Plug-in car sales are soaring. This year alone, so far, 10 million vehicles have been sold. And which do you figure is one of the biggest selling electric cars? Tesla’s Model Y, with an 87 percent rise in sales since 2020. It’s so popular among car buyers, that industry insiders predict it may be the first EV to make it to the top selling cars globally.
It’s clear that consumers are hot about Tesla. To own one isn’t limited to just a straight purchase; you could lease one or do a Tesla trade in, which can be done even with gas-powered cars.
But if you don’t want to lease a Tesla or have nothing to trade, you may still be able to drive one through Tesla financing.
Is Tesla Financing Hard to Get?
Financing your Tesla car is doable through the electric car manufacturer’s program. You may also secure financing through a third-party provider.
In a nutshell, it’s not hard to get Tesla financing because:
- You can order and finance your car online
- You don’t have to pay for lender or application fees
This is not to say that financing applications will be a cinch. You’ll still go through a credit check; Tesla has stated that it performs one hard pull of your credit report.
But in comparison to experiences from other auto makers, Tesla’s car purchasing experience is considered a lot less painless. When it comes to the waiting period, credit decisions may be made in minutes with many being available in 48 hours, according to Tesla.
What Credit Score Do You Need for Tesla’s Financing?
Although Tesla currently does not specify a minimum credit score to qualify for financing, but a decent credit is better than a low credit score.
Tesla buyers tend to have an average of 740 credit score, which has dropped to 717 owing to the increasing affordability of the automaker’s vehicles. Tesla used to be at the top spot in terms of buyer credit scores; Porsche has moved to the top spot with buyers typically having 725 in credit.
Also, a much better credit score would mean fewer requirements. Fewer requirements would mean less time waiting around to get approved for your financing application.
If you’re uncertain about your credit score and worry about getting approval, a pre-approval process may seem like a good idea. Except Tesla doesn’t have a pre-approval process; you’ll have to do that with your bank.
Once approved, how will your payments go?
What is Tesla’s Current Financing Rate?
Tesla’s annual percentage rate (APR) is currently at 2.49 percent. Loan terms with the automaker go from 36 to 72 months. The 2.49 percent Tesla financing rate may apply to people with credit scores of 717 and above.
Car buyers with low credit scores, ranging from 600 and below, can expect higher interest rates of up to 14 percent.
The credit score isn’t the only factor that influences your APR on a car loan. An automaker may also look at your:
- Credit history
- The make and model of what you’re buying
- Loan’s length term
- Down payment
Tesla’s financing plan generally requires about $4,500 in down payment for a standard Model 3. It’s not the fastest Tesla in the automaker’s line, but it’s the most affordable Tesla. If you get approved for financing, you may end up paying about $549 per month with the Tesla’s APR.
But if you’re like most car buyers, you may shop around for the best rates. You don’t have to stick to Tesla’s financing if you feel you’ll get better rates from third-party providers.
Should You Buy or Lease a Tesla?
If you’d rather not be bothered by the chore of owning a car, from maintenance to repairs, you may be more interested in leasing. A lease is a good way to drive around a luxury car without the hefty price tag. But before you apply for a Tesla lease, consider the computations of getting a loan versus leasing.
It turns out leasing a Tesla may end up costing you more in the long run, according to these calculations. An outright purchase of the popular automaker’s EV may be better, considering how it holds its value and the length of warranty coverage for the battery and the powertrain. All things considered, you could resell your Tesla after a few years and you’ll be far ahead than if you went with a lease.
Of course, if you’re thinking about getting a Tesla for business, a lease may be a better option. Your choice will depend on why you need to get one.
Overall, this is a car buying decision that’ll require more thought and some shopping. Check financing rates. Consider the cost of ownership for each Tesla model. And make sure your credit is on the high side.