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Tesla Resale Guarantee Document...

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Purchase price*: $85,370.
Loan start date: 8/15/2013

Loan 1: 2.95% / 72 months / $72,565 (price - 15%)
- Your monthly payment is $1,100.91.
- As of September 2016, you'll have paid $5,045.76 in interest and have a principal balance of $36,877.21.

Loan 2: 2.95% / 72 months / $42,685 (price - 50%**)
- Your monthly payment is $647.59.
- As of September 2016, you'll have paid $2,968.07 in interest and have a principal balance of $21,692.33.

You get $41,684 for the car. With Loan 1, you get $4,807 back. With Loan 2, you get $19,992 back.

* In reality this number should include registration, sales tax, and the document & delivery fee.
** $42,685 instead of the $42,670 in your question.

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Remember that if you're comparing these two options, the actual difference is the amount you'll pay in interest vs. the opportunity cost of a larger down payment, not really anything that you might "get back" in the end (since that is directly related to how much you put down).

Loan 1: pay $2078 more in interest and weather larger monthly payments ($1101), but only have to put 15% down.
Loan 2: pay $2078 less in interest and have smaller monthly payments ($648), but have to put down 50%.

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I used this loan calculator in the above calculations. You might find it helpful.

Thanks Colasec. I think I'll go with the lowest rate I could find (1.49% at Alliant) instead of the Tesla offered financing.
i find it hard to believe that a $92,000 Model S will only be worth $41,684 after three years.
In this scenario I would hope the car will be worth closer to $60,000 after three years.
 
Thanks Colasec. I think I'll go with the lowest rate I could find (1.49% at Alliant) instead of the Tesla offered financing.
i find it hard to believe that a $92,000 Model S will only be worth $41,684 after three years.
In this scenario I would hope the car will be worth closer to $60,000 after three years.

And what happens if, in a year or two, a major defect is found with the car that stigmatizes the vehicle? In that case, you would really appreciate Tesla's resale guarantee because you would not get that much anywhere else for this car. This is an unproven company with an unproven technology. Look at all of the latent production defects that have been addressed by the service centers after combing through all of the threads here. There are quite a few people with issues. While those issues have presumably been addressed, there's a lot more to the car that we can't see or touch that could have similar, but invisible problems that won't manifest themselves for years.

Just something to think about.
 
And what happens if, in a year or two, a major defect is found with the car that stigmatizes the vehicle? In that case, you would really appreciate Tesla's resale guarantee because you would not get that much anywhere else for this car. This is an unproven company with an unproven technology. Look at all of the latent production defects that have been addressed by the service centers after combing through all of the threads here. There are quite a few people with issues. While those issues have presumably been addressed, there's a lot more to the car that we can't see or touch that could have similar, but invisible problems that won't manifest themselves for years.

Just something to think about.

Agreed. I went with the 'resale guarantee' as insurance. We all have different opinions on this issue. My take; It is insurance on a new product/company; If there is a problem, it goes back; if a S2 version comes out with lots of bells/whistles that I think would be good, then easy trade in; if it is worth way more than the guaranteed price...sell it and buy a new S2, X, two genIIIs or another competitors vehicle if it proves to be better (highly unlikely).
 
And what happens if, in a year or two, a major defect is found with the car that stigmatizes the vehicle? In that case, you would really appreciate Tesla's resale guarantee because you would not get that much anywhere else for this car. This is an unproven company with an unproven technology. Look at all of the latent production defects that have been addressed by the service centers after combing through all of the threads here. There are quite a few people with issues. While those issues have presumably been addressed, there's a lot more to the car that we can't see or touch that could have similar, but invisible problems that won't manifest themselves for years.

Just something to think about.

if you believe so strongly in the resale guarantee why didn't you use Tesla financing?
BTW, if a major issue arises in a year or two the resale guarantee will be worthless. You have to own the car at least three years to qualify for it.
 
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That is a terrible residual value--OHCH! 50%???

Tesla is only worth 50% after 3 years--not good thing at all.

IMO it will be worth more than 50% on the open market. This buy back was set up to be insurance for people who might be worried about the residual value of a car from a brand new auto manufacturer. It is, IMO, a brilliant idea on TM's part. They set it at the residual value % of a Mercedes at the end of a three year lease period instead of just randomly picking out a figure that everyone would argue over.

I was one of the skeptics and took their buy back guarantee which requires financing through one of their partner banks.

If you think the % is unfair then I would suggest you get a better interest rate through a third party financial institution and save a couple bucks on interest charge differential.
 
IMO it will be worth more than 50% on the open market. This buy back was set up to be insurance for people who might be worried about the residual value of a car from a brand new auto manufacturer. It is, IMO, a brilliant idea on TM's part. They set it at the residual value % of a Mercedes at the end of a three year lease period instead of just randomly picking out a figure that everyone would argue over.

I was one of the skeptics and took their buy back guarantee which requires financing through one of their partner banks.

If you think the % is unfair then I would suggest you get a better interest rate through a third party financial institution and save a couple bucks on interest charge differential.

I'm paying cash, I was just very surprised to see such low residual rates. Typically manufacturers inflate residuals, so the fact this is so low is pretty scary. Just a comment, not bashing. Losing $50K in 3 years is a lot.
 
IMO it will be worth more than 50% on the open market. This buy back was set up to be insurance for people who might be worried about the residual value of a car from a brand new auto manufacturer. It is, IMO, a brilliant idea on TM's part. They set it at the residual value % of a Mercedes at the end of a three year lease period instead of just randomly picking out a figure that everyone would argue over.

I was one of the skeptics and took their buy back guarantee which requires financing through one of their partner banks.

If you think the % is unfair then I would suggest you get a better interest rate through a third party financial institution and save a couple bucks on interest charge differential.

An '11 S class Benz sells on average around $70k - $75k. New on average around $100k- $110k. Around 10% - 12% per year is expected on a luxury car. To lose %50 over the three year period on the best and safest car on the market seems like a stretch. What you'll probably see in three years is Tesla paying 50% and turning around and selling those cars after reconditioning them at a nice 15% - 20% profit. Hence the need to keep the residual low. They wouldn't want to shoot themselves in the foot by setting a high residual.
 
An '11 S class Benz sells on average around $70k - $75k. New on average around $100k- $110k. Around 10% - 12% per year is expected on a luxury car. To lose %50 over the three year period on the best and safest car on the market seems like a stretch. What you'll probably see in three years is Tesla paying 50% and turning around and selling those cars after reconditioning them at a nice 15% - 20% profit. Hence the need to keep the residual low. They wouldn't want to shoot themselves in the foot by setting a high residual.

Absolutely agree. Good for TM if they do. The point was to give some level of comfort for early adopters where no one knew what a residual value would be on this new car/company and if the company would go 'belly up'. Granted, even though Elon personally guaranteed the buy back/residual value, if the company went belly up you may not see a dime. They did peg it to one of the Mercedes in terms of % of that car's residual value in three years.
 
And what happens if, in a year or two, a major defect is found with the car that stigmatizes the vehicle? In that case, you would really appreciate Tesla's resale guarantee because you would not get that much anywhere else for this car. This is an unproven company with an unproven technology. Look at all of the latent production defects that have been addressed by the service centers after combing through all of the threads here. There are quite a few people with issues. While those issues have presumably been addressed, there's a lot more to the car that we can't see or touch that could have similar, but invisible problems that won't manifest themselves for years.

Just something to think about.

if you believe so strongly in the resale guarantee why didn't you use Tesla financing?
BTW, if a major issue arises in a year or two the resale guarantee will be worthless. You have to own the car at least three years to qualify for it.

In my case the decision came down to financed amount. Tesla's financing partners (Wells Fargo, US Bank) would only allow for a relatively limited $70k-$80k financed amount which required me to bring an additional $25k-$30k down payment. No thanks. So I went with a credit union that financed 100% at 1.8%. This way I have the down payment cash available and can invest that money to create a greater return than the interest paid on the loan. Free money and I have no financial risk.
 
Hmmm? You have ALL of the financial risk :smile:

And these days making more than 1.8% in a liquid account is almost impossible.

I don't see it that way. If the Model S is a lemon, I can walk away from the car without walking away from the down payment. What would have been the down payment is now flipping money. :) I can double it in less than a year.
 
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Right.....if credit ratings are irrelevant to you I guess.

It does appear that the Company has staying power (at least through my 39 month period). My bigger concern now actually on resale is if the improvement curve is so great and the car gets THAT much better in 39 months that my current model is only worth 50% of the original to a buyer compared to a new car that could be purchased 3 years from now. As an example, if the cars three years from now have a 600 mile range, my existing car could be worth much less (if prices don't continue to increase). Most car brands only improve modestly, so I'm not sure the Tesla residual can really be forecasted at this point.
 
Right.....if credit ratings are irrelevant to you I guess.

It does appear that the Company has staying power (at least through my 39 month period). My bigger concern now actually on resale is if the improvement curve is so great and the car gets THAT much better in 39 months that my current model is only worth 50% of the original to a buyer compared to a new car that could be purchased 3 years from now. As an example, if the cars three years from now have a 600 mile range, my existing car could be worth much less (if prices don't continue to increase). Most car brands only improve modestly, so I'm not sure the Tesla residual can really be forecasted at this point.

Bingo