Should I buy a Tesla as a first car?

[mobe88]

Hello All,

Just wanted to ask your advice on this. I have recently moved to the US living in California and I'm still building my credit history.
I'm over 30, and my credit score now is 700+. My credit history is only 8 months and this will be my first car loan ever.
My mind is so set on buying a model 3. I make around 70-80K a year (which should increase to much more in the upcoming few years) and I don't have any other loans going. I can pay a down payment of about $8K aside from what's needed for registration, taxes..etc. I don't have any issue of paying $700-$800 monthly.

My question is, Will I be approved for financing that much for a Tesla considering the short history and the needed amount? or should I maybe buy any other ~$25K car first pay it off fast in a year or two (which I can do) to show financial ability then trade it off or sell it to get the model 3?

Appreciate your advice, Thanks!

 

[EVRider-FL]

This isn’t the place to ask for financial advice, but since you asked, look for a used Tesla that you can afford.

 

[smogne41]

What is your driving history? If you are a new-ish driver, hell no. Even the SR+ is way too much torque/power for a really new driver. Beyond the power, just learning to maneuver a 2 tone death machine in the world takes time a practice. You might not want to get that practice in something so nice/expensive. Get an old econo-box to get some driving hours in. Get the Tesla in a few years. If you are dead-set on the Tesla, chill mode is your friend.

 

[mobe88]

This isn’t the place to ask for financial advice, but since you asked, look for a used Tesla that you can afford.

I did look into that, but most of the used ones are as expensive as the new considering I just wanted to start with the very basic model 3 then switch higher if I feel comfortable.

What is your driving history? If you are a new-ish driver, hell no. Even the SR+ is way too much torque/power for a really new driver. Beyond the power, just learning to maneuver a 2 tone death machine in the world takes time a practice. You might not want to get that practice in something so nice/expensive. Get an old econo-box to get some driving hours in. Get the Tesla in a few years. If you are dead-set on the Tesla, chill mode is your friend.

Thanks, I'm definitely not new to driving. I have been driving for 15+ years. I have also tried several Tesla's too before deciding on getting one. I have rented a model 3 for over 2 months just to get a feel for it. I'll be starting with the very basic model though then move up since again I'm still building history.

 

[jjrandorin]

Only you know what you can afford, and this isnt a financial advice website, as was stated. With that being said, remember that:

1. A loan commitment is just that, a commitment to pay that amount for the loan term, or make other arrangements such as selling the vehicle

2. Your statement that your salary "should increase to much more in the coming years" doesnt mean much, as it relates to loan planning. Unless you have a contract somewhere that spells out exactly what your new increased salary is, most employment in the US is "At Will" which means that both sides can end the employment for whatever reason. What you "plan you will be making" isnt relevant as far as your loan obligation.

3. You dont mention what your living situation is (and nor should you, I am not asking you to do that). I mention this because YOU should consider it, and know whether you expect it to be the same for the entire loan term, or what you might be budgeting for living expenses (housing, etc) might change.

You can always get a car loan here if you put down enough down. Since you just got here, I am not sure you realize that "8K + taxes, registration, license etc) on a new model 3 is actually telling you to come up with something like 13k - 14k. if you ask "whats better", given what you laid out, it would be better to buy that 25k car (or less) and then have the "Im gonna make more money later" be "I am making more money now" then consider buying a 50k car.

70-80K, in California, with CA expenses, isnt as much as you might think.


EDIT: I realize I typed out all this without actually giving an opinion on the question in the thread question. The question was "should I buy a tesla as my firs car?" and given the circumstances you laid out, my answer would be "No". The answer is based on the circumstances you laid out, not that there is anything wrong with a Model 3 as a first car in general.

 

[mobe88]

Only you know what you can afford, and this isnt a financial advice website, as was stated. With that being said, remember that:

1. A loan commitment is just that, a commitment to pay that amount for the loan term, or make other arrangements such as selling the vehicle

2. Your statement that your salary "should increase to much more in the coming years" doesnt mean much, as it relates to loan planning. Unless you have a contract somewhere that spells out exactly what your new increased salary is, most employment in the US is "At Will" which means that both sides can end the employment for whatever reason. What you "plan you will be making" isnt relevant as far as your loan obligation.

3. You dont mention what your living situation is (and nor should you, I am not asking you to do that). I mention this because YOU should consider it, and know whether you expect it to be the same for the entire loan term, or what you might be budgeting for living expenses (housing, etc) might change.

You can always get a car loan here if you put down enough down. Since you just got here, I am not sure you realize that "8K + taxes, registration, license etc) on a new model 3 is actually telling you to come up with something like 13k - 14k. if you ask "whats better", given what you laid out, it would be better to buy that 25k car (or less) and then have the "Im gonna make more money later" be "I am making more money now" then consider buying a 50k car.

70-80K, in California, with CA expenses, isnt as much as you might think.


EDIT: I realize I typed out all this without actually giving an opinion on the question in the thread question. The question was "should I buy a tesla as my firs car?" and given the circumstances you laid out, my answer would be "No". The answer is based on the circumstances you laid out, not that there is anything wrong with a Model 3 as a first car in general.

Thank you so much for all the details, and sorry for asking in the wrong place.
I wasn't mainly asking if I can afford it or not, it was more of wondering how financing actually works here and if I'd get approved or not. Financially, I do know that I can afford it, but I want to buy it as a loan for the purpose of building history.
About the increase I meant, It's not really a salary it's a business-based income. Which is true it might not be as accurate as I anticipated but it shouldn't be really far off from it. Anyway, appreciate the advice and will definitely consider buying the cheap car first pay it off then switch.

 

[holeydonut]

Again, throwing the warning that following financial advice online is usually a bad idea.

Anyway, your post indicates you're not sure if you qualify for a car loan "from Tesla". But consider that Tesla isn't actually underwriting their car loans. Tesla just gets applicant data over to an online marketplace of car loan originators and fishes out a loan if the application passes.

Most of the people buying Tesla's and getting loans "from Tesla" are actually getting a secured auto loan from Wells Fargo, BoA, or Chase. If you have a personal checking account from these lenders, you should be able to get "pre-approved" for an auto loan in an approximate principal balance necessary to cover the purchase, doc, title, auto-fees, and any loan-origination fees. Heck, they may pre-approve you even if you don't have an account. Give them a call and see if they'll help you.

Auto Loans

Manage your auto loan online

www.wellsfargo.com

Auto Loans & Car Financing from Bank of America

Fast Application, Competitive Rates And Quick Decisions. Apply for a new or used car loan or refinance your existing auto loan at Bank of America.

www.bankofamerica.com

Shop Cars & Explore Auto Financing Options | Chase

Shop for cars, explore auto financing options and manage your car all within Chase Auto. Learn how you can get started today!

autofinance.chase.com

Edit: the answer to the question about whether you can afford it should come down to your personal budget. If you can reasonably plan the fixed cash outlay of your car, expenses, etc and have a reliable income that can withstand hiccups, then you have a good budget. Lenders will look at things like your debt to income ratio, free cash flow, and other simple maths to determine if you're overleveraged or lack sufficient cash income to pay your debts. Getting pre-approved will only help you to understand how you look with these ratios/maths. Pre-approval won't help determine if your budget is sound.

Also, since you're in California, you can also look into some lending products like a First Republic unsecured line of credit or SoFi personal loan. Even though it's unsecured, First Republic's interest rate is around 2.25%. SoFi was doing some absurd loans a few years ago where the unsecured personal loan rates rivaled some secured products. Not sure how they stack up today though.

Shopping for a loan with hard-pulls may "hurt" your credit score in the sense that the pulls themselves will appear on your credit. But, having 4 pulls from 4 lenders on a loan doesn't really depress the score that much since the bureaus know smart shoppers look for the most attractive interest rates. The amount of impact due to shopping for loans is usually negligible.

Where a bunch of hard pulls hurts people is if they're signing up for trash retail store "loyalty" cards, Affirm long-term payback options, or lots of different lending products that are unrelated (eg, a HELOC and a credit card). Being smart about a car loan interest rate and options is a good idea for your first of 25th car.

 

[jjrandorin]

Thank you so much for all the details, and sorry for asking in the wrong place.
I wasn't mainly asking if I can afford it or not, it was more of wondering how financing actually works here and if I'd get approved or not. Financially, I do know that I can afford it, but I want to buy it as a loan for the purpose of building history.
About the increase I meant, It's not really a salary it's a business-based income. Which is true it might not be as accurate as I anticipated but it shouldn't be really far off from it. Anyway, appreciate the advice and will definitely consider buying the cheap car first pay it off then switch.

I have no idea of 13-14k down (which is what your 8k down payment + taxes / license / registration etc) would be in CA would be enough to get financed, however, you can always apply and see. The other thing I briefly touched on is, you can always get a car loan here as long as you put down enough money.

You can also apply at wherever you bank (the financial institution where your money is), and will likely find out what it would take to get approved (as in, how much of a loan they will give you for the asset, which in this case is the car).

 

[mobe88]

Again, throwing the warning that following financial advice online is usually a bad idea.

Anyway, your post indicates you're not sure if you qualify for a car loan "from Tesla". But consider that Tesla isn't actually underwriting their car loans. Tesla just gets applicant data over to an online marketplace of car loan originators and fishes out a loan if the application passes.

Most of the people buying Tesla's and getting loans "from Tesla" are actually getting a secured auto loan from Wells Fargo, BoA, or Chase. If you have a personal checking account from these lenders, you should be able to get "pre-approved" for an auto loan in an approximate principal balance necessary to cover the purchase, doc, title, auto-fees, and any loan-origination fees. Heck, they may pre-approve you even if you don't have an account. Give them a call and see if they'll help you.

Auto Loans

Manage your auto loan online

www.wellsfargo.com

Auto Loans & Car Financing from Bank of America

Fast Application, Competitive Rates And Quick Decisions. Apply for a new or used car loan or refinance your existing auto loan at Bank of America.

www.bankofamerica.com

Shop Cars & Explore Auto Financing Options | Chase

Shop for cars, explore auto financing options and manage your car all within Chase Auto. Learn how you can get started today!

autofinance.chase.com

Edit: the answer to the question about whether you can afford it should come down to your personal budget. If you can reasonably plan the fixed cash outlay of your car, expenses, etc and have a reliable income that can withstand hiccups, then you have a good budget. Lenders will look at things like your debt to income ratio, free cash flow, and other simple maths to determine if you're overleveraged or lack sufficient cash income to pay your debts. Getting pre-approved will only help you to understand how you look with these ratios/maths. Pre-approval won't help determine if your budget is sound.

Also, since you're in California, you can also look into some lending products like a First Republic unsecured line of credit or SoFi personal loan. Even though it's unsecured, First Republic's interest rate is around 2.25%.

Shopping for a loan with hard-pulls may "hurt" your credit score in the sense that the pulls themselves will appear on your credit. But, having 4 pulls from 4 lenders on a loan doesn't really depress urt the score that much since the bureaus know smart shoppers look for the most attractive interest rates. The amount of impact due to shopping for loans is usually negligible.

Where a bunch of hard pulls hurts people is if they're signing up for trash retail store "loyalty" cards, Affirm long-term payback options, or lots of different lending products that are unrelated (eg, a HELOC and a credit card). Being smart about a car loan interest rate and options is a good idea for your first of 25th car.

Thank you so much for this! This has been really really helpful and it explains a lot to me for what I actually wanted to understand cause I don't really know how financing works!
Really appreciate the answer, and again I'm really really sorry for asking in the wrong place.

I have no idea of 13-14k down (which is what your 8k down payment + taxes / license / registration etc) would be in CA would be enough to get financed, however, you can always apply and see. The other thing I briefly touched on is, you can always get a car loan here as long as you put down enough money.

You can also apply at wherever you bank (the financial institution where your money is), and will likely find out what it would take to get approved (as in, how much of a loan they will give you for the asset, which in this case is the car).

Got it. I can definitely increase that down payment too if needed, but this is really helpful.
I should start calling banks and see what they can mention. I didn't know they can give me some brief info without doing a hard pull on my score.

 

[Shelburne]

Finances and credit rating aside, where did you live before moving to the US? If you came here from England, Ireland, or Japan where everyone drives on the left side of the road, I would suggest you spend at least 6 months driving a cheap used car until you are absolutely accustomed to driving on the right. I spent a long time in Ireland and even after months there I would sometimes wonder if I was on the correct side of the road, especially coming around a curve on an almost empty two lane road with someone coming in the opposite direction.

 

[boriszima]

Hello All,

Just wanted to ask your advice on this. I have recently moved to the US living in California and I'm still building my credit history.
I'm over 30, and my credit score now is 700+. My credit history is only 8 months and this will be my first car loan ever.
My mind is so set on buying a model 3. I make around 70-80K a year (which should increase to much more in the upcoming few years) and I don't have any other loans going. I can pay a down payment of about $8K aside from what's needed for registration, taxes..etc. I don't have any issue of paying $700-$800 monthly.

My question is, Will I be approved for financing that much for a Tesla considering the short history and the needed amount? or should I maybe buy any other ~$25K car first pay it off fast in a year or two (which I can do) to show financial ability then trade it off or sell it to get the model 3?

Appreciate your advice, Thanks!

Do you have a place where you live now or in near future to charge a car? With almost no credit history, it might be hard for you to get a loan from any major bank, maybe go to a local credit union to see how much you qualify for? If you drove elsewhere, than likely you will be ok. But if this is your first card, i would stay away. dont buy what you cant afford though, buying brand new cars is a very bad financial advice if you listen to any podcasts. (yes now some cars like Teslas cost more slightly used, but still)

 

[Nomad_in_US]

It's my first car XD

 

[Gauss Guzzler]

Absolutely it's a great first car! It sounds like your income - expenses provides a margin that you're comfortable with and your plan sounds economically realistic and sensible. I've seen people ask questions kinda like this, but about getting a loan to buy mods for their leased car.

The base Model 3 arguably has the lowest total cost of ownership of any new car (and most used cars) so it's one of the most responsible vehicles you could buy. And with low depreciation and the flexibility of ownership you can easily back out of it and go back to riding the bus if your financial trajectory changes. There's really very little commitment other than the $5000 sales tax.

Plan for a higher than usual interest rate of course (and get quotes), and also plan for some pretty high insurance rates since you will be required to carry full coverage and Teslas are on the "luxury" end of repair pricing. Plus the insurance company will gouge you for your lack of driving record, your low credit score, and any external genitalia you might have.

 

[jrweiss98020]

I hate to be the party pooper, but...

If you have to ask, "Can I afford it?", you probably can't.

If you 'don't understand financing', then taking out a loan for an unnecessary luxury that will stretch your credit, when there are MUCH better alternatives (i.e., a MUCH cheaper car), is NOT a good move.

Wait until the income and credit score get higher, you have 6 months living expenses in the bank, and you have your IRA and/or 401k well established.

 

[Pyre]

My $700/mo payment is more like $400/mo after fuel savings. Then again. I drive a lot.

If you can get a level 2 charger or and drive enough to offset the extra cost I would say, "sure."

 

[Double-O]

I hate to be the party pooper, but...

If you have to ask, "Can I afford it?", you probably can't.

If you 'don't understand financing', then taking out a loan for an unnecessary luxury that will stretch your credit, when there are MUCH better alternatives (i.e., a MUCH cheaper car), is NOT a good move.

Wait until the income and credit score get higher, you have 6 months living expenses in the bank, and you have your IRA and/or 401k well established.

He's not asking if he can afford it. He makes enough to make the payments. He can easily afford it based on his income. His question is more about his lack of credit history and whether or not he'd get approved for a reasonable loan.

Only thing he needs to do is simply apply for the loan and find out. If he needs to put a bigger down payment, he said he's able to. Other expenses aside, if his score is over 700, there should be no reason why he wouldn't get approved for the loan. It's a 45k car, not a ferrari.

 

[afadeev]

Just wanted to ask your advice on this. I have recently moved to the US living in California and I'm still building my credit history.
I'm over 30, and my credit score now is 700+. My credit history is only 8 months and this will be my first car loan ever. [...] My mind is so set on buying a model 3. I make around 70-80K a yea [...] Will I be approved for financing that much for a Tesla considering the short history and the needed amount?

As others pointed out, it's a financing question, not a Tesla question. I will skip the lecturing on the wisdom of spending 50+% of your pre-tax income on a car (not too smart).

To answer your actual question - call up your bank and/or credit union (CU), and ask them to pre-qualify you for a car loan. It's a standard practice, and they will all do it for free (credit pull is required).
Two popular internet CUs with competitive car loan practices:
DCU Auto Loans | DCU
PenFed: https://www.penfed.org/auto

I've used both in the past, both have better rates and are more customer friendly then OEM-sponsored banks (e.g.: Tesla's WellsFargo pairing).

HTH,
a

 

[focher]

No new car purchase is a good financial decision.

You’ll get a loan. It’s your down payment and interest rate that will vary.

Do what you want. Life is short.

 

[Double-O]

As others pointed out, it's a financing question, not a Tesla question. I will skip the lecturing on the wisdom of spending 50+% of your pre-tax income on a car (not too smart).

To answer your actual question - call up your bank and/or credit union (CU), and ask them to pre-qualify you for a car loan. It's a standard practice, and they will all do it for free (credit pull is required).
Two popular internet CUs with competitive car loan practices:
DCU Auto Loans | DCU
PenFed: https://www.penfed.org/auto

I've used both in the past, both have better rates and are more customer friendly then OEM-sponsored banks (e.g.: Tesla's WellsFargo pairing).

HTH,
a

He's financing the car, not buying it outright. He can comfortably afford it. If this was the logic, no one working jobs under 60k should own a new car, not even the cheapest production car on the market.

 

[thesmokingman]

If you have a garage to charge it during super off peak hours (considering in you're in SD, prob TOU) then go for it.