Should I?

[Matt Phillips]

Ok, I've been following Tesla for several years now and I have known it was my dream car from the beginning. I've known for a while that I will eventually buy one of these glorious pieces of technology but I've never been in a good financial spot to do it, until now. There's a lot on my mind about buying a Tesla right now so I'm going to apologize to everyone in advance for such a long post but please bear with me (There is a TLDR section below). I would love to get some outside advice on this.

So here's the question:
I'm in a position to buy my dream car and I'm trying to decide to buy right now before the tax incentive and maybe even the free supercharging on the performance version, or do I just need to settle down and wait a few more years?

Below I covered the main areas of concern I have about the purchase. Feel free to read through them or you can skip ahead to the TLDR below. I'm an engineer so my writing isn't the best and I can tend to ramble... Again, I'm sorry

Down Payment:
I graduated from college last May and got a job at a great company where I really enjoy what I'm doing and I'm making great money for my age. Thanks to some very generous parents I don't have any student loans either which means I have quite a bit of disposable income. Over the last year that money has been going toward a down payment for buying a house and starting that whole adulthood thing people talk so much about. However, at the same time my parents were looking into getting into rental properties and ended up buying a house which we mutually decided my girlfriend and I would rent from them. This gave us a place to live and gave them guaranteed renters, for at least a few years, who would take good care of the house. So now I'm left with about 15k in my bank account with no other debts to pay off. So I could either use that money to invest and make my future brighter and possibly bump my retirement up by a few years.... or buy a new Model 3 and drive one of the cars I've been wanting for years. Take into account I think I could sell my current car (A 2013 Ford Fusion Hybrid) for ~$9,000 which bumps my down payment capabilities.

Monthly Payment Situation:
Being an engineer, I like to get stuck in the numbers so obviously I've created an excel sheet with my budget and financing for this purchase. I actually made this excel sheet a long time ago but the numbers haven't really played out until now. I've budgeted out money for rent, groceries, utilities, monthly subscriptions (Amazon, Spotify, etc.), additional retirement saving outside of pre-tax 401k contributions through work and I still have ~$1800 a month left over.

Now of course this money could be used to really enjoy my life by going on extravagant trips, living comfortably, investing to try and get even more money in the future or even continue to build a nice nest egg. These are all valid options that sound equally as nice but that Tesla is so shiny... It would require a bit more money management skill than I currently possess but I could make it happen.

Range Concerns:
My concerns for this don't come from the same direction as most people but I figure it's worth talking about. If I am going to spend this amount of money on a car I will need to own it for long after the loan is over to really get my worth out of it. I worry by that time the battery will have depleted down enough that the car won't be able to go anywhere near as far as I want it to go.

The thoughts that ease my mind on this are that Tesla could make it easier and cheaper to either charge faster or completely replace the battery with a new one in the coming years. It's so hard to predict what is going to happen in this industry in the future though. A completely equally possible scenario is that a newer, better technology comes out and all focus shifts to it instead of trying to keep the current models in top condition. That seems unlikely to happen to me but it is something that crossed my mind.

Other Concerns:
Outside of the financials there are a couple other concerns I have. The Model 3 has a lot going for it but there are two things I worry about with it. The first is something I think a lot of people can relate with is the 'key'card. I've heard that Tesla may be creating a key fob for the M3 eventually but we still haven't heard anything official. And two, I worry that it doesn't have the kind of storage space for me and my girlfriend to eventually start a family in vs. the Model S with more than twice the storage space.



Now that my concerns are over with let me walk you through what I'm thinking about purchase and timing. I think if I order now but request delivery later in the year I could pull enough money together to make a sizable down payment. Enough to get the monthly payment down to ~$650 for AWD or even ~$800 for performance and still have a good amount of money as a cushion. Performance probably isn't realistic but you gotta have dreams... My current insurance provider says they can cover me for $114 a month which is about what I currently pay. This seemed low to me, is anyone else getting these kind of numbers for insurance on an M3? I know the MS/MX are closer to $170-$200 per month. If this insurance number is correct this would come out to a total of about half my disposable income. I believe I could entertain my life style with that kind of budget and still be able to save money for a house down payment. It would take longer but I would get there eventually. Most people don't have a sizable down payment on their first home anyway.

Preferable M3 build:

• long range AWD - Because I live in a mountainous area that can get a lot of snow in the winter. I also prefer to go with AWD and all season tires than RWD and having to swap out every winter/spring.
• Aero wheels - To maximize range. Covers can always come off when range isn't a necessity.
• Blue Paint
• White interior
• Enhanced Autopilot
• Still considering FSD - I know it's pointless right now but it's cheaper to do it now and I'm a nerd about that kind of stuff. This money could go toward a protective coating instead though.

TLDR:

• Tesla is my dream car that I've been wanting for over 4 years now.
• I'm finally in a position to buy and have little other financial responsibilities but I'm only 24 years old.
• Range over long periods of time (realistic amount of time you should own a car this expensive) concerns me. Not sure if the car will have enough range after 6 years
• Not sure if it will be a good car to start a family with. I know it is one of the safest cars on the road but I don't know if it has the storage space to be competitive.
• I have ~$1800 a month of disposable income and I could get a Model 3 for somewhere between $750-$950 after all other expenses.

Ok, I'm done rambling. I'd like to open this up to conversation now and get some other people's opinions on my current situation. Should I move forward with the Model 3 purchase or am I just an immature recent college graduate who doesn't realize he could be economically crippling himself?

Please any comments and suggestions on this would be very much appreciated. Let me know if I missed anything on all of my studying or if you think this could actually work. Please also feel free to be a blunt as possible, I can take it

Thanks.

 

[Zaxxon]

Responding from my phone, so apologies for not hitting all your questions.

The financial piece is a personal decision. It sounds like you can afford the car, but you don't go into detail as to retirement planning, etc. So you do you on the financial side; that's not for us to tell you.

Two points I want to respond to: range and size.

Size: I have two little kids in car seats. My family took a 2500-mile road trip last month. There is plenty of space. We had the four of us, a large checked-baggage size suitcase, a medium carry-on size suitcase, two small backpacks, a large hiking backpack, a camera bag, tripod, etc. It all fit in the trunk and frunk and everyone was comfortable in the cabin. You wouldn't want to road trip with 5 humans, but up to 4 is no problem at all.

Range: Tesla batteries degrade a little at first, and then extremely slowly afterward. Additionally, Tesla's range estimates are fairly accurate (vs, say, the Leaf, whose EPA estimate bears little relation to reality). You would start out with 310 realistic range, and drop maybe to 285 or 290 over 8ish years. Call that 250 extremely conservatively (eg bad weather, wind, etc). Is that enough for you?

Good luck, whatever you decide.

 

[Matt Phillips]

Thank you for the reply.

Ultimately, yes, you're correct that the financial side is up to me. I just like to gather as much data as possible before making big decisions. Through all my research though I rarely hear anyone talk about how much of a monthly payment they're willing to put up with for these cars. Generally it is a bad idea to take on such a big car loan because they depreciate so fast but Tesla's just don't seem like they fit into that category. I fear that feeling is because I want it too bad though and it is clouding my judgment.

I'm amazed at how much you were able to fit in the car with four people on a road trip that long. Kudos to you for not wanting to strangle anyone after being stuck in a small car together for that long

Your range numbers surprised me. I was anticipating the battery range would be down closer to 200 after ~8 years. While that is still a long way to drive, it's still nowhere close to how far some ICE cars can go (In the 400-500 mile range).

 

[MXWing]

Based on income alone, you can afford the car. Like a good engineer, you adequately planned for all your known variables. However, the following X factors you need to at least consider in the overall scheme of things for the next 4-5 years (probable loan terms)

Loss of job
Marriage
Divorce
Kids
Girlfriend contribution to expenses
Parental safety net

I have no technical concerns of the Model 3 not being functional for the next 8 years.

 

[Gavyne]

Since the Model 3 is your dream car and you are in the position to obtain one now, I'd say go for it. You are only young once, and you never know what may happen later in the future. Enjoy your life while you can.

The Model 3 will bring great joy to you and your g/f. It's a car that'll make you want to make excuses to go out and have fun. Plus you'll also be a great ambassador to other young adults to steer away from our country's addiction to oil.

 

[RayK]

It appears that I'm on the opposite end of the spectrum from you (61 years old; paid in cash, married and two grown daughters) so I can't comment on your financing and family queries. However I can offer up this as to the battery range after 6 years: The warranty for the Model 3 battery is 8 years / 100,000 miles, whichever comes first, for 70% of the original capacity. Given that the LR is rated at 310 miles, that means after 8 years Tesla will guarantee that the range will be at least 217 miles.

P.S. I voted "DO IT!".

 

[rodrego66]

Congrats on your graduation and new job. I say if it’s your dream car go for it. You only live once. I just took delivery of my M3 and couldn’t be happier. I have two teenage kids and we all fit fairly comfortable. Although I’m not riding in the back. If you find the 3 doesn’t fit your needs when your future kids are older you could always trade in for an S,X or Y or what ever is around then.

 

[Matt Phillips]

Thank you for all the replies everyone,

In reply to MXWing:

• The loan that I'm looking at would be either a 60 or 72 month loan through Tesla lending. I haven't been able to find a better interest rate at any local banks/credit unions yet but I haven't actually gone in to talk to any of them.
• My company is actually looking to expand rather than reduce and it is a very stable industry, so I would say my job is pretty solid.
• Paying for a wedding/honeymoon is one of my concerns that will likely come up in the next few years. This monthly payment plus wanting to save for our own house and then paying for a wedding will put us in an economic bind.
• Luckily my girlfriend is going to law school so if need be she can take up some of the expenses once she is out and passes the Bar.
• The parental safety net is there but it would hurt them worse than I am willing to allow. I would sell the car if it came to that.

RayK:
Your range estimates are closer to what I expected to see after 8 years. These numbers wouldn't work for me in my current state but may depending on where charging goes in the future. There will always be people who are willing to buy it with that kind of range though. So that is a nice cushion.

Rodgrego66:
You are correct I could always trade in for a used model S, X, Y or even Truck if it seemed appropriate/it was released by then. Also, I have scheduled a test drive with someone who owns an M3 locally (No service center in my state). The back seats are definitely one of the things I want to test out and compare to my current car.

Thank you everyone for all the support.

 

[RichXKU]

What's the charging situation at the rental house? 240V is a must. Do you have $500-2000 to get an outlet or wall connector installed where you need it?
If you plan on keeping the car for a while, ask Tesla what the usual maintenance costs are: brake fluid replacement (every 2 years), battery coolant replacement (every 4 years)
The Model 3 has few moving parts, but many, many little sensors and actuators. Have a buffer of $500-1000 if one of those goes bad after the 4yr/50,000 warranty is up. Especially if one is buried deep in the car.
The Model 3 is heavy, powerful, and begs you to throw it into turns, so expect to eat tires faster than usual. This was not meant to scare you, just to make sure you take the maintenance budget in your excel sheet and add a "juuuuust in case" factor.
The battery is the one thing I wouldn't worry about. They have an impeccable record and very slow degradation after the first year. If something catastrophic doesn't happen during the 8 year battery warranty, it's probably going to be fine.
Insurance: make sure your policy covers a rental for a good amount of time. If you do have a crash, it could be months to get parts because the car is so new.
AWD: Get AWD. Love my RWD, but making a 90° left or right from a standstill if the intersection is dirty or wet means lots of traction control intervention and slow going.

 

[xyeahtony]

Do not worry about battery degradation. The majority of people dont see more than 10% after 300k miles

 

[MXWing]

• The loan that I'm looking at would be either a 60 or 72 month loan through Tesla lending. I haven't been able to find a better interest rate at any local banks/credit unions yet but I haven't actually gone in to talk to any of them.

• My company is actually looking to expand rather than reduce and it is a very stable industry, so I would say my job is pretty solid.

• Paying for a wedding/honeymoon is one of my concerns that will likely come up in the next few years. This monthly payment plus wanting to save for our own house and then paying for a wedding will put us in an economic bind.

• Luckily my girlfriend is going to law school so if need be she can take up some of the expenses once she is out and passes the Bar.

• The parental safety net is there but it would hurt them worse than I am willing to allow. I would sell the car if it came to that.

Forgot to ask if that house you were renting would be yours eventually through inheritance?

All in all, it seems like the time needed to pay off the car and for your girlfriend to finish up school might line up.

You are good to go. Enjoy. Once you finish the car payment, car payment becomes mortgage payment. Once girlfriend/wife graduates, her income becomes savings.

I was married at 26 so I was stuck driving a M3 for a long time due to all the expenses that come with marriage.

Mazda 3..!

 

[Matt Phillips]

What's the charging situation at the rental house? 240V is a must. Do you have $500-2000 to get an outlet or wall connector installed where you need it?
If you plan on keeping the car for a while, ask Tesla what the usual maintenance costs are: brake fluid replacement (every 2 years), battery coolant replacement (every 4 years)
The Model 3 has few moving parts, but many, many little sensors and actuators. Have a buffer of $500-1000 if one of those goes bad after the 4yr/50,000 warranty is up. Especially if one is buried deep in the car.
The Model 3 is heavy, powerful, and begs you to throw it into turns, so expect to eat tires faster than usual. This was not meant to scare you, just to make sure you take the maintenance budget in your excel sheet and add a "juuuuust in case" factor.
The battery is the one thing I wouldn't worry about. They have an impeccable record and very slow degradation after the first year. If something catastrophic doesn't happen during the 8 year battery warranty, it's probably going to be fine.
Insurance: make sure your policy covers a rental for a good amount of time. If you do have a crash, it could be months to get parts because the car is so new.
AWD: Get AWD. Love my RWD, but making a 90° left or right from a standstill if the intersection is dirty or wet means lots of traction control intervention and slow going.

I'm an Electrical Engineer with experience with household wiring so I plan on installing the home charger myself. Luckily the charging station is only a couple feet from the breaker box.

Maintenance is something that briefly crossed my mind and I've been meaning to talk to people about this. I just read that Tesla has yet to release a maintenance schedule for the M3 but that it will be similar to the MS. For people who currently own a Tesla what do these costs tend to be?

Forgot to ask if that house you were renting would be yours eventually through inheritance?

All in all, it seems like the time needed to pay off the car and for your girlfriend to finish up school might line up.

You are good to go. Enjoy. Once you finish the car payment, car payment becomes mortgage payment. Once girlfriend/wife graduates, her income becomes savings.

I was married at 26 so I was stuck driving a M3 for a long time due to all the expenses that come with marriage.

Mazda 3..!

Haha! I see what you did there... Well done. The house could become mine come inheritance but that is a ways out for my parents who are both still in their 50's. I have considered buying this house when the time is right though so that could make the buying process REALLY easy.

 

[RichXKU]

Tesla has yet to release a maintenance schedule for the M3

They have. What I posted is pretty much the whole thing. 2yr = brake fluid, 4yr = battery coolant.
6,250mi = tire rotation (negligible cost)
Cabin air filters (two) when needed, cheap and probably 30 min diy.
In conclusion, buy a Model 3!

 

[MXWing]

Haha! I see what you did there... Well done. The house could become mine come inheritance but that is a ways out for my parents who are both still in their 50's. I have considered buying this house when the time is right though so that could make the buying process REALLY easy.

You are overqualified to purchase a Model 3. Let's see if we can make the numbers for a 2020 Roadster work..

BTW.. if I could go back in time I would have told myself "go ahead and buy that E46 M3... you can bring a car into a marriage easily. Getting one after being married is a different story."

It's tougher now when you are spending her money.

I'm hoping she doesn't dig too deep and outs my BS. "Yeah we got one of those $35,000 Model 3's.. good value for 3.5 second 0-60, 310 mile range, awd and white seats..."

Maintenance wise... I'm just going to expect frequent tire replacements... and insurance.. and insurance..

 

[ebmcs03]

If you bother to think this much about it, you’re responsible enough.You make good money. Get it!

 

[Zaxxon]

Re: range warranty vs reality... What others have said. The warranty is for > 70% after 8 years and 120k miles (for the LR. SR is 100k), but the typical 2012 Model S seems to be doing far better than that.

Re: fitting everyone into the car for a road trip that long: the 3 is not huge, but its storage capacity is really impressive for a car its size. The trunk is bigger than you'd expect, and has a large subfloor area. And the frunk, while not huge, is big enough to be useful.

I think based on the further responses in this thread, you should go for it. YOLO!

 

[rdlink]

I echo what everyone else has said, with this one caveat. You should crunch numbers on the difference between putting that $15K into a down payment vs. investing in something "fairly" liquid, and safe that might give you a return that's more than your loan APR. Your $15K could then actually help pay for the car. Just a thought.

 

[ebmcs03]

I have concerns with all the suggestions of investing. It will bite you one of these days because all these people tell you borrow because you can invest in something low risk and make more than what your APR is. Yes it maybe true this time. It maybe true a second time but it won’t last forever. If you get in the habit of thinking this way and carry debt to invest it will bite you back hard.

Pay down as much as you can. Save your borrowing power for a mortgage. Then continue to save.

Don’t carry a $1000 car loan. Carry a small loan on depreciating assets. So when u see the opportunity to get a house use that borrowing power to get that house. You don’t want to be in the situation where you lost that $15k investing in what was suppose to be small risk and then you can’t borrow enough to get a mortgage loan you want at the time you want.

 

[wbhokie]

I'm going to play the opposite role here. I love that you did all of the research. Being someone who seems very similar to you in terms of outlook in life, but who has also been through some of it, i'd say this:

Right away, you started by saying you graduated from College last May. Glad to see you are putting money into your 401k already. (I hope you are maxing this out already, and not doing the minimum for matching) It's wonderful that you are looking at things with a objective perspective and not only that, have a great financial situation already. But I will say this. A lot of people, even in your situation, tend to saddle themselves with too much debt the moment they have money. I'm not saying you can't afford it. I'm saying that things can and do happen even to the best of us.

There are several things to look at.

Range anxiety and car in general : it's all in your head. no really, it doesn't exist. you just aren't used to an EV. it takes no time to adjust. I wouldn't worry about the key card or the fob. Even if they release a fob, i'm sure you could just buy one later.

Retirement : Max out your contributions early.

Living Situation : You are renting. Your life can change. First, your charging situation isn't permanent. But what if you get in a serious relationship, want to buy a house? that debt will be a big hit to you. When you rent you don't get a lot of options. When you own at least you could rent out a room if you needed to make some extra money, but if you rent you are stuck sometimes. At least you aren't on the hook for repairs. But since you are renting, it is obvious that sometime soon your next logical step will be a house... and you will have a lot of expenses with that. It will make it a lot harder with that big car payment to get, and harder to save for it as well.

Hidden Expenses : It's easy to put things like recurring bills on a spreadsheet, but a lot of people go "prime happy" and just buy things online.

Savings : Even if you budget your money, outside of everything are you saving money? Most people don't do this, so it's a silly suggestion but usually you should have a few months in a liquid asset in case of job loss, medical emergency, etc.

Life : Enjoy it. Remember, all of us here either own or have ordered a Tesla for the most part. That being said, life isn't necessarily about things. Most people right out of school haven't experienced a lot. Make sure you can afford to Travel! Your car is a lot of fun but usually just gets you from place to place. We all have splurged on it ourselves because we like them, sure. But want and need are two different things. Using a new Tesla as "the bar" for all future vehicle purchases could be a bad precedent.

So... after all of that "Get off my lawn" wall of text - based on your life sitaution I'd say this. If tesla is your dream car, I'd say start small. Don't go overboard on options you don't need. You don't need FSD. You don't need performance. You probably don't even need AWD, but that is one option you could splurge on. I'm not sure what your credit is at this stage in your life, but I'll reiterate that early on, starting your working life with a $700-800 monthly payment (and the insurance to go with it) is no joke. But everyone goes to work for different reasons, and if that's what you love, go for it! Just take make sure you evaluate everything equally and not just with a focus on the shiny Tesla!

Good Luck! I'm sure it will work out for you no matter what you decide.

 

[stonelance]

I would say make sure you have a rain day savings of at least 6 months of your expenses before buying something I would call a luxury item like the Model 3 is right now. If it is a financial stretch I would also recommend AWD over performance. You will still be really happy with your purchase and pay a lot less. Just don't go test driving one . The money you save in upfront cost and interest can be invested and probably help cover it more comfortably on your next car purchase (or towards a house).

My insurance went up about $100 a month to add the M3P, so your quote sounds reasonable.

I have a kid and haven't done a road trip yet, but I doubt the space will be an issue. It might be more of an issue for something like a camping trip that requires also bringing camp and food supplies, but we have a second vehicle that is a small SUV to cover that case when needed. I'm guessing most families with kids will have two vehicles, and hopefully the second one can cover the bases the first one doesn't.