Question on Tesla finance

[khyros]

Hi,
I'm considering getting a M3 long range towards the 2nd half of the year. I've never bought a new car so I'm fairly inexperienced in this area.
We don't like leasing, and we want to have the option to own the car, but also have some flexibility in case there's a new model with better battery and we can swap it.

I think what we need is a PCP with the balloon payment at the end of the initial term. Is this considered a lease? Do PCP owners have full access to the Tesla account and apps? I don't want to be restricted in any way as the most likely scenario (90% sure) is that we keep the car for many years after the initial term.

Any help is greatly appreciated!
Cheers!

 

[Jez_GB]

Given your criteria I'd go PCP - that gives you the in-app/account access & control of an outright private purchase, and some flexibility during and at the end of the finance term. IMO, YMMV, Caveat Emptor, etc, etc!

 

[Durzel]

PCP is not leasing. Leasing is rental whereas PCP the implication is that you're ultimately buying the car (hence the "Purchase" part of it ). Many people either refinance the balloon payment, or get another new car with the residual value of the existing one deducted from it, etc.

Some leasing companies will give you the option to buy the car if asked, but unlike PCP you have no idea whether they will actually agree to that until the point at which you ask them, or how much you'll be quoted to buy the car from them.

As above - it sounds like PCP is your best option, particularly as you want full app/account access.

 

[khyros]

PCP is not leasing. Leasing is rental whereas PCP the implication is that you're ultimately buying the car (hence the "Purchase" part of it ). Many people either refinance the balloon payment, or get another new car with the residual value of the existing one deducted from it, etc.

Some leasing companies will give you the option to buy the car if asked, but unlike PCP you have no idea whether they will actually agree to that until the point at which you ask them, or how much you'll be quoted to buy the car from them.

As above - it sounds like PCP is your best option, particularly as you want full app/account access.

Thank you both. I think I understand the difference between PCP and a lease.
What escapes me is the difference between a lease and hire purchase?

Anwyays, there's not much point is going around the bush.. we'll get a PCP

 

[Durzel]

Hire purchase is basically paying off the cost of the car, in fixed payments, with no balloon payment at the end, like a mortgage. Once you've made the final payment of £X - the same as you made the previous however many months - you own the car.

The payments on HP will therefore be considerably higher than PCP and to a lesser extent leasing.

My understanding is that lease payments will basically be closer to PCP than HP, on the basis that you're basically just renting the car and the leasing company expects it to have a defined value at the end of the term.

 

[Yev000]

Why not Tesla Loan?

PCP 6k £635/Mo 10k mile limit, early repayment penalties, baloon payment financing Interest charges £6,040 (not including the baloon if you refinance that)
Loan 6k £662/Mo None of the above restrictions Interest charges £5,340

 

[Mrklaw]

Why not Tesla Loan?

PCP 6k £635/Mo 10k mile limit, early repayment penalties, baloon payment financing Interest charges £6,040 (not including the baloon if you refinance that)
Loan 6k £662/Mo None of the above restrictions Interest charges £5,340

I went for a loan this time, after about 4 PCPs in a row. I nearly always hand back or even VT, so my thinking was I wanted the flexibility to move on when I wanted, but didn't want to be locked in to a specific term (lease = full term, PCP = VT point which is pretty late into the term anyway, eg 42 months into a 48 month agreement). I'm betting on the resale value of the car being high enough to facilitate moving on to another car if I want to, and settling the loan, which is the safety net a PCP provides for you (guaranteed future value and ability to hand back)

 

[Yev000]

I went for a loan this time, after about 4 PCPs in a row. I nearly always hand back or even VT, so my thinking was I wanted the flexibility to move on when I wanted, but didn't want to be locked in to a specific term (lease = full term, PCP = VT point which is pretty late into the term anyway, eg 42 months into a 48 month agreement). I'm betting on the resale value of the car being high enough to facilitate moving on to another car if I want to, and settling the loan, which is the safety net a PCP provides for you (guaranteed future value and ability to hand back)

Yep, its also built into your Tesla account. They do the Loans through Adyen N. V. And you can tweak everything on your Tesla account page. Car is yours, any upgrade is yours and all the documents are stored on your Tesla account.

You can even change the direct debit or pay off a large portion at any point....

 

[Durzel]

Omg I've got your last 4 digits.. spending spree time!

 

[Yev000]

Omg I've got your last 4 digits.. spending spree time!

LOL, good luck. I got no money, you're welcome to depost some, for a good cause and all that.

 

[jontymo]

We have gone down the Tesla loan route after having pcp's for years, feels like a bit more freedom around the rules. Its good to have all the options and make your own choice.

 

[Billbrown1982]

I also chose Tesla Loan after years of PCP. I want to actually have some equity in a car instead of constantly upgrading every 3 years and starting from scratch.

It feels great at the time, then that balloon payment comes around and its hard to justify such a large amount of what is then a 3 year old car.

 

[gangzoom]

The cheapest way to finance any large borrowing at present is via additional mortgage borrowing. You can currently get 1.5% fixed for 5 years from pretty much any lender if your LTV is half decent.

For a £50k loan if fully repaid over 5 years that translates to under £2k of interest versus more than double that for a Tesla PCP product. The equivalent monthly repayment is £860/month for 5 years of which only £60/month is interest, I doubt we will ever see such cheap borrowing again in our lifetime!!

You do need the self control to ensure you repay the loan ASAP though, as 1.5% interest is cheap but if you let the loan run for 20 years on the mortgage it become very very expensive.

 

[Mrklaw]

Understood but I’d rather not have it secured on the house

 

[btc1k]

Understood but I’d rather not have it secured on the house

Why and how would it be secured on the house?

 

[Tigermad]

Why and how would it be secured on the house?

Because adding to your mortgage is a secured loan.

 

[JupiterMan]

PCP 6k £635/Mo 10k mile limit, early repayment penalties, baloon payment financing Interest charges £6,040 (not including the baloon if you refinance that)
Loan 6k £662/Mo None of the above restrictions Interest charges £5,340

Just a note to add is that with PCP the mileage limit you select only applies if you don't pay the balloon payment and instead hand the car back.

If the intention is to keep the car then the agreed mileage would not be relevant.

 

[Yev000]

The cheapest way to finance any large borrowing at present is via additional mortgage borrowing. You can currently get 1.5% fixed for 5 years from pretty much any lender if your LTV is half decent.

For a £50k loan if fully repaid over 5 years that translates to under £2k of interest versus more than double that for a Tesla PCP product. The equivalent monthly repayment is £860/month for 5 years of which only £60/month is interest, I doubt we will ever see such cheap borrowing again in our lifetime!!

You do need the self control to ensure you repay the loan ASAP though, as 1.5% interest is cheap but if you let the loan run for 20 years on the mortgage it become very very expensive.

Until you get a divorce and find out you have to pay off the car portion of your mortgage and noone offers a loan to pay off a loan.

Also, they will create an "additional mortgage" - at least in case of Barclays, which you cant overpay and is fixed. So if you need to repay it early, there will be early repayment charges. And because its "additional account" the interest rate wont be your mortgage interest rate.

So yes, if you can guarantee your life wont change for 5 years, mortgage is the cheapest. By about £1000 total (for 35k borrowed) vs Tesla loan. Thats about £15/mo.



And before anyone gets their panties in a twist - * from presonal expereince * your milage may vary*

 

[gangzoom]

So yes, if you can guarantee your life wont change for 5 years, mortgage is the cheapest. By about £1000 total (for 35k borrowed) vs Tesla loan. Thats about £15/mo.

Lucky I can, and the real 'value' is when you are borrowing 6 figure sums.

There is no getting around the fact mortgage borrowing at present represents near 'free' money when you factor in inflation.

Clearly you need to manage the capital repayment but I honestly cannot see been able to access such cheap/free money for the foresable future!!

If you have a big capital spend planned for the next 5 years it really is looking at a gift horse in the mouth.

We are normally savers but the last 18 months I've been desperate to borrow.....its just we still have nothing to borrow for at present, its a strange financial world right now!!