Who here financed through Tesla without verifiable income?

[1LE McQueen]

I was wondering how many members here had been approved for Tesla finance without being required to show verifiable income..? If so, how much did you put down and what was the total cost of your car?

I'm about to apply for a preapproval online, but unfortunately I don't have any proper form of verifiable income. Called my local Tesla showroom and they said it wasn't necessarily required. I told them my exact situation, which is this:

Above 710 Credit Score

Over $20k to put down (from TSLA, thank you fellow TSLA investors)

Currently owe 20k on my Veloster, but can sell for 31k according to KBB. I would post for sell immediately upon preapproval from Tesla finance.

Also have mortgage which should be considered.

Tesla salesperson said I shouldn't have any trouble. I'm hesitant on applying because I don't want a hard pull on my credit if the chances are good I'd get denied. I would love to hear what you all have experienced if you were in a similar situation. I'd get a red or white model 3 AWD with the white interior. Thanks all!

 

[jjrandorin]

A hard pull on your credit will drop your score around 5-10 points, for a couple of months, whether you are approved or denied, provided you dont take the loan.

Unless you are about to buy a home, or take out some other loan different from this, that 5-10 points wont matter for anything.

 

[1LE McQueen]

A hard pull on your credit will drop your score around 5-10 points, for a couple of months, whether you are approved or denied, provided you dont take the loan.

Unless you are about to buy a home, or take out some other loan different from this, that 5-10 points wont matter for anything.

Thanks! I didn't realize that. I have 3 hard pulls still on record. They drop after 2 years from what I understand but I didn't know how long the score suffers.

 

[jjrandorin]

Thanks! I didn't realize that. I have 3 hard pulls still on record. They drop after 2 years from what I understand but I didn't know how long the score suffers.

They last on your credit for 2 years, but ones for buying something like a car or a home are different than ones like credit cards. Never apply for a credit card you dont intend to take.

Car loans (and home loans) are acknowledged as something people shop for (which requires multiple credit apps), so as long as you do them within a couple weeks or something you can apply for your proposed car loan in multiple places (tesla, your bank, maybe a credit union).

They will all show up separately on your credit, but they will be lumped together for one "hit" on your credit score. The score drop will go away after 2 or maybe 3 months, if you dont take the loan. The only way you are going to know what you want to know is to apply yourself.

A credit profile is kind of like a fingerprint... no two peoples lifetime credit profile is exactly the same, so no experience you read about online is going to apply to you. Note, I dont work in the credit industry or anything, but did a ton of research on "how all this works" years ago for my own personal information.

 

[holeydonut]

I also think this depends on your lender.

I was looking into financing with Tesla Finance to see what their headline rate would be and to better understand their generic credit box they try to fit into for the lowest rates. But when I contacted the finance team, they said they don't work that way. I'd need to basically have a delivery confirmed and then just apply for normal financing (hard pull). If I got the headline rate, then that's great. If I didn't then that's too bad. But they weren't in the business of pre-qualifying someone with a soft pull and generic underwriting to help that customer make a smart financial move.

But I spoke with my bank and they let me know their underwriting requirements on new car loans. They did a quick soft pull to confirm my FICO, DTI, and look for any major credit demerits without a hard pull. They didn't guarantee my rate (that'd take a hard pull), but basically said if I did what I said about income were true then there was a rate table they could offer on a collateralized car loan amortization term.

My point is, don't talk to Tesla sales or Tesla Finance about things unless you are ready to finance. Just grab your local banker (or credit union rep if you go that route). They'll be more helpful to at least understand what you may be looking at without a hard pull.

Companies like Capital One advertise pre-qual without a hard pull... but I don't have experience with this workflow or product. Feel free to mod/delete my link if you all think it's a schill. I have no affiliation with them.

Used & New Cars for Sale, Dealerships, Reviews, and More | Capital One Auto Navigator

Find and finance the perfect car, all with no impact to your credit score.

www.capitalone.com

 

[jjrandorin]

I also think this depends on your lender.

I was looking into financing with Tesla Finance to see what their headline rate would be and to better understand their generic credit box they try to fit into for the lowest rates. But when I contacted the finance team, they said they don't work that way. I'd need to basically have a delivery confirmed and then just apply for normal financing (hard pull). If I got the headline rate, then that's great. If I didn't then that's too bad. But they weren't in the business of pre-qualifying someone with a soft pull and generic underwriting to help that customer make a smart financial move.

But I spoke with my bank and they let me know their underwriting requirements on new car loans. They did a quick soft pull to confirm my FICO, DTI, and look for any major credit demerits without a hard pull. They didn't guarantee my rate (that'd take a hard pull), but basically said if I did what I said about income were true then there was a rate table they could offer on a collateralized car loan amortization term.

My point is, don't talk to Tesla sales or Tesla Finance about things unless you are ready to finance. Just grab your local banker (or credit union rep if you go that route). They'll be more helpful to at least understand what you may be looking at without a hard pull.

Companies like Capital One advertise pre-qual without a hard pull... but I don't have experience with this workflow or product. Feel free to mod/delete my link if you all think it's a schill. I have no affiliation with them.

Used & New Cars for Sale, Dealerships, Reviews, and More | Capital One Auto Navigator

Find and finance the perfect car, all with no impact to your credit score.

www.capitalone.com

This is great info and person to person sharing, so no need to delete.

 

[1LE McQueen]

I also think this depends on your lender.

I was looking into financing with Tesla Finance to see what their headline rate would be and to better understand their generic credit box they try to fit into for the lowest rates. But when I contacted the finance team, they said they don't work that way. I'd need to basically have a delivery confirmed and then just apply for normal financing (hard pull). If I got the headline rate, then that's great. If I didn't then that's too bad. But they weren't in the business of pre-qualifying someone with a soft pull and generic underwriting to help that customer make a smart financial move.

But I spoke with my bank and they let me know their underwriting requirements on new car loans. They did a quick soft pull to confirm my FICO, DTI, and look for any major credit demerits without a hard pull. They didn't guarantee my rate (that'd take a hard pull), but basically said if I did what I said about income were true then there was a rate table they could offer on a collateralized car loan amortization term.

My point is, don't talk to Tesla sales or Tesla Finance about things unless you are ready to finance. Just grab your local banker (or credit union rep if you go that route). They'll be more helpful to at least understand what you may be looking at without a hard pull.

Companies like Capital One advertise pre-qual without a hard pull... but I don't have experience with this workflow or product. Feel free to mod/delete my link if you all think it's a schill. I have no affiliation with them.

Used & New Cars for Sale, Dealerships, Reviews, and More | Capital One Auto Navigator

Find and finance the perfect car, all with no impact to your credit score.

www.capitalone.com

I should call around, the one credit union I called absolutely required income verification and a hard pull. I was under the impression that since tesla finance works with multiple banks, that they would find the best rate and one that wouldn't require proof of income. Going with a soft pull lender would be amazing.

I'm ready to go, I have the 22k in hand to put down. I could pull more together but i don't wanna sell all my TSLA. Just hope that's enough for an approval.

Teslas site says after you put your 100 deposit in, you can apply for pre-approval. It's good for 60 days.

 

[techlogik]

Shouldn't take but 5 minutes to get an approval from any bank/lender these days. Any longer should be a sign of something wrong. Sadly, while rate shopping and trying to get BMO bank they used for my loan, my credit score dropped by like 40 points...what a sham. They know people rate shop and multiple bank hits for an auto loan should be a sign, but noooooo...whatever, don't care what they think. Nobody verified anything but the basics of the application all automatically.

Lowest rate I round Tesla matched, actually, BMO won't change the rate after approval, so they are sending me a check for the interest/rate difference in 6 weeks after my delivery....whatever.

 

[holeydonut]

Yeah lenders have some whack terms... really wish they wouldn't confuse people but here are the major buckets of "pre-whatever". Naturally this isn't financial advice; just the ramblings of an online idiot.


1) Pre-Selected... if you get a thing in the mail, it'll often say "congratulations you've been pre-selected for some stupid offer". This just means they "selected" your name from some database maintained by the credit agencies or some other marketing partner. Much money is made selling your data so you can be selected for all sorts of goodies. And people wonder why Millennials have a tough time with finances. Boomer-operated financial institutions love to select people for enticing offers that often stretch/corrupt finances. But it's always done with the "best of intentions" and the borrower is the one that messes up...

2) Pre-Qualified... This is usually what happens after you initiate something and authorize a "soft pull that doesn't impact your credit." The pre-qualification just means that at a cursory glance, if you are who you say you are and some basic info matches the real-deal, then you could fit their credit/risk box for whatever financial product you're shopping for. Collateralized car loans are way different than credit cards or debt consolidation loans. But a pre-qualification basically informs the borrower that what they're trying to do is actually within reason based on their credit, DTI, FCF, and other basic factors with a lender. At this step, most lenders can also tell you the types of income/statements/docs you'll be expected to produce. I say most... because Tesla doesn't seem to help people with this step and just pushes people to Pre-Approval because they don't want the noise.

3) Pre-Approval... This usually requires a hard pull and an underwriting event (like you may need to prove your income or produce other docs). Most people want to get pre-approved before they actually pull the trigger on a decision. But at this point the customer has selected one or two major parties to execute a deal with. As jjrandorin pointed out, a couple of pre-approvals from various lenders at the same time isn't really a bad thing since the whole point is that the borrower is shopping around for the best rate possible. Tesla basically says if you can get someone else to pre-approve you, then they'll just force-fit you and match that offer. That's a high-volume way to do financing. But also means if you don't cross shop, then Tesla is jobbing you a bit with less than the best rates.

4) Pre-Funding... there's a time gap between getting everything approved and the financial institutions actually sending money. On car loans there's usually a right to rescind (remorse) provision... but most lenders just force the borrower to sign away this right and the whole thing becomes moot. And the amount of the loan is very well known. But some stuff like student loans or debt consolidation loans... banks will only fund what another financial institution or bursar's office requests. So there could be a difference between the approved amount and the funded amount.

 

[jjrandorin]

Yeah lenders have some whack terms... really wish they wouldn't confuse people but here are the major buckets of "pre-whatever". Naturally this isn't financial advice; just the ramblings of an online idiot.

I would encourage anyone reading along to pay close attention to @holeydonut on this topic, even though of course "this is not financial advice, and just online rambling"

 

[1LE McQueen]

Just went through Tesla financing. I was approved for a 72 month 2.49 apr loan through Chase. Words can't express how excited I am. They never asked for proof of income.

This'll be the longest 7-11 weeks in my life.

 

[holeydonut]

Just went through Tesla financing. I was approved for a 72 month 2.49 apr loan through Chase. Words can't express how excited I am. They never asked for proof of income.

This'll be the longest 7-11 weeks in my life.

Oohhhh ok I think I see what Tesla is doing now. I'm used to automakers having a financing arm that actually underwrites and does the lending. Like GM Financial does the lending for GM dealerships, and tends to offer subvented rates to attract customers to keep all the profits in the GM ecosystem.

I guess Tesla just gets leads from prospective Tesla owners, and farms that lead out for bids in some financial marketplace. That's why you got a Chase loan, while someone else may bet a Wells Fargo or Citi loan.

If this is the case, then there's a strong chance that going to Chase, Wells, or Citi directly (especially if you were already a client of there's) could result in a lower APR. Because these banks wouldn't be paying commission for the lead as you'd be going straight to their credit team.

 

[1LE McQueen]

Oohhhh ok I think I see what Tesla is doing now. I'm used to automakers having a financing arm that actually underwrites and does the lending. Like GM Financial does the lending for GM dealerships, and tends to offer subvented rates to attract customers to keep all the profits in the GM ecosystem.

I guess Tesla just gets leads from prospective Tesla owners, and farms that lead out for bids in some financial marketplace. That's why you got a Chase loan, while someone else may bet a Wells Fargo or Citi loan.

If this is the case, then there's a strong chance that going to Chase, Wells, or Citi directly (especially if you were already a client of there's) could result in a lower APR. Because these banks wouldn't be paying commission for the lead as you'd be going straight to their credit team.

Right, my Hyundai loan is through HMF (Hyundai Motor Finance). Tesla told me they partner with multiple banks and try to get you the best rate. 2.49 for 72 months is insanely low and I couldn't be happier.

Even my local credit union quoted 72 months at 3.25 apr. The funny thing is, I have a Southwest Card, mortgage AND savings account all with Chase bank. Just add this to the list of things Chase can do for me.

 

[holeydonut]

Right, my Hyundai loan is through HMF (Hyundai Motor Finance). Tesla told me they partner with multiple banks and try to get you the best rate. 2.49 for 72 months is insanely low and I couldn't be happier.

Even my local credit union quoted 72 months at 3.25 apr. The funny thing is, I have a Southwest Card, mortgage AND savings account all with Chase bank. Just add this to the list of things Chase can do for me.

Yeah, without Tesla putting money into a loan to subvent it, 2.49% (assuming no hidden fees*) is pretty low. But any super-stable credit union balance sheet should be able to get into the 1's if you were a long-time member and they trust your previous cash stream translates into your next 6 years of stability.

Most major automakers with captive financing arms are putting 0% loans on the table. This is because the automaker is putting some of their incentives to buy your interest rate down. But since Tesla doesn't play with any of these games it's not fair to compare your rate with one that can be had from a normal automaker that has per-vehicle incentives and a captive financing arm.

Regarding the fees; make sure you read the fine print. I don't know about Chase, but some lenders charge prepayment penalties. So some people who make 2 payments in a month (trying to pay off their car faster) end up getting hit with a fee. And then there may be origination fees so the amount of the loan is actually greater than the amount if it were cash only. Lots of shady business in there... just keep your eyes open and don't act too quickly. The auto biz is one of the most mature industries out there. They've learned how to capitalize on the excitement of a car purchase. Tesla is doing a pretty good job of re-inventing the whole thing to be as painless as possible, but you're still dealing with banks, insurance companies, etc etc.

 

[Radish11]

If I were a lender I would absolutely give you the loan if you put down a 20k deposit. From their perspective there’s very little risk as even if you immediately default they’ll be able to recover all the loss and more by auctioning off the car

 

[holeydonut]

If I were a lender I would absolutely give you the loan if you put down a 20k deposit. From their perspective there’s very little risk as even if you immediately default they’ll be able to recover all the loss and more by auctioning off the car

Fun little story (completely off base to the subject of the thread, but taking a thread off the rails is what I'm good at)...

So one of the problems with the auto lending industry is that repo-ing a vehicle can actually be pretty tough. I don't mean in terms of that stupid TV show with that guy trying to repo cars. I mean more real-life-day-to-day repos are kind of hard. It's tough to locate cars sometimes. Companies like Rekor are using LPR (license plate reader) cameras on vehicles operated by large fleets (like government, Telco, delivery trucks, etc). They even offer to put LPRs on residential home security systems.

One use of the LPR is to aid the discovery of cars that were on the repo list. So if a plate matched real time, the data would go out to repo folks. They'd know where were these cars were at and go take care of their business. This significantly dropped loan losses and servicing costs so this company was doing pretty well.

Tesla flips this concept around around. Tesla drivers know someone can literally look at some database and instantly know where that car is located and come n' get it if a loan isn't being paid. Hell, at some point I bet Tesla could instruct the car to drive itself to the repo yard. This alone should drop expected loan losses where a Tesla is the collateral by a metric crap ton.

Edit, I don't have a financial position in Rekor. Like I'm not some /r/WSB autist. I'm just pointing out a clever use of tech to aid repos.

 

[Deleted member 184361]

If you don’t mind me asking, what did you tell them your income was?

 

[PSMod3]

I have a credit score tickling 800, I only paid TT&L, so I financed the full amount of the car. I put down our household income and was preapproved at 2.49% for 72 months without documenting anything. I don't think I've ever had to show proof of income on any car transaction I've ever made.

 

[1LE McQueen]

If you don’t mind me asking, what did you tell them your income was?

They never asked for it. I put down 22k or 24k and was instantly approved, no proof necessary.

 

[holeydonut]

They never asked for it. I put down 22k or 24k and was instantly approved, no proof necessary.

Dude you still have the Squirrel? You don't have your car yet?