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Yes, Tesla is offering a financing deal that’s hard to pass up. The company is offering 0.99% APR financing on a new Tesla Model Y! That’s a crazy-low financing option. Note that it’s only available on the Model Y, though, not the Model 3.
Wait, what’s going on — the federal interest rate is 5.3%, so how can Tesla be offering 0.99% financing? And one week ago, the lowest financing rate on a Model Y was 6.49%!
Basically, Tesla is subsidizing the financing. Confused yet? With federal interest rates at 5.3%, banks can’t come in and offer 0.99% financing to consumers. However, shifting money around a bit, Tesla can subsidize the financing instead of doing the usual vehicle price cuts (or can do both).
“Typically, when an automaker offers an unusually low interest rate, it’s accounted as a price cut for the manufacturing side of the business,” Barron’s notes. Of course, I don’t have to tell you: Tesla doesn’t always do things the typical way. However, one way or another, Tesla is footing the bill for the lower interest rate — no bank is doing so.
Just to end, note that this low interest rate offers big potential savings. If you put down $4,250 and get the low rate, you could be saving $100 a month, or $6,000 across five years. To be honest, this is a huge incentive (assuming it’s not too hard to qualify for the low interest rate). I assume it will actually drive a good surge in new Model Y sales.
The bigger story is nothing new. Tesla has been pulling different consumer demand levers to stimulate more sales for about a year and a half now. We are long past the days of Tesla naturally having more demand than it can supply. Production capacity grew and grew and grew, and it eventually grew more than consumer demand, which seems to be on a kind of plateau now. There’s much discussion about whether a bunch of new models could get Tesla back to its high targeted growth rates, or if that could only happen from legit Full Self Driving and robotaxis, but the fact of the matter right now is that Tesla needs to move more vehicles and it keeps exploring more demand levers in order to do that (while also cutting costs).
I also wonder if this is a sign that Tesla is getting ready to roll out its updated Model Y (like the updated Model 3 that is now on the market). If it is going to announce that soon, it’ll probably want to move out as many of the first-gen Model Ys it has on hand as soon as possible. However, really, I think the simpler, more boring matter of Tesla needing to stimulate more sales on an ongoing basis is the core story.
From a consumer’s perspective, though, if you are thinking about getting a Model Y, this 0.99% financing rate on top of already low prices has got to be very appealing! I would be extremely tempted to jump on it if I wasn’t much more interested in the refreshed Model Y. And, even though a refreshed Model Y will see a consumer demand bump and probably increased sales for a bit, I do assume Tesla is more or less at its natural limits with demand for this model and would count on price cuts and low financing a year or so after this Model Y “Juniper” is released. We’ll see!
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Basically, Tesla is subsidizing the financing. Confused yet? With federal interest rates at 5.3%, banks can't come in and offer 0.99% financing to consumers. However, shifting money around a bit, Tesla can subsidize the financing instead of doing the usual vehicle price cuts (or can do both).
What is the .99 interest rate on a Tesla? ›
Following this, a similar initiative has been launched in the United States with the introduction of a new 0.99% APR financing option for the Model Y. This offer is valid until May 31. According to Tesla's website, the terms require a $4,250 down payment and a 72-month loan period.
What is the lowest APR for Tesla financing? ›
The best Tesla financing rates on their website are at a starting purchase loan APR of 6.34% for those with the highest credit scores. There is no minimum credit score required for financing a Tesla and you can get a loan as long as you are in eligible states.
How to get a lower APR for Tesla? ›
Tesla partners with big banks like Wells Fargo and US Bank for financing. A good credit score (720 or higher) or a large down payment (typically 20%) make it more likely that you'll get approved for a lower rate. US Bank's lowest auto loan rate as of February 2023 is 6.86%. Loan terms are typically 36-72 months.
How long is a Tesla 0.99 APR? ›
New Loan Rates:
60-month loan terms: The APR remains unchanged at 0.99% Estimated Monthly Payment After Federal Tax Credit: $595/mo. 72-month loan terms: The APR increases to 1.99% Estimated Monthly Payment After Federal Tax Credit: $518/mo.
Can you negotiate the purchase price at Tesla? ›
Tesla doesn't price cars the same way other automakers do.
Dealerships will offer incentives, charge additional fees, cut deals or haggle over options and financing, but the MSRP stays steady.
What is the interest rate for Tesla Model Y 2024? ›
Tesla is offering a 1.99% APR financing deal on the Model Y until August 31, 2024. The Model Y accelerates from 0-60 mph in 6.5 to 3.5 seconds, with a range of 279 to 320 miles.
What does 99 percent APR mean? ›
An APR (Annual Percentage Rate) of 99.9% on a loan means that the borrower will be charged an interest rate of 99.9% per year on the amount borrowed. This means that for every $100 borrowed, the borrower will have to pay back $199.90 in total over the course of a year.
Can I leave my Tesla at 100%? ›
You can always leave your Tesla or any other electric car plugged in even if it's fully charged. They have software that stops the charge. In fact many can be,set to shut off at lower limits with 80% being a good level to pick.
Is Tesla insurance more expensive? ›
How Much Does Tesla Insurance Cost? Full-coverage car insurance for 2021 Tesla vehicles costs an average of $4,098 per year or $352 each month. This makes Tesla auto insurance premiums approximately 53% pricier than for the average vehicle with a full-coverage policy.
Depending upon which vehicle you intend to lease, you should expect to make a down payment ranging from $4,500 to $7,500. Annual mileage limits range from 10,000 to 15,000 miles per year. You can use the Tesla lease calculator on any Tesla model page to calculate your monthly lease payment.
How to lower Tesla payments? ›
Contract Purchase, also known as a PCP, allows you to keep your monthly payments lower by deferring a significant proportion of the cost to an optional final payment at the end of the agreement.
Is it possible to negotiate a lower APR? ›
If you're unhappy with your credit card's annual percentage rate (APR), securing a lower one may be as simple as asking your credit card issuer. The issuer may decline your request, but it never hurts to ask.
How can I avoid APR rates? ›
If you'd like to avoid paying interest on your credit card, you have two options. You can pay off your balance before your grace period ends, or you can apply for a credit card that offers a 0 percent intro APR on purchases for a time.
Can a dealership lower the APR? ›
Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers may not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.
What is the effective interest rate for Tesla? ›
Tesla (TSLA) Effective Interest Rate on Debt % : 3.07% (As of Jun. 2024)
What is the financing rate for Tesla in June 2024? ›
From June 6th through the 16th, 2024 Tesla Model 3s are eligible for 1.99% financing for 36 months. Tesla also has 48 and 60-month options at 4.99%. The rate on every other Tesla remains 6.39% on loans up to 72 months.
Does Tesla offer low interest rate incentives? ›
Model 3 Long Range and Performance can also enjoy low interest rates of 0.98% and 1.18% respectively. Customize your Model 3.
What is the Tesla promotion for June 2024? ›
Customers who take delivery of a new Tesla vehicle between June 24, 2024 and September 30, 2024 may qualify for transferring Full Self-Driving (FSD) (Supervised) from their current vehicle to their new vehicle.
