Until the recent release of the Model 3, Tesla has primarily catered to the full-size luxury car market with their Models S and X. The pricing may seem expensive, but Tesla offers multiple methods to cover the cost of a Tesla in an affordable way. You can finance a new Tesla, lease a new one, or finance a used model. Let’s compare the various options so that you can make a more informed decision.
Financing A New Tesla
If you want to own your own Tesla, applying for a loan via the Tesla website is a wise choice. You can apply for a loan of either 60 or 72 months in length, and there’s a calculator on Tesla’s website you can use to calculate your monthly payments.
If your down payment is supposed to be $12,500 at signing, you’ll effectively end up paying $5,000 instead. This is because you are entitled to a $7,500 Federal tax credit (as of this writing), that is deducted from the taxes you owe, when you file your tax return. Read this article to see how the tax credit system works for electric vehicles and how long it’s expected to last.
Here’s an example. The Model S 75D, with a 72-month loan at a 1.49% Annual Percentage Rate (APR) comes comes with a payment of about $1,027/month. Over the 72-month period, your payments will total $78,944. Buying it outright will cost you $75,700.
With such a low interest rate, you can hold onto your money, or find a productive investment with better returns.
Leasing A New Tesla
Tesla also offers the option of leasing a Tesla for three years.Leasing essentially means you’re paying for the use of the car, until it’s time to return it in good condition.
With leasing you must go through pre-approval and qualify, just as if you were applying for a loan. There’s a down payment of $5,000,with monthly payments that will vary, depending on the model of the car, the options, and how many miles you intend to drive each year. Tesla is currently offering 10K, 12K and 15K annual mileage options on their leases.
Leasing has tax advantages if you drive a Tesla for your business. Business owners can write off some of the expenses, based on how much they use the car for business. Be sure to review this with your accountant or tax advisor.
Another benefit to leasing over purchasing: you can simply turn in your current Tesla at the end of the lease, and get the latest new Tesla model for your next lease.
It’s probably not ideal to lease if you’re going to be driving a lot, say over 20K miles a year, or if you plan to modify your car in any way. You’ll be charged for the extra miles if you exceed the limit, and you will have to return the car to original condition before you turn it in.
Lease payments do not include taxes, registration and other fees due when signing the lease. The fixed costs for leasing a Tesla include a $5,000 down payment, a $695 acquisition fee, and the first month’s lease payment when signing. There’s also a $395 disposition fee when returning your car at the end of your lease.
Buying A Used Tesla
Buying used is another way to pay significantly less for a Tesla. There are numerous websites where you can find a second-hand Tesla, but you can also check the used inventory that Tesla offers on its website.
This is generally a safer option compared to buying a used model from another source, as each one is checked by Tesla’s engineers and comes with a limited warranty.
Getting a used model from Tesla requires a $1,000 deposit, and the balance can be paid in full via cash or with financing. You can also trade your existing car to offset the costs. Shipping fees can be up to $2000 for most states or up to $5000 for Alaska and Hawaii.
Things to consider when buying a used Tesla are the mileage and the optional features it has. The mileage of every car is listed, and is a generally a good indicator of its remaining battery life.
Make sure that you understand what is and is not covered by the warranty, because replacing the battery or a motor can be expensive. And remember, not every used Tesla comes with free lifetime supercharger access.
The Model 3
Finally, we come to Tesla’s latest offering,The Model 3. This will be their most affordable car yet, with a base price of $35,000. The reservation fee to get on the waiting list is $1,000.
You can purchase a Model 3 with cash, or get financing through Tesla as your delivery day approaches. Leasing details on the Model 3 are unknown at this point in time, but are likely to be announced once production reaches normal levels. Production is still ramping up, and you may have to wait until 2018 or later to get a Model 3. Head over to our Electric Car reviews page and read our Tesla model 3 review.
Next: Tesla Warranty Coverage
For all the details on what is and what isn’t covered in the various Tesla warranties, continue here. Want to know more about the Tesla Story? Head over to our Tesla Story blog articles to find out more and read our Tesla electric cars reviews.