Tesla dramatically reveals a 66-month car loan that acts like a lease


Recommended Posts

Tesla Motors dramatically took down its website and held a conference call to reveal...a fancy car loan.

For Tesla, having built 4,750 Model S sedans, such things still count as big news. And given the difficulties of selling an all-electric sedan that starts at $62,000 with worries about how long the batteries will last, the loan has a few unique quirks, including a personal guarantee from Elon Musk of the car's future value. But with a monthly payment of more than $1,000, it's not for everyone.

The majority of luxury buyers drive off the dealership lot with a lease, the less-costly way in the short term to buy a car. But with no history of how its vehicles would age over the years nor how quickly their value would decline, traditional finance companies and banks wouldn't write a lease deal for a Model S.

The new deal, negotiated with Wells Fargo and US Bank, looks like a 66-month car loan, with 10 percent down and a 2.95 percent interest rate. After three years, the owner can ? but isn't obligated ? to sell it back to Tesla for what the company says is a guaranteed residual value of about 61 percent, or roughly the same depreciation as a Mercedes S-Class. As a backstop, Musk says he will guarantee the value of the Model S with his own personal wealth.

While Tesla says the deal can reduce the monthly cost of owning a Model S from a minimum of $1,051 to nearly $500 a month, its own calculator demonstrates acrobatics rarely seen outside a Cirque de Soleil show to reach that number, assuming things like business tax deduction and the value of time reclaimed from pumping gas. (It has no entry for time spent recharging.)

more

Link to comment
Share on other sites

^ Your wife probably spends that much. :p

I'd hate to imagine the insurance cost of a Tesla.

I wouldn't imagine it'd be much different than a similarly priced vehicle - there's not really anything to say driving a Tesla is more dangerous than driving any other car.

I'd love to have a Tesla, but it's well out of my price range.

Link to comment
Share on other sites

Thank I'll stick to my beautiful old 99 Caddie. . .just can't see replacing it as of yet. . ."Sweet Read." :yes:

Link to comment
Share on other sites

Hmm not a terrible deal for those that like to lease, I guess. I could swing $1k, but that is a lot of money, I'd definitely be more interested in the $650-750 range. You could lease something like a BMW 640i for $689/36 months.

Link to comment
Share on other sites

so it's a personal contract purchase (PCP) as we have had for as ****ing long as i can remember in the UK

at the end of your 3 or 4 year term, you are offered the chance to pay the residual value [guaranteed future value]... say ?10k or give it back to the dealer for say ?11k if you are lucky, or ?9k if the market is down

the difference being your equity and is typically used as a deposit on the next car.

the main difference (and way the product can be so 'cheap') is that you only repay capital on one part of the loan... but interest is calculated over the whole of the loan, it really is nothing new!

PCP deals are also used as a tool to tie a purchaser to a specific marque, as they will typically give preferential rates when trading in the same manufacturer.. well, at least in my experience :D

  • Like 1
Link to comment
Share on other sites

This topic is now closed to further replies.