Tesla Financing Tip

[csalvato]

In my experience, there are very few banks who are going to be able to do financing on a car with Tesla's value if you've never had a huge car loan before.

Even with impeccable credit, few lenders would give me a loan without requiring 50k down because I never had a big car loan before.

I shopped around with a bunch of lenders, at the risk of harming my own credit, and found one that will finance without a previous loan at this size.

The bank was Unify Financial Credit union. If you want to work with the same lender as I did, I can give you her contact details over PM. I was originally going to put 5%-10% down on the car, but after hearing their rates, I financed the whole thing and it wasn't a problem for them or me.

This was a 2-3 week process for me, so hopefully this saves some people on here some time.

If this helps you, I hope you'll keep me in mind for your referral credit!

 

[mattack4000]

Our previous big loan was 40k...

 

[csalvato]

I never needed a loan for a car before, so this was the first one we've ever had. I've always just gotten lower priced cars. Based on my research, lots of others are in the same boat.

 

[mattack4000]

No loan yes , that’s just lack of installment on your profile

 

[DoubleDownOn9]

It's interesting I was worried about this at first but my credit union is financing both of my Tesla's and it never even came up during the application process. I've always been with credit unions so that could be it too. Good luck and thank you for being a resource for people getting into new Teslas in CO!

 

[dgatwood]

I had the same problem. Despite otherwise top-tier credit, the lack of large loans in my credit history (maxing out at only $30k for my last car more than a decade back) meant that it took five or six companies for Tesla to find one that would finance more than $60k. The whole process kind of made me want to tell all the banks and credit unions what they could do with themselves and a broom handle.

This sort of absurdity is why, IMO, Tesla desperately needs to set up its own financing company like the major automakers. Relying on banks and credit unions leaves them beholden to behavior that often borders on the truly bizarre. And that might not be critical for people who can afford a Model X, but it will kill their ability to upsell would-be Model 3 buyers to the Model S, and it will likely hurt Model 3 sales as well.

 

[DarkMatter]

Heads up, if you're shopping for the same sort of loan within a short period of time, it doesn't do anything more to your credit than a single application.

 

[DarkMatter]

Also, yes, if you have never had a large car loan before you can have a great credit score and they still won't have an easy time finding you financing. My previous largest car loan was only $32k so Tesla had to shop around a little bit. They were still able to find pretty solid terms for me.

 

[csalvato]

Also, yes, if you have never had a large car loan before you can have a great credit score and they still won't have an easy time finding you financing. My previous largest car loan was only $32k so Tesla had to shop around a little bit. They were still able to find pretty solid terms for me.

This was the biggest shock for me. Apparently, never having a huge car loan is something that lenders don't like to see. Found that crazy since I have a mortgage, and 15 years using credit cards with never a late payment and carrying some pretty impressive balances (100k+ in credit card spend some years).

I'll never really understand underwriting, I guess

 

[DarkMatter]

I believe the key difference is that car loans are easy to walk away from, and there can be a lot of damage to the property very easily. Don't carry enough insurance, get in an accident, walk away, and there's nothing left. Property is different because the land never goes away, and credit cards tend to have lower limits and a longer ability to hound you.

 

[Canuck]

This sort of absurdity is why, IMO, Tesla desperately needs to set up its own financing company like the major automakers. Relying on banks and credit unions leaves them beholden to behavior that often borders on the truly bizarre.

I look at it a different way.

Banks and credit unions are, quite rightly, adverse to advancing money for a significantly depreciating asset based on someone's credit score or current income and for very good reason: Credit score and current income mean diddly squat when a recession hits, and recessions always hit -- it's not a matter of "if" but "when". That's just a fact of the peaks and valleys of our economic reality.

As to other automakers, take a look at what happened to GM during the most recent recession.

I'm glad Tesla is not doing what you want them to do, and advancing money to people based on credit scores and current income levels. I know people will say "with rates so low it's best to leverage your vehicle for other investments." That argument doesn't work with me because none of the wealthy people I know did foolish stuff like that to make their wealth, and most wouldn't have their wealth with that attitude. Until I had my investments paying me enough to buy my Tesla in cash, all my money went into investments, not a significantly depreciating asset.

Calisnow (now banned?) says it best in his post here:

Guidance aimed at those in the medical field, when financing while in Res/Fellowship.

 

[csalvato]

I'm glad Tesla's not doing what you want them to do, and advancing money to people based on credit scores and current income levels. I know people will say "with rates so low it's best to leverage your vehicle for other investments." That doesn't work with me because none of the wealthy people I know did foolish stuff like that to make their wealth, and most wouldn't have their wealth with that attitude.

Generally, I agree with you.

But it is important to note that just because you know wealthy people who didn't behave that way, doesn't mean that there aren't wealthy people who have over-leveraged themselves as a kick in the ass.

In my network, there are quite a few people who have done that, and came out the other side multimillionaires within a few years, rather than waiting 30 years.

Yes, taking out a huge loan is a risk. But if you trust your own resourcefulness, and your own ability to make *sugar* happen, then you also need to consider the risk of being 50 or 60, living your dream for a year, then dying early of cancer (which has happened to *several* people I know). Or, worse, dying before you've lived the life you wanted to live.

It's all about the risk you're willing to take. And there's no right answer. I used to also think it was crazy for people to over leverage like that. But then I started to see people who have made it work. A lot of people.

(Disclaimer, I financed my car, but I can easily pay off most of it and bring my monthly payment down to the same amount a Honda Pilot would cost me, if *sugar* hits the fan)

 

[Canuck]

Generally, I agree with you.

But it is important to note that just because you know wealthy people who didn't behave that way, doesn't mean that there aren't wealthy people who have over-leveraged themselves as a kick in the ass.

In my network, there are quite a few people who have done that, and came out the other side multimillionaires within a few years, rather than waiting 30 years.

Yes, taking out a huge loan is a risk. But if you trust your own resourcefulness, and your own ability to make *sugar* happen, then you also need to consider the risk of being 50 or 60, living your dream for a year, then dying early of cancer (which has happened to *several* people I know). Or, worse, dying before you've lived the life you wanted to live.

It's all about the risk you're willing to take. And there's no right answer. I used to also think it was crazy for people to over leverage like that. But then I started to see people who have made it work. A lot of people.

(Disclaimer, I financed my car, but I can easily pay off most of it and bring my monthly payment down to the same amount a Honda Pilot
would cost me, if *sugar* hits the fan)

There's no one who trusted in his own resourcefulness, or believed in his own ability to make *sugar* happen, more than me. I also grew up with not much food in the cupboards and earned every dime.

Having said that , what you say is true -- there's a lot of flash in the pans -- who make it early, risky and fast (and usually lose it just as fast) -- so my comments were directed as a general rule only -- and there's exceptions to every rule.

As to dying after earning millions, I can tell you from my own personal perspective that "living your dream" isn't about how much money you have in the bank, and not working, at least for me. Retirement sounds great until you can afford to do it at an early age. Musk risked most of his paypal fortune to keep working - for good reason. I enjoy my work and staff, and while working grinds on us all at times, sitting on the beach, or going on safaris, gets old quite fast. I remember when I had nothing listening to Tony Robbin's tapes and he would say lying on the beach drinking margaritas gets old fast, and you need to work, and I laughed not believing that at all. Fast forward 30 years and now it becomes scary thinking I can easily walk out of the office never to return. It sends a chill through me and not in an ecstatic way.

Family, friends, gardening, work, holidays, my cabin, is what life is all about for me (and TMC). If a heart attack gets me now -- at 52 --, I will die with no regrets when it comes to money (getting my Tesla just before AP came out -- yes -- regret! -- and dying before my Model 3 - now that's not fair!).

The greatest satisfaction in my life comes from providing for my family -- and there's no regrets when you accomplish that, at least for me.

But to each their own. That's what makes the world go round. Life would be really boring if we didn't have a variety of people in the world and, having just finished reading "Fire and Fury" -- there's entertainment in watching how others live.

 

[dgatwood]

I'm glad Tesla is not doing what you want them to do, and advancing money to people based on credit scores and current income levels.

They also ignored my net worth, and denied credit based solely on not having bought such an expensive car previously. That's just dumb. For everybody who buys an expensive car, there's a first time, and anyone who can afford to pay cash is almost certainly not at a significant risk of defaulting. So basically, they had the opportunity to issue a loan at almost zero risk and make some interest on it, and they didn't do so.

¯\_(ツ)_/¯

I know people will say "with rates so low it's best to leverage your vehicle for other investments." That argument doesn't work with me because none of the wealthy people I know did foolish stuff like that to make their wealth, and most wouldn't have their wealth with that attitude.

*shrugs* The dividend yield on my stocks exceeds the loan percentage. It's effectively a negative interest rate as long as that holds true, so it seems silly not to take advantage of that for as long as I can. That said, I guess some folks have lower risk tolerance than I do.

 

[csalvato]

That said, I guess some folks have lower risk tolerance than I do.

Bingo - it's something I always struggle with because my risk tolerance is through the roof compared to most people.