Q: Tesla Financing - How Long To Wait?

[F4B8TS]

Hey All,

I'm a first time Tesla purchaser (Model X 90D). I've been surprised on the lack of feedback and response from Tesla Financing. I filled out the lending application on Thursday last week. Six days later I still haven't heard anything from them. I've left two e-mails and one voice-mail.

1. Is this normal (e.g. the wait)?

2. Should I wait until I actually get assigned a VIN etc to arrange financing (especially considering that it may be months before mine is built)?

I wish I had an opportunity to talk with someone regarding some of the Model X options and about financing/timing.

Thanks.

Wes

 

[bridaus]

My guy was fast. Less than a day every time.

 

[Nototrader]

Approval is only good for 60 days max. Don't do it now. You have months to go. You are only pulling credit and hurting yourself in the short term. Trust me. Approval takes one day. If they know you have a 90D, they are probably not going to waste their time or your credit right now...which is the right thing to do.

 

[flar]

I'm not sure I understand why getting an approval hurts your credit. It would be a bummer to order a fully optioned car only to discover that you only qualify for a part of its price and don't have the money to make the difference. How else would you know if the build you've chosen is feasible financially?

 

[EboMike]

I'm not sure I understand why getting an approval hurts your credit.

Applying for any kind of credit (be it for buying a home, buying a car, etc), even preapproval/qualification, means the lender will run a credit report on you, which is a hard inquiry (a soft inquiry is when credit card companies test your credit in order to send you unsolicited spam with credit card offers, or for background checks). These hard inquiries stay on your credit report for 2 years and will at first reduce your credit score. If you have too many hard inquiries on your report, some lenders may refuse to approve you for a loan or credit card. It's a pretty idiotic system, but that's what we have.

So Tesla is looking out for you. Well, it would be nice if they just told you that now is not the time to get approved yet, and it's probably more that they don't want to waste their resources, but hey, let's just imagine that they have your best interests in mind

 

[aznt1217]

The decision to finance or lease doesn't have to be made till 2 weeks prior to delivery. No need to fret.

 

[flar]

For some of us, if we can't get approval to finance most of the car then we would need to order a different, less expensive configuration so 2 weeks prior to delivery is not the time to be qualified for the loan...

 

[elguapo]

For some of us, if we can't get approval to finance most of the car then we would need to order a different, less expensive configuration so 2 weeks prior to delivery is not the time to be qualified for the loan...

You should have a good feel for your credit score today and your cash flow - that's what the lender's going to look at. If, for example, your credit score is 650, and the payments on the loan, combined with a house payment are, say, 45% of your gross income, you're likely going to have a tough time getting the loan you want. If, on the other hand, your credit score is 750 and your ratios are lower, you will be fine. There are all sorts of free websites you can use to get a feel for this. I am not an expert in this area, and credit scores are a bit of a black box.

 

[flar]

True, but their idea of allowable financial pain might differ from mine and as was pointed out, they use other factors beyond your monthly expenses to determine if they want to lend to you. Did the mortgage qualification I did last summer when I was considering a new home scare them off or not? I can calculate my monthly payments for any given configuration and the amount of liquid money that I'm willing to put into this and think "I can do that easy", but will they come to the same conclusion?

If someone put a gun to my head I could pay cash for the car, but I don't want to liquidate my assets for this - I'd prefer to eliminate some options and stick to a monthly payment that I can qualify for. It seems silly that simply asking the question (i.e. getting a test qualification) can affect your credit rating.

This isn't an issue if you are dealing with pre-built cars as most car purchases tend to be - you know the price, they do the credit check, and you either get that car or its cheaper copy next to it. With this process you commit to a car before you check the credit qualifications and that seems backwards.

 

[elguapo]

Same issue. It is a "hard" check when they do it for a regular car too. The difference is you can decide on the spot to take a different car from inventory.

There's no way around it, I think you just have to wait. No way to know before your car enters production. At that point, if you can't afford it, I suppose you could just not accept it and lose your deposit or ask them to transfer deposit to a new order (don't know if TM would do that). But then you have to wait all over again for the car...

 

[RichardL]

Back in the old days there was a 10 week wait for my car. I did the Tesla loan app a week after confirming, and got approval within 24 hours. When the car was ready, they confirmed by it was still a valid approval, it was all very easy.

I too hate the 'everything is approved, we just need one last set of info..' - if it's approved, why do they need something additional?

But in the case of Tesla, it was really easy.

 

[CmdrThor]

True, but their idea of allowable financial pain might differ from mine and as was pointed out, they use other factors beyond your monthly expenses to determine if they want to lend to you. Did the mortgage qualification I did last summer when I was considering a new home scare them off or not? I can calculate my monthly payments for any given configuration and the amount of liquid money that I'm willing to put into this and think "I can do that easy", but will they come to the same conclusion?

If someone put a gun to my head I could pay cash for the car, but I don't want to liquidate my assets for this - I'd prefer to eliminate some options and stick to a monthly payment that I can qualify for. It seems silly that simply asking the question (i.e. getting a test qualification) can affect your credit rating.

This isn't an issue if you are dealing with pre-built cars as most car purchases tend to be - you know the price, they do the credit check, and you either get that car or its cheaper copy next to it. With this process you commit to a car before you check the credit qualifications and that seems backwards.

The two most important factors that determine whether you will get the loan are your credit score and your DTI (debt to income ratio). You should be able to get your credit score for free (many credit cards offer a free FICO score now) and you can calculate your DTI yourself. Regarding "asking the question" affecting your credit rating a "hard pull" typically only docks you 1 point on your credit score. So a single request isn't going to hurt you much, but if you start requesting credit all over town your credit rating will understandably decline.

 

[pvogel]

Not quite right. The drop in credit score from zero hits in the last two years to one hit is about 10-20 points. Going from 1-2 hits is minor, about 5 points. 2-3 is a big hit 30+ points. Then it's minor again up to I think 5 hits at which point your score falls off another cliff. I was VERY pissed 4 years ago when I bought my Prius v for cash, handed them a check for the full amount and they pulled my credit. Which popped me back to 1 hit. Then my mortgage refi just under 2 years later had me at 2 hits for 1 month. Now I'm happily at zero hits and the bump from going from 1 to zero was quite obvious.

 

[CmdrThor]

Not quite right. The drop in credit score from zero hits in the last two years to one hit is about 10-20 points. Going from 1-2 hits is minor, about 5 points. 2-3 is a big hit 30+ points. Then it's minor again up to I think 5 hits at which point your score falls off another cliff. I was VERY pissed 4 years ago when I bought my Prius v for cash, handed them a check for the full amount and they pulled my credit. Which popped me back to 1 hit. Then my mortgage refi just under 2 years later had me at 2 hits for 1 month. Now I'm happily at zero hits and the bump from going from 1 to zero was quite obvious.

Interesting. I just checked my credit and it varies wildly by reporting agency. At one I have zero inquires, another I have 1 for a business credit card I opened up, and the third I have a whopping 5. Nissan apparently pulled my credit twice when I got my LEAF, Comcast and AT&T each have a hard inquiry for starting service (I sign up for cable every fall for football season and then cancel it. I guess I'll forever have inquiries from Comcast), and then we refinanced our mortgage less than two years ago so that one is there too. Additionally my mortgage company only reports to one agency, so I imagine my score and DTI could vary significantly depending on which agency a lender pulls from.

 

[bridaus]

If you are truly nervous about your credit call people. I learned when younger, ask questions and people will help! There are many banks that you can tell them your numbers and they'll tell you very likely what will happen. Talk to three or four and you'll feel very confident.

 

[Darryl]

First if you think there is anything in your credit which may prevent you from getting approval I would apply early so you have time to make other arrangements. As you can see from this forum people get different rates based on their credit score. I found Tesla Financing to be extremely efficient and helpful. Once I got a low VIN I got concerned about financing. I had originally planned on paying cash but with the market down I decided a just over 2% car loan sounded good. I can always pay it off if the market rebounds.

So the beginning of the year I filled on the on-line application. It only requested a minimal amount of information, not like a normal loan application. I did at around 8Pm eastern time. When I got up the next morning at 8 am I already had an email saying two banks had approved my loan and they provided me the rates for the various terms. I sent an email back with my selection and it was done.

A single inquiry doesn't have an impact on your credit but multible inquiries over a few month period will have an impact. A bank does an inquiry when you apply and if more than 30-45 days goes by before you get the loan (I.e. You are waiting for the car to arrive) they will run it again to make sure you haven't made any big purchases since applying for the loan. Also even if you pass the 60 day period the finance person says it only takes them a couple of days to get it extended.

Since you live in California it will be a relatively short time for the delivey of your car from Freemont to the Burlingame SC unlike us who live on the east coast. For me it was 60 days from the confirmation of the order to delivery at the Orlando SC (it arrived at my SC on Saturday). Ten days of the time it was in transit. I would apply for credit once you know it had entered production. With the factory speeding up this should be plenty of time but still leave you time if there are any issues. It takes less than three weeks from the time it enters production until it is completed. Quality control varies from a few days to weeks depending if they find something.

 

[ModelX+911]

what's the rate Tesla is providing?

 

[Darryl]

It took less than 12 hours for Tesla to get approval for our loan. Chase and TD Bank both came back with rates. The online application only asked for income and mortgage. The quote is good for sixty days. After that Tesla would have to request an extension. I think the rate on a 5 year loan was around 2%. American Express provides the ability to look at your credit score each month at no charge so I knew I didnt need to worry. Worse case I would have taken it out of savings.

The earliest I would apply is after you get your VIN.

 

[elguapo]

It is also important to know Tesla affiliated financing, and the buyback that comes with it, is not available in all states. In MD, for example, I can't get it. Not because of credit, but something to do with laws. If you do plan to apply through Tesla, just make sure they can provide in your state.

As as it relates to when to apply - I think at VIN assignment is too early until ramp up is going full force. I got my VIN 5 weeks ago or so and don't expect delivery for another 45 days, at best, so I would've lost my lock without an extension. You should have plenty of time if you wait until you find out the car is actually in transit to your SC.