Tesla Financing Terms have changed

[Argelius]

I just received this from my Delivery Specialist:

"I wanted to let you know that the financing resale value guarantee terms are changing as of tomorrow. The minimum is still the 30k financed, which is what you have. However, you can’t pay off the loan early and still get the resale value guarantee. You would have to have the 36 consecutive months of good payments to be eligible."

I was going to finance the minimum ($30K), then pay off after 6 months to get the guaranteed residual value. Now I'm guessing I won't do this since the added 3 years of interest payments wont make this worthwhile (I'm guessing).

There must have been too many people trying to take advantage of the guarantee and paying off early, thereby denying TM those years of interest.

It still seems like -- unless something goes completely whacko with Tesla -- that the car is going to retain it's value (as much as any other similar luxury car.

 

[lorih]

It is my understanding that Tesla doesn't get interest. It gets the full price of the car when you purchase. The financing goes through one of the two banks that Tesla works with and they are the ones collecting interest.

Please correct me if I'm wrong...

 

[CygnusX-1]

That's correct. When I closed, Tesla got 2 checks. My down payment and the payoff amount from Wells Fargo. Wells Fargo is carrying the risk / getting the interest. Tesla's already whole on my car.

 

[CapitalistOppressor]

That's correct. When I closed, Tesla got 2 checks. My down payment and the payoff amount from Wells Fargo. Wells Fargo is carrying the risk / getting the interest. Tesla's already whole on my car.

Yes, but if folks are doing what the OP says, the underwriters could force a change in the financing terms to protect themselves. Tesla is just the messenger in this transaction.

 

[bareyb]

That's the first question I asked them. Can I pay it off early? At the time they told me six months consecutive payments. I wasn't going to take them up on it anyway, but it does close the big loophole and it makes this plan even less like a "lease" which is how they are characterizing it. There may be some bad press over this... we'll see. I hope not.

 

[clmason]

If one is concerned about resale value and desires a guaranteed buy back after 36 months, IMO the option to finance just $30K (out of $70k-$115K) over 36 months is a fair trade off. Those who paid off the loan after 6 months were really taking advantage of the program IMO. It's one of those give'm an inch and they'll take a mile kind of things...

 

[lorih]

If one is concerned about resale value and desires a guaranteed buy back after 36 months, IMO the option to finance just $30K (out of $70k-$115K) over 36 months is a fair trade off. Those who paid off the loan after 6 months were really taking advantage of the program IMO. It's one of those give'm an inch and they'll take a mile kind of things...

I agree. I've never gone for leasing as it costs more for the first 3 years. I've always bought a car outright, or financed and paid off as soon as I had the money.

Tesla option of paying for 3 years makes it more like a lease. Tesla guarantees the value back which will pay off the rest of the loan. If you are planning on keeping the car, you should pay cash or you can even find your own financing. Many banks will finance a Tesla, it is just that Tesla has an agreement with two banks so that people that like to lease (many luxury buyers that like a new car every 3 years), and those unable to put all the money up-front have an option. This 'buy back' was to encourage new buyers and banks to take a risk on a brand new car company, by establishing a lower limit for resale value. (All the other US new car companies had previous gone bankrupt)

I think everyone here agrees, Tesla isn't going out of business in 3 years. :smile:

You should make the decision based on what makes most sense for your needs and not worry about Tesla buy back (there will be a great secondary market based on the buy back program if you choose to sell the car on own anyway)

 

[bareyb]

That's why I didn't go for it. I have no doubts that someone would LOVE to buy my Model S in three years if they could get it for a reasonable price. The only thing stopping most folks from buying one is the current price. If it were $20k cheaper I know quite a few people who would be players.