tax credit right?

 

[Knightshade]

This is acknowledging a point of sale rebate is not the same as a tax credit right?

Not sure why you think it would.

Since the entire point was you're not paying in cash either way you are instead taking a loan since loans are so cheap.


The only thing a point of sale rebate does in that case is make the loan a little smaller... so your monthly payment might slightly smaller for the 5 or 6 years or whatever you have the loan.


Though.... I suppose in this case (investment) it's arguable the point of sale rebate is worse.

Let's check the math on that!



With the POS rebate you're effectively just "saving" a small amount each month for 5 or 6 years because the borrow amount is smaller by that rebate.

With the tax credit you're potentially saving $7500 right now (if you're someone who say sets aside a portion of cap gains the credit will offset throughout the year)-or at most less than a year from now (when you file) in one shot, which you could invest in full.



For example let's say you're taking a 60k loan at 2% in June with EITHER a $7500 tax credit, or a $7500 POS rebate. It's assumed your normal income can cover a car payment either way (if it can't you probably shouldn't be buying this).

(Either way whatever cash on hand you have can be invested, at likely much better than 2% return- so that's irrelevant to the math either way)


So...on a 72 month loan you're paying $885 a month on 60k...or $774 a month on 52.5k


The POS rebate means that over the next 6 months you will save $111 per month. Come January you'll have $666 in "saved" cash you could invest!

But...with the tax credit you have an extra $7500 right now (if you're someone who puts tax $ aside all year apart from W2 withholdings, as many investors do)... or at worst you have $7500 extra in January you'd have otherwise had to give the IRS for your tax obligation for the year.

So you've got over 10x as much money to invest and grow by no later than 6 months after car purchase.

Now... the POS buyer will keep 'saving' his 2% of 52.5k ($111 a month) and you'll keep earning a lot better than 2% on your extra $7500 you invested.


The POS buyer won't reach $7500 "extra" money until month 68 of the 72 month loan.


So yeah, now that I really think about it- the POS rebate genuinely is worse if you're someone who can manage to beat 2% return on investment.



Now- don't get me wrong... the POS rebate is "better" for folks who don't understand the credit anyway, or who aren't going to be investing for good returns in the first place, they just want "the lowest monthly" they can get without caring if it's really "costing" them in the long run.

Which is why that's what the new EV credit is probably gonna be.

But mathematically speaking I'm sure much happier (and richer) having had $7500 extra actual money 3 years ago to buy Tesla stock with, than having a $100ish buck a month cheaper loan payment.

 

[Pyre]

Not sure why you think it would.

Since the entire point was you're not paying in cash either way you are instead taking a loan since loans are so cheap.


The only thing a point of sale rebate does in that case is make the loan a little smaller... so your monthly payment might slightly smaller for the 5 or 6 years or whatever you have the loan.


Though.... I suppose in this case (investment) it's arguable the point of sale rebate is worse.

Let's check the math on that!



With the POS rebate you're effectively just "saving" a small amount each month for 5 or 6 years.

With the tax credit you're potentially saving $7500 right now (if you're someone who say sets aside a portion of cap gains the credit will offset throughout the year)-or at most less than a year from now (when you file) in one shot, which you could invest in full.



For example let's say you're taking a 60k loan at 2% in June with EITHER a $7500 tax credit, or a $7500 POS rebate. It's assumed your normal income can cover a car payment either way (if it can't you probably shouldn't be buying this).

(Either way whatever cash on hand you have can be invested, at likely much better than 2% return- so that's irrelevant to the math either way)


So...on a 72 month loan you're paying $885 a month on 60k...or $774 a month on 52.5k


The POS rebate means that over the next 6 months you will save $111 per month. Come January you'll have $666 in "saved" cash you could invest!

But...with the tax credit you have an extra $7500 right now (if you're someone who puts tax $ aside all year apart from W2 withholdings, as many investors do)... or at worst you have $7500 extra in January you'd have otherwise had to give the IRS for your tax obligation for the year.

So you've got over 10x as much money to invest and grow by no later than 6 months after car purchase.

Now... the POS buyer will keep 'saving' his 2% of 52.5k ($111 a month) and you'll keep earning a lot better than 2% on your extra $7500 you invested.


The POS buyer won't reach $7500 "extra" money until month 68 of the 72 month loan.


So yeah, now that I really think about it- the POS rebate genuinely is worse if you're someone who can manage to beat 2% return on investment.

Anyone who can beat 2% is basically anyone who isn't ignorant with their investments/money. So POS rebate is best?

 

[Knightshade]

Anyone who can beat 2% is basically anyone who isn't ignorant with their investments/money. So POS rebate is best?

I just said literally the exact opposite.

And showed the math why.

I'm starting to understand why the POS rebate is so appealing to you.

 

[Pyre]

I just said literally the exact opposite.

And showed the math why.

I'm starting to understand why the POS rebate is so appealing to you.

Edit: if my bank will give me 100% msrp as a loan on a vehicle at 2% interest and i get $7500 off as POS thats $7500 i can pocket and use as, down payment on properties when even mortgages do not hit 2%, or pay off higher interest loans/cards, or invest and receive profit over 2%. Waiting potentially a whole year for a tax credit I may not entirely qualify for is not worth betting on.

 

[Knightshade]

Edit: if my bank will give me 100% msrp as a loan on a vehicle at 2% interest and i get $7500 off as POS thats $7500 i can pocket

No, it's not.

That's literally not how any of that works.

 

[Pyre]

No, it's not.

That's literally not how any of that works.

Wait, did i just do this on a used car? Yup.

Edit: on my used m3p purchase the bank assessed the car value vehicle at 100% NADA, i was able to get an extra 3k over vehicle purchase simply my requesting as it still was below NADA.

Edit 2:
Vehicle msrp 50k, sale price with POS rebate 42.5k, loan at 50k. I pocket 7.5k.
What am i losing you on? After your post, which was condescensing, you should be humble.

 

[Knightshade]

Vehicle msrp 50k, sale price with POS rebate 42.5k, loan at 50k. I pocket 7.5k.
What am i losing you on?

Generally the bank writes the check for the new car based on the final price on the MVPA (most commonly they write it TO the dealer to).

Which will already have the POS rebate taken off of it.

They don't usually just give you a suitcase of cash to buy the car at whatever price you tell them and let you keep any leftovers.

 

[rm1626]

Prices for all cars are going up nationwide and maybe even globally. There is a sever global chip shortage for autos leading to supply issues while demand is very high...if you go to any dealership right now you'll see no incentives and prices substantially higher than just a few months ago. And on top of that Teslas in particular are selling like crazy...so makes sense for Tesla prices to go up at least as much if not more than others.

 

[Kevy Baby]

Interest is usually worst on a used car loan no?

Usually but not always. At one point my credit union was offering the same rate for a new as used car (2.99% at the time a few years ago).

 

[bro1999]

What are the odds Tesla jacks up prices again in 2 days?