If you saw any of my earlier posts or are familiar with the Tesla you know its a crazy expensive car at about $100K. People will have all different ways of dealing with that and it will depend on their personal situations. I decided to finance a portion of the car to take advantage of low new car interest rates. I’ve been doing business with USAA for years and they have a 1.99% interest rate for a 5 year term so that’s what I was thinking about doing.
But Tesla also offers financing through some partners and when you finance through them they provide a Resale value guarantee which guarantees a buyback price between months 36-39. They have a formula for calculating that buyback price:
- 50% of the cost of the base 60 kWh Model S
- 43% of the cost of all the options you add on top of that
Doing that math for the car I ordered gives this:
- 50% x $69,900 = $34,950
- 43% x ($92,800-$69,900) = $9,847
So the total buyback price 3 years from now is $44,797 according to the basic rules. But there is an adjustment for more than normal usage which they define as “15,000 miles per year”. I drive 35K miles per year so i’m not normal according to Tesla (my wife would agree too). For each mile over 15K they take down the value by $0.25, so doing that math:
- (35K – 15K) x 3 x $0.25 = $15,000
For me the buyback price 3 years from now is $44,797 – $15,000 = $29,797 or 32% of the original value.
The other consideration is that Tesla financing is at a slightly higher rate. Current reports put it at about 2.24%, the difference is negligible though.
My logic was this:
- I already know/trust/work with USAA and have for a few decades. Wells Fargo I worked with once and would prefer not to again, they’re pretty old-school.
- If Tesla has gone under 3 years from now the guarantee may not apply (nothing to support it) and I don’t know how any personal guarantee from Elon would hold/work but with 40,000+ Teslas out there at a $40K buyback each thats a value of $1.6B. Perhaps Elon could personally cover that but is that still true if Tesla goes south? Not sure.
- If Tesla is in good shape then my car is going to be worth more than $30K to me and perhaps to someone else too. I plan on keeping it for a long time and i’m not interested in getting rid of it in 3 years.
- I can afford the $30K buy back risk.
The net result is I decided on 3rd party financing. Before you can start the financing you need the final purchase numbers. I had to push several times to get Tesla to the point where I could get the numbers for financing. I don’t like leaving things until the end and to me starting financing, money transfers etc. 3 weeks from delivery seemed tight given times to move things around, paperwork and potential hangups. I finally got the information about 3 weeks prior to delivery which seems to have been about the time they would have been ready pushing or not.
The next issue was that USAA has its loan application process online, but when you go to pick the car type, Tesla’s not an option:
So next was a process of calling USAA and explaining the situation. They did something behind the scenes and I picked “I don’t know the car type yet” and then proceeded. From there the process was simple and they sent instructions for the dealer (Tesla) to use to receive payment. I forwarded that to Tesla and they said “we are very familiar with the USAA dealer instructions” which is odd since USAA still doesn’t list the type despite several Tesla’s being financed and insured through them.
Insurance was interesting: the Tesla for me is $714/year. My 2011 ML-350 is $974. Evidently a good part of the difference is due to a 3 year new car discount.
After Tesla recorded the USAA piece they updated the “My Tesla” portal with the payment details:
The final option is to pay the balance (rest of my downpayment) and there are 2 options:
- EFT – electronic check where you need bank routing number and account number.
- Wire transfer – they provide wire transfer instructions
I asked Tesla about 6 weeks ago if it was possible to make an additional deposit on the car and, if so, how. I never got an answer but now it’s clear. Hopefully this blog will help someone else understand the process and options in the future.
Anyway, next week I finish the payment process and then payment and insurance are all set. Tesla just needs to get past the whole “We have begun sourcing parts for your Model S.” stage they’ve been in since the day I ordered the car and get on with building and delivering it.
Brian H said:
The “status” is likely unreal; many owners had that until well after delivery!
No doubt. But it was better than nothing (although not much).
David Shuman said:
Thanks so much for the walk through. As well as I also love USAA, as a 2017 update, currently USAA only offers 1.99% financing if you purchase through TrueCar. You cannot buy a Tesla through Truecar, therefore your rate is 2.49%. Tesla is providing 1.49% for my purchase, utilizing Chase as the approved bank. Therefore, I’m going with the lowest interest rate with Tesla’s financing through Chase.
That’s a shame. Did you call them and explain the car you want isn’t available on TrueCar? Still, at 1.49% that’s better than USAA anyway. For My Model 3 I have a good bit of the expected price in Tesla stock (which is a bit of a yo-yo), the rest I was going to do a low rate loan on for a short period so good to know about USAA.