New Financing Options Available for the Model S “D” Debut

Posted on November 05, 2014 by Matt Pressman

GUEST POST: Jon Krumdick, VP of Consumer Lending & Business Development at USAlliance Federal Credit Union

In the early days of the Model S, only a few financial institutions (e.g., U.S. Bank and Wells Fargo) partnered with Tesla to provide financing options. Other banks and credit unions viewed the Model S as too big a risk to finance because it wasn’t mainstream enough. Boy, were they wrong!

Some of us in the auto financing business took a second look and decided to find out more about the Model S and the people who buy the car. As a consequence, future purchasers of the Model S, and now Model S "D" buyers, have a much wider array of nationally competitive financing options for their new vehicle.

 

Local banks and credit unions may offer low financing rates that are coupled with a variety of terms and conditions. Yet, because each Tesla buyer has unique financing requirements, your local institution may not be able to provide the right financing options for your needs. Therefore, when you consider financing options for the Model S/D, the Internet is your best friend. In fact, the Tesla Motors Club forum has several threads going that list specific financial institutions and their staff members that have provided great rates and service…and even the names of some that didn’t.

Before you get on the web and start submitting credit applications to various institutions, take the time to consider the following:

  1. How much is the total build price for my Tesla model?
  2. How much will my state sales tax be based on the total build price?
  3. How much cash am I willing or able to put down on my purchase?
  4. How much of a monthly payment can I afford/want?
  5. How long do I plan on keeping my Tesla?
  6. What is my credit score?

The answers to the above will help you prepare for the questions you will be asked, or should ask if not requested of you, to determine what the institution is willing or able to do to meet your financing needs.

You can now get rollin’ with your search. Start by speaking with your current bank(s) or credit union(s). Due to the relatively high cost of a Model S/D, some smaller financial institutions may not finance the full dollar amount of your request or provide the most desirable terms due to perceived risk factors such as a higher dollar request, loan-to-value (LTV) restrictions on higher dollar amounts and the fact that some insurance companies consider the Tesla an exotic vehicle.

Keep in mind that rate may not always be the most important factor in your search. Rate will affect how much you pay over the life of the loan for borrowing the money, but it may not be the true indicator of cost if you can put little or no money down to secure your loan. Today’s market rates make it desirable for some buyers to finance as much as they can, in most cases up to 120% of the build price, and keep their cash in the market. If you have this luxury, consult your financial advisor before making any decisions on your own. Your advisor can be your second best friend…right behind the Internet!

Once you decide which institution is right for you, apply for financing about 30 to 60-days before your delivery date. Some buyers may choose to be pre-approved for financing prior to placing their order. This is okay, but some financial institutions may require a new credit report on you after a 30 or 60-day window of time if your loan has not yet been finalized. Keep the institution’s representative informed of any changes in your delivery date so he or she can speed up or delay the process if needed. Finalize your loan and take delivery. You are now on the road of fully-electric driving. Enjoy…and don’t forget to share your financing experience with everyone on your favorite Tesla blog or forum.

Jon Krumdick is the Vice President of Consumer Lending & Business Development at USAlliance Federal Credit Union in Rye, NY. USAlliance has helped hundreds of Tesla buyers secure appropriate financing for their loan needs.

Posted in Financing, Model S, Tesla, tesla news


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