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 financing 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 up to $200/month 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%.
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
California drivers looking to purchase a new Tesla have access to a variety of federal and state programs created to help offset the cost of an EV. The federal EV tax credit introduced by the Inflation Reduction Act, the Clean Vehicle Rebate Project, the Clean Vehicle Assistance Program, and a host of other local incentive programs can help you save money on your new Tesla.
However, each of these programs has its own complicated set of vehicle and driver eligibility requirements, and dealerships and traditional auto lenders aren’t willing to risk helping you sort through each program in order to factor your potential rebates directly into your loan.
Instead, to get your savings, you’ll end up having to go through all the complex fine print yourself before you can even apply to these programs, then wait a full 6-18 months before you see any of the money. Meanwhile, you’re left paying back your traditional loan out of pocket, without help from the programs you qualify for.
The Advantages of an EV Climate Loan from EV Life
EV Life is the modern solution to EV auto loans. Rather than waiting months and months to see any savings, it helps you find and use your tax credits, rebates, and incentives to finance your electric vehicle purchase right away. The process is simple. EV Life will:
· Identify your savings. EV Life will help you go through each federal, state, and local program to ensure you get all the money you qualify for.
· Apply your savings directly to your purchase. EV Life will prequalify you in minutes for your incentives, then set you up with an EV Climate Loan to finance the purchase of your new Tesla. The difference? EV Life immediately factors in your anticipated EV tax credits and rebates as an incremental down payment. This reduces your loan payments by as much as $200/month right from the start, and can save drivers an average of $10,000 on their electric vehicle purchase.
If you’re in the market for an electric vehicle, don’t waste time and money with traditional auto lenders or manufacturer loans. Get pre-qualified for an EV Climate loan with EV Life and use your incentives to lower your monthly cost from the very first payment.
Find out how much you can save today.
Get Pre-Qualified now.