Regarding Financing Through Tesla

[JakeGonz]

So I've caught the Tesla bug about 5 months ago or so. And with getting a new job, I think I'm finally in a spot where I can afford one with a good down payment! Currently chipping away at filling up a $7k minimum cash Tesla fund for a good down payment, so I can make monthly payments as easy as possible.

Thing is, I can't afford all the bells and whistles out of the gate. Luckily, black is my favorite color, so thats an easy choice to save some cash. And the standard 18" wheels are more than fine. Initially, I was going to take the SR with autopilot. But for some reason, the SR+ was always in the back of my mind. Now I'm torn between taking an SR+ without autopilot, or the SR with AP. Unfortunately FSD is out of the equation completely with my budget. But I can live without it.

Now I have decent credit, around 715-ish or so. But I figure I'll finance through Tesla, for the sake of just making everything seamless.

But regarding financing through Tesla. Say, hypothetically, I get the SR+ without AP. And a few months down the line, figure I could budget getting AP as well. Is it possible to just figure that into my monthly payments? I'm realizing now, if I take the SR+, I could always get AP eventually, but I'll never be able to upgrade to SR+ if I take a SR.

For the record, I've never bought a new car before, and also have never taken out a loan. So this is a completely new world to me. I've just gone through junkers I've bought either from family or friends.

What would be my best move here? Thanks in advance for the help.

 

[commasign]

If you have to pick between SR with autopilot and SR+ without autopilot, I would get the SR+ without autopilot. While the after-delivery price of Autopilot is higher, there's a reasonable chance Tesla will discount it again at some point in the future. I think the $2500 extra for SR+ over SR is worth it to get the power adjustable premium front seats, fog lights, covered console, phone dock, extra 20 miles range, and quicker acceleration. However, if you commute a lot with bumper to bumper traffic, then maybe SR with autopilot makes more sense. Of course, if you can stretch a little to get SR+ and autopilot, that would be even better.

Keep in mind you get $3750 federal tax credit (depending on your tax situation) and it looks like PA has a $2000 rebate (https://www.dep.pa.gov/Citizens/Gra...ve-Grant/Pages/Alternative-Fuel-Vehicles.aspx). Plus you save a lot of money on gas (up to a few thousand $ per year).

 

[JakeGonz]

If you have to pick between SR with autopilot and SR+ without autopilot, I would get the SR+ without autopilot. While the after-delivery price of Autopilot is higher, there's a reasonable chance Tesla will discount it again at some point in the future. I think the $2500 extra for SR+ over SR is worth it to get the power adjustable premium front seats, fog lights, covered console, phone dock, extra 20 miles range, and quicker acceleration. However, if you commute a lot with bumper to bumper traffic, then maybe SR with autopilot makes more sense. Of course, if you can stretch a little to get SR+ and autopilot, that would be even better.

Keep in mind you get $3750 federal tax credit (depending on your tax situation) and it looks like PA has a $2000 rebate (https://www.dep.pa.gov/Citizens/Gra...ve-Grant/Pages/Alternative-Fuel-Vehicles.aspx). Plus you save a lot of money on gas (up to a few thousand $ per year).

Well my daily commute is really only about 20 miles round trip. Thing is, it goes between 3 different highways. And while there's some traffic, I have to switch lanes so often, I feel like I would barely be able to use it most of the time. So I'm thinking I'll probably swing for the SR+ with none of the fun stuff added. But I'm completely in the dark with how Tesla financing works. Like, if I did want to add AP a couple months down the line, could that just be figured in to my monthly payments? Or would they just want all that cash up front?

 

[jjrandorin]

There is a bit more here to unpack than you realize. The short version of this is, once you finance the car, that amount is "set". You will not be adding onto that loan unless you re finance it, so you can not plan on adding on things to that loan "later" . Re financing it is actually getting another loan.

Since tesla lets you add features like AP and FSD "later" if you want the car you can add it later. It will (might) cost more later though. Currently it does cost more "later" than at purchase but we dont know if that will stay the same forever ( no one does, not even tesla).

Still, you CAN add it later by paying cash for it, but you likely wont. Also, since you have not bought a new car before, you may not be figuring in "taxes / destination / etc" into the price of the car. Quite a bit of your 7k down payment will be taken up by that stuff. Your 37k SR+ is 37K + 1200 destination + tax + registration. thats probably 41-42k. Figure 42k, minus your down payment of 7k, and you are likely FINANCING 35k... not financing 37k - your 7k down payment. This is fairly basic stuff but if you have never bought a new car you may be looking at the 35 or 37k and forgetting to add those charges.

Your "best" move would be to hold off on the tesla right now, and buy a 1-2 year old model 3 which would still be a great car, with low miles. New cars are a luxury in my opinion. Failing that (nothing wrong with wanting shiny / new.. just make sure you understand exactly what you will be paying for), you should probably get the SR+ since its much more "bang for buck", and the Autopilot stuff can always be added "later".

Also plan for installing charging in your garage, or really (really) plan out where you will charge.

 

[phlevcar]

Keep in mind you get $3750 federal tax credit (depending on your tax situation) and it looks like PA has a $2000 rebate (https://www.dep.pa.gov/Citizens/Gra...ve-Grant/Pages/Alternative-Fuel-Vehicles.aspx). Plus you save a lot of money on gas (up to a few thousand $ per year).

Sorry for the dumb question, but in what situation you don't get the tax credit?

 

[commasign]

Well my daily commute is really only about 20 miles round trip. Thing is, it goes between 3 different highways. And while there's some traffic, I have to switch lanes so often, I feel like I would barely be able to use it most of the time. So I'm thinking I'll probably swing for the SR+ with none of the fun stuff added. But I'm completely in the dark with how Tesla financing works. Like, if I did want to add AP a couple months down the line, could that just be figured in to my monthly payments? Or would they just want all that cash up front?

Got it. Yeah, in that situation, the current new autopilot doesn't change lanes so you'd have to break out of autopilot fairly frequently. So then definitely recommend SR+ without autopilot.

Unfortunately, after-delivery Autopilot is only available as a one time, full-price purchase with your credit card. Again, I'd wait until it's on sale again if you really want to add it later.

 

[commasign]

Sorry for the dumb question, but in what situation you don't get the tax credit?

If you owe less than $3750 in taxes, you'd get that lower amount. E.g. if your tax liability is $2000, then you'd get only $2000 tax credit. And there's no provision to carry it over to the next year.

 

[jjrandorin]

Sorry for the dumb question, but in what situation you don't get the tax credit?

You can also "get" the credit but not get the money. People dont consider that. With the tax changes, if you normally get a refund (before the tax change) but now owe money without the credit, the credit will apply toward your tax liability. You "get" it but you dont get cash if that makes sense.

I "know a friend" that had this situation. In 2017, my "friend" got a 2k Federal tax refund based on his taxes. For 2018, with the tax changes, "my friend" owed 5k instead of getting a refund.... but my "friend" bought a tesla in december so got the full tax credit. This means my "friend" got a refund of 2500 instead of owing 5k. he got the full tax credit, but did NOT get 7500 in cash like he was expecting / hoping.

My "friend" was a bit disappointed, but was also happy that he bought the tesla last year or he would have actually had to write a check for 5k to the IRS.

Amazing how much I know about my "friends" tax situation, right?

 

[JakeGonz]

There is a bit more here to unpack than you realize. The short version of this is, once you finance the car, that amount is "set". You will not be adding onto that loan unless you re finance it, so you can not plan on adding on things to that loan "later" . Re financing it is actually getting another loan.

Since tesla lets you add features like AP and FSD "later" if you want the car you can add it later. It will (might) cost more later though. Currently it does cost more "later" than at purchase but we dont know if that will stay the same forever ( no one does, not even tesla).

Still, you CAN add it later by paying cash for it, but you likely wont. Also, since you have not bought a new car before, you may not be figuring in "taxes / destination / etc" into the price of the car. Quite a bit of your 7k down payment will be taken up by that stuff. Your 37k SR+ is 37K + 1200 destination + tax + registration. thats probably 41-42k. Figure 42k, minus your down payment of 7k, and you are likely FINANCING 35k... not financing 37k - your 7k down payment. This is fairly basic stuff but if you have never bought a new car you may be looking at the 35 or 37k and forgetting to add those charges.

Your "best" move would be to hold off on the tesla right now, and buy a 1-2 year old model 3 which would still be a great car, with low miles. New cars are a luxury in my opinion. Failing that (nothing wrong with wanting shiny / new.. just make sure you understand exactly what you will be paying for), you should probably get the SR+ since its much more "bang for buck", and the Autopilot stuff can always be added "later".

Also plan for installing charging in your garage, or really (really) plan out where you will charge.

All very good points. Thanks for the input. Being completely new to this, I didn't realize destination fees and registration would be that much. I figured I'd be looking at more around $500. I could just bump up my down payment fund a little higher to take care of that and tax. Also I have an old 03 Durango in great shape I could easily get $4k for, and PA has a $1.7K rebate program, so those should also help me out.

I'm sure I'm making it seem like I'm scraping for pennies to afford the car, but I just really want to have all my bases 100% covered before taking the plunge. Having never done this before, I wanna be extra careful with each step I take. I'm lucky right now in that I have 0 debt, decent credit, and only have to worry about rent and bills, which I can pay off in less than a week of work. Also luckily, I have an EV enthusiast neighbor I share a driveway with, who is conveniently also an electrician. He said he'd be more than happy to install a covered NEMA 14-50 outlet in the driveway.

Thank you for the info!

 

[commasign]

Make the jump. You won't regret it.

I say that both from personal experience and from seeing a lot of friends and family take delivery of Model 3's in recent months. Everyone loves the car.

 

[Knightshade]

Also note- unless it's changed recently, Tesla rates were not great (even when your credit is)

Check out the financing rate spreadsheet stickied near the top- there's still some options around (and even under for shorter periods) 2% available...

 

[jjrandorin]

All very good points. Thanks for the input. Being completely new to this, I didn't realize destination fees and registration would be that much. I figured I'd be looking at more around $500. I could just bump up my down payment fund a little higher to take care of that and tax. Also I have an old 03 Durango in great shape I could easily get $4k for, and PA has a $1.7K rebate program, so those should also help me out.

I'm sure I'm making it seem like I'm scraping for pennies to afford the car, but I just really want to have all my bases 100% covered before taking the plunge. Having never done this before, I wanna be extra careful with each step I take. I'm lucky right now in that I have 0 debt, decent credit, and only have to worry about rent and bills, which I can pay off in less than a week of work. Also luckily, I have an EV enthusiast neighbor I share a driveway with, who is conveniently also an electrician. He said he'd be more than happy to install a covered NEMA 14-50 outlet in the driveway.

Thank you for the info!

Sounds like you are thinking through things. "Eyes wide open" I like to say. As long as you are considering everything, make the right decision for yourself.

Tesla charges 1200 for destination. No idea what registration is where you are... I am in california and its very expensive here (so are taxes). Several hundred a year for registration. The destination charge wont change but maybe my total all in estimate for your car is off based on your local taxes and registration... but like I said destination is 1200 for tesla.

 

[JakeGonz]

Also note- unless it's changed recently, Tesla rates were not great (even when your credit is)

Check out the financing rate spreadsheet stickied near the top- there's still some options around (and even under for shorter periods) 2% available...

That's true. I might try a few different outlets for that once I'm ready. Right now Tesla has a 3.75% APR, which I'm told isn't bad as far as new auto loans go, but a Tesla employee told me during my test drive that they're planning on bumping it up to 4% eventually. I'd like to spring for a 72 month loan, as to keep the monthly payments low. I'll look into that spreadsheet a little more.

Ideally, I'd like my monthly payments to be in the low $500's range.

 

[JakeGonz]

Sounds like you are thinking through things. "Eyes wide open" I like to say. As long as you are considering everything, make the right decision for yourself.

Tesla charges 1200 for destination. No idea what registration is where you are... I am in california and its very expensive here (so are taxes). Several hundred a year for registration. The destination charge wont change but maybe my total all in estimate for your car is off based on your local taxes and registration... but like I said destination is 1200 for tesla.

Gotcha. Luckily title and registration fees in Philly are only $90. Or $120-ish with lien. So I'd probably fall into the latter category going with a loan/financing. So I'm assuming my extra fees come to 1200 for destination, 120 for title and registration, and Philly has an 8% auto tax rate, so an extra 3k for tax. So around 4k extra for everything considered. That sound about right?

 

[Moze1021]

You can also "get" the credit but not get the money. People dont consider that. With the tax changes, if you normally get a refund (before the tax change) but now owe money without the credit, the credit will apply toward your tax liability. You "get" it but you dont get cash if that makes sense.

I "know a friend" that had this situation. In 2017, my "friend" got a 2k Federal tax refund based on his taxes. For 2018, with the tax changes, "my friend" owed 5k instead of getting a refund.... but my "friend" bought a tesla in december so got the full tax credit. This means my "friend" got a refund of 2500 instead of owing 5k. he got the full tax credit, but did NOT get 7500 in cash like he was expecting / hoping.

My "friend" was a bit disappointed, but was also happy that he bought the tesla last year or he would have actually had to write a check for 5k to the IRS.

Amazing how much I know about my "friends" tax situation, right?

You can't "get the credit and not get the money". Your "friend" got the money all year long in "his" paycheck.

Ideally, if you set your withholding up correctly you shouldn't get a refund and you shouldn't owe anything .

So...If you know you are getting a $3750 credit from buying a Tesla before June, you should adjust your withholding so that you will owe ~$3750 on your 2019 taxes that you will file in 2020. That way you "get" the credit all throughout the year like your "friend" did rather than wait for it.

 

[jjrandorin]

You can't "get the credit and not get the money". Your "friend" got the money all year long in "his" paycheck.

Ideally, if you set your withholding up correctly you shouldn't get a refund and you shouldn't owe anything .

So...If you know you are getting a $3750 credit from buying a Tesla before June, you should adjust your withholding so that you will owe ~$3750 on your 2019 taxes that you will file in 2020. That way you "get" the credit all throughout the year like your "friend" did rather than wait for it.

He did not receive an extra $288 per paycheck last year, and he claims the exact number of dependents he has. The tax changes to home interest deducibility and other deductions effected him fairly significantly. I stand by his description of what happened, but this is not a tax thread, so I am finished discussing his taxes.

 

[Moze1021]

He did not receive an extra $288 per paycheck last year, and he claims the exact number of dependents he has. The tax changes to home interest deducibility and other deductions effected him fairly significantly. I stand by his description of what happened, but this is not a tax thread, so I am finished discussing his taxes.

It's not a tax thread..but can't spread misinformation on how taxes and withholding work.

His change in tax liability because of tax plan changes had nothing to do with the EV credit.

The $7500 credit was $7500 more cash in his pocket than he would have had without it... Period. The timing or when he got that cash is all based on fed tax withholding in his paycheck.

 

[M3BlueGeorgia]

SR+ with AP, if you can swing the $46K fully loaded price (including taxes and delivery fees)
$38K + $3K + $1.5K + $3.4K = between $45.5K and $46K
With a 15% downpayment, over 72 months this will cost about $600/mo (depending on interest rate).

Dropping either to SR or dropping the AP will each save around $50/mo, and dropping both will bring you down to around $500/mo

If you are trading in a car, that reduces the sales tax and provide your downpayment. Otherwise, do you know where the downpayment ($5K to $8K) is coming from? Higher downpayment can result in lower interest rate.

Yes, live on a budget and spend what you can afford.
If you are able to charge where you live, or at work, then factor in the gasoline savings.

Consider waiting on the AP, then buy it in a year from your (hopeful) $3750 tax refund. We don't know the price in a year, but a reasonable view is between $3K and $4K.

 

[JakeGonz]

SR+ with AP, if you can swing the $46K fully loaded price (including taxes and delivery fees)
$38K + $3K + $1.5K + $3.4K = between $45.5K and $46K
With a 15% downpayment, over 72 months this will cost about $600/mo (depending on interest rate).

Dropping either to SR or dropping the AP will each save around $50/mo, and dropping both will bring you down to around $500/mo

If you are trading in a car, that reduces the sales tax and provide your downpayment. Otherwise, do you know where the downpayment ($5K to $8K) is coming from? Higher downpayment can result in lower interest rate.

Yes, live on a budget and spend what you can afford.
If you are able to charge where you live, or at work, then factor in the gasoline savings.

Consider waiting on the AP, then buy it in a year from your (hopeful) $3750 tax refund. We don't know the price in a year, but a reasonable view is between $3K and $4K.

Hm, well considering the price of everything fully loaded. I might just go with SR+ no AP for now. Between selling my old car, PAs $2k rebate, and the tax credit, I might be able to swing it down the line. But yeah, while I'm not living paycheck to paycheck, I don't want my monthly payments to be through the roof. Ya know, worst case scenario if theres an emergency or I somehow lose my job, I don't want to be immediately panicking because I'm spending the majority of my paychecks on this car.

As I said, I'm not loaded, but I live modestly for my salary. I can absolutely afford a couple hundred a month for the car, especially considering I'm putting in around $25 a week minimum in gas.

Thing is, while I know the tax credit is a huge incentive to buy now, I'm realistically not in the right place to buy this second. I want to have all my assets in order, and the biggest asset right now is getting a good down payment. I'm pinching every penny I have to put into my down payment fund, as I don't want to max out a credit card or dip into my emergency savings.

So while I'm caught up in the hype, and as much as I love talking about the car and really REALLY want it now. I'm not going to get it for a while, most likely after July.

So what I'm hoping, is when I'm ready to buy, the SR will be in better production so I wont have to wait 2 months to get it after ordering, and not to mention actually see what they look like. Maybe then I'd be willing to settle for a regular SR, possible AP.

And my dream method would be to save up around 7+k, then sell my car for 4k, turn around and dump that into a big deposit, plus tax title reg and destination fee. Making my monthly payments as easy as possible. Then use the PA rebate to immediately pay off around 4 months of the car. But I also need a car, as I work all the way on the other side of the city, where public transportation doesn't really go. But if the cars are in full production by then, I might be able to just uber or lyft for 2 weeks.

 

[jjrandorin]

It's not a tax thread..but can't spread misinformation on how taxes and withholding work.

His change in tax liability because of tax plan changes had nothing to do with the EV credit.

The $7500 credit was $7500 more cash in his pocket than he would have had without it... Period. The timing or when he got that cash is all based on fed tax withholding in his paycheck.

Sigh.. I dont think you understood the point I was making but it certainly doesnt matter.