What You Should Know About Tesla Financing

Despite many legacy brand automakers jumping into the EV space and releasing new electric models, Tesla continues to dominate the electric car market. The Tesla Model 3 and its sport utility cousin, the Model Y, are still the two most popular EVs in the country by a large margin. And while the price has gone down recently for both cars, Teslas are still on the pricier side of the spectrum for many drivers. So, if you’re like most potential Tesla buyers, you will probably look to finance your Tesla purchase with a loan rather than pay the sticker price upfront.

You will also want to take advantage of the numerous state and federal tax credit, incentives, and rebates available to encourage drivers to purchase eligible EVs like the Tesla Model 3 and Model Y instead of a traditional gas-guzzler.

In this article, we’re going to compare some of the Tesla financing options available through Tesla and other auto loan companies and see how EV Life’s EV Climate Loan can help applicants take advantage of tax credits, incentives, and rebates to save money on their Tesla purchase and lower their monthly loan payment compared to traditional lenders.

How Financing Through Tesla Works

Tesla offers a variety of auto loan financing options for new and used Tesla models through outside lenders. Drivers can apply for financing directly on the Tesla website during the car-buying process by filling out a credit application in their Tesla Account after placing an order.

When financing your electric car purchase through Tesla, the company essentially acts as a middleman between you and the auto lender when you order your new vehicle. Tesla’s lending partners, which include US Bank and Wells Fargo, among others, offer standard car loans for all Tesla models, including Model Y, Model 3, Model X, and Model S, with loan terms ranging from 24 to 72 months.

Tesla financing is only available in certain states, and the company does not publish a minimum income or credit score required to qualify for financing, but like most traditional loans, borrowers in the 26 available states with higher credit scores and larger down payments usually have a better chance of getting a lower interest rate.

Tesla Financing does not disclose most of its loan terms up front, but research indicates that rates start around 5.59% APR for the purchase of new Tesla electric vehicles. There is no application fee, and down payments can range between 0% and 50%.

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Traditional Auto Lending Options for Tesla Financing

In addition to Tesla financing through the manufacturer, there are also many traditional auto lenders offering financing for Tesla EVs. However, the vast majority of traditional auto lenders approach electric car financing the same way they do gas-powered vehicles.

Third-party lenders like banks, credit unions, and auto lending companies have a range of financing terms to purchase a Tesla depending on your income, credit score, and down payment amount.

• Income. Your income is a primary factor that lenders consider when assessing your ability to repay your loan. Lenders typically consider your debt-to-income ratio (DTI) when determining the maximum loan amount, which compares your monthly debt obligations (including the potential auto loan payment) to your gross monthly income. Lenders usually prefer borrowers with lower DTIs, as it indicates a lower risk of default, and will be more inclined to approve your loan application if your income meets their minimum requirements.
• Credit score. Your credit score will play a significant role in the loan approval process. Typically, higher credit scores improve your chances of securing the lowest interest rates on your loan.
• Down payment. Your down payment will directly affect the loan-to-value (LTV) ratio, which is the percentage of the car's value that you are borrowing. Higher down payments mean less risk for lenders and generally result in more favorable loan terms, including lower interest rates.

But while so-called “captive loans” through car manufacturers and traditional auto financing options have a range of standard loan terms to choose from, none of them help drivers take advantage of available EV incentives to immediately lower the cost of their loan payment.

The solution? The EV Climate Loan from EV Life.

Available EV Tax Credits, Rebates, and Incentives

$7500 Federal EV Tax Credit is now an Instant Rebate

Thanks to 2024 tax credit updates, the $7500 EV tax credit is now available to eligible buyers as a discount at checkout through Tesla to qualified buyers on select vehicles including:

State & Local Incentives

• Colorado Electric Vehicle Tax Credit. The newly expanded Colorado EV tax credit offers all Colorado residents who purchase an electric vehicle or plug-in hybrid electric vehicle with an MSRP of up to $80,000 a tax credit of up to $5,000. Effective January 1, 2024, new electric vehicles priced under $35,000 MSRP are eligible for an additional $2,500 state tax credit.
• The California Clean Cars 4 All program helps lower-income Californians by offering cash incentives of up to $9,500 to retire their older gas-powered vehicles and invest in EVs.
• Other State & Local Incentives. There are also plenty of state and local EV incentives available. Check EV Life’s Savings Calculator to see what you qualify for.

How to save big on Tesla financing with EV Life

At EV Life, we’re on a mission to make it easier and more affordable for anyone to save on driving electric–including you!

With a free EV Life account we help you:

1. Maximize your tax credits and rebates. We prequalify your incentives up front and help you apply for all your incentives pre- and post-purchase with our easy-to-use “Turbo Tax-style” incentive filing tools.
2. Prequalify for low rate EV loans. Based on the EV you want and your credit score, score a prequalified loan offer that beats traditional loan payments.
3. Bundle charging. EV Life can also help you get an instant quote for a home charger + installation – and you can even bundle it into your EV loan.

Open a free account today and start saving on your EV.