Tesla Financing Questions

[smak]

I applied to PenFed credit union because 1. We used them in the past and got a great rate 2. They use Equifax Fico 9 scoring which was our highest scoring (810) got approved for up to 60k with 110% LTV. But we needed more since our model S came to 90k. So we applied directly to one of Tesla's partner banks Alliant credit union. They used Transuion (not sure what scoring model) and they rated our credit at 730. But approved us for up to 85k with 90% LTV.... lower score but more money then PenFed? I don't get it either lol
So we went with them. We only used 80k of their loan and paid the rest from our account. Side note: they don't accept credit card payments, only check or bank transfer for the remaining.

Does that mean PenFed was willing to give you a 60k loan and give you 6k in cash?

I'm not familar with a LTV over 100%.

 

[run-the-joules]

Does that mean PenFed was willing to give you a 60k loan and give you 6k in cash?

I'm not familar with a LTV over 100%.

It's to cover taxes/registration.

 

[trm2]

I just financed a model S today so I can give a little insight. Tesla doesn't have their own bank like Toyota any other does. When ever you apply through their website, they shoot your app to their partner banks they are working with to get the best bid. Alliant Credit, US bank and I can't remember what the other two were. So there's nothing special or different tesla does far as Financing because they use a regular credit union. Then you wait till the tesla rep calls you to to tell you what you got approved for based on only those few banks.

If you don't get approved through any of them. No worries. Just like any other car, you can use what ever bank you want of your choice and try your luck there. You don't even have to apply at all using Tesla's site. You can go straight to one of their partner banks and apply exclusively with them.

Now, this is how I did it.
I applied to PenFed credit union because 1. We used them in the past and got a great rate 2. They use Equifax Fico 9 scoring which was our highest scoring (810) got approved for up to 60k with 110% LTV. But we needed more since our model S came to 90k. So we applied directly to one of Tesla's partner banks Alliant credit union. They used Transuion (not sure what scoring model) and they rated our credit at 730. But approved us for up to 85k with 90% LTV.... lower score but more money then PenFed? I don't get it either lol
So we went with them. We only used 80k of their loan and paid the rest from our account. Side note: they don't accept credit card payments, only check or bank transfer for the remaining.

Again, you can use any bank or credit union you wise. I do believe there are a few banks that do Tesla loans for some reason so make sure you call the bank and ask before applying. The more cash down, there better because some banks don't like to finance 100% of it.

Also, PenFed approvals are good for 90 days! Alliant is good for 45 days before you have to reapply. Hope this helps!

PenFed might be the only company using FICO9, most still use FICO8. FICO9 will be a higher score, especially if you have medical debt.

 

[03DSG]

Is that Allian CU rate through Tesla financing?

I live in Canada and Telsa only partnered with two major banks and from the MyTesla portal it is showing as 1.9% for eight years and maybe a little lower for four and below.

In Canada I think we are in for a bit of a surprise. Tesla financing is currently through Scotia I believe. The low rates on S and X financing are artificially low (read subsidized). Canadian prime rate is 3.2%. The so called 'big 3' subsidize the rates to move cars. Tesla is not in the same position with Model 3. I think we will be be paying higher interest than on the S and X.

 

[internalaudit]

In Canada I think we are in for a bit of a surprise. Tesla financing is currently through Scotia I believe. The low rates on S and X financing are artificially low (read subsidized). Canadian prime rate is 3.2%. The so called 'big 3' subsidize the rates to move cars. Tesla is not in the same position with Model 3. I think we will be be paying higher interest than on the S and X.

True but aren't US bond yields still slightly higher in the US?

Prime rate in the States seem higher not sure if it's a legit link:
United States Prime Rate

Competition in the States is what keeps prices in check.

 

[Keith909man]

Does that mean PenFed was willing to give you a 60k loan and give you 6k in cash?

I'm not familar with a LTV over 100%.

If the MSRP is 30k for the car you want, that 30k is 100% loan to value (LTV)If it goes over 30k for dealer add ons, tax etc and came to 34k, that's now 114% LTV. And if a bank can only finance up to 90% LTV of the 34k, that means you have to cover the difference. That's why we most commonly pay a down payment

 

[03DSG]

True but aren't US bond yields still slightly higher in the US?

Prime rate in the States seem higher not sure if it's a legit link:
United States Prime Rate

Competition in the States is what keeps prices in check.

Yes but the interest rates are subsidized for S and X in Canada to move the cars. Not a bank in Canada that will give a car loan below prime. I don't believe Tesla will subsidize the Model 3 interest rates. You can check with your own bank for new car loan rates. I'm in the process of doing that now. After the recent 2 interest rate increases in Canada and 2 more forecast for next year I'm concentrating on minimizing the loan amount.

 

[insaneoctane]

Incorrect. Right now their lowest rate is .99% with Alliant credit union for well qualified buyers... but that expires this month. It's .99% for 72 months and if you go any longer, the rate goes up

I visited Alliant credit union .org and they advertise car loans as "low as 2.49%"

 

[K-MTG]

When I was purchasing my Model X during the hyped period over a year ago....Alliant was offering 1.49% for a 100k loan. And now a $40k loan will be over 2.5%?

 

[internalaudit]

Yes but the interest rates are subsidized for S and X in Canada to move the cars. Not a bank in Canada that will give a car loan below prime. I don't believe Tesla will subsidize the Model 3 interest rates. You can check with your own bank for new car loan rates. I'm in the process of doing that now. After the recent 2 interest rate increases in Canada and 2 more forecast for next year I'm concentrating on minimizing the loan amount.

I think for Canadians, the lowest auto loan would be at least 5% but mostly likely more than 6%. I asked on redflagdeals months before the prime rate was raised twice. I never tried the Credit Union route but I doubt they will go below 2%, like the auto manufacturers' leasing or financing arms.

I would definitely not finance a reasonably expensive car like the M3 at more than 2% per annum. Of course if global interest rates were more normal/historical, we would be seeing rates more than 3-4% but most savings accounts don't pay more than 2.5% anyway.

 

[jtpassat]

with the feds raising interest rates and selling back bonds - loans are going to get more expensive as time goes on.

When I was purchasing my Model X during the hyped period over a year ago....Alliant was offering 1.49% for a 100k loan. And now a $40k loan will be over 2.5%?

 

[Keith909man]

I visited Alliant credit union .org and they advertise car loans as "low as 2.49%"

That is correct. But if you buy a Tesla, it's 0.99% for this month. By my understanding, it will go up to 1.49% for a tesla after that

 

[Garlan Garner]

Should a person take a loan when they have cash available?

 

[Keith909man]

Should a person take a loan when they have cash available?

Cash is king, but credit is life.

Even when I have the means to pay cash, I like to loan it to keep building my credit profile. We live in a Society where your credit has more value then money on hand. With that being said, I never stop using credit.

 

[Runt8]

Cash is king, but credit is life.

Even when I have the means to pay cash, I like to loan it to keep building my credit profile. We live in a Society where your credit has more value then money on hand. With that being said, I never stop using credit.

Great answer. In addition, with a low enough interest rate it often times make more sense to take the loan and invest the cash.

 

[K-MTG]

Should a person take a loan when they have cash available?

Taking a loan is the American thing to do

 

[yodrak]

Should a person take a loan when they have cash available?

Yes, if the interest rate on the loan is sufficiently less than what a person could earn by investing the cash.

 

[SageBrush]

A) Keep my same scheduled monthly payment amount, but reduce the term of payments I have to make. (Therefore if my monthly payment is $500, and one month I make a payment of $1000, that's one fewer month I have to pay.)

This is about right, but not exact because the early extra payment also saves you interest.

This loan business seems complicated but at its most basic an early payment reduces your outstanding principal from that moment forward. You then continue to pay the monthly coupon ... and the loan finishes earlier than it would have without extra payments.

The only common difference between car loans these days has to do with the option to skip a month if you are a month ahead. Only your contract knows for sure.

Here is an example in table form
Note the extra payment in month #5 and how it affects the outstanding principal after the payment.