Tesla Loan vs Self-Arranged Loan: (Upvoted By Reddit)

If you are interested in buying a Tesla, you may wonder whether you should use Tesla’s own financing or arrange your own loan from a different lender.

Here are some pros and cons of each option to help you decide.

Factor	Tesla Financing	Self Arranged Financing
Interest rate	Competitive	Variable
Loan term	Fixed	Negotiable
Down payment	High	Low
Convenience	High	Low
Flexibility	Low	High
Control	Low	High

Tesla Financing

Tesla financing is a service that allows you to apply for a loan from one of Tesla’s partner banks, such as Bank of America, Wells Fargo, or US Bank.

You can fill out a short credit application on Tesla’s website and receive a loan offer within minutes. The interest rate and loan term will depend on your credit score, income, and the vehicle model you choose.

Some of the benefits of Tesla financing are:

1. Convenience: You can apply for a loan online and get approved quickly without having to visit a bank or dealership.

2. Competitive rates: Tesla claims to offer competitive interest rates that are lower than the national average for auto loans.

3. Rate match: Tesla may match the interest rate of another lender if you provide proof of approval within three days of your order date.

4. Incentives: You may qualify for electric vehicle incentives from your state or local government if you finance with Tesla.

Some of the drawbacks of Tesla financing are:

1. Limited options: You can only choose from the lenders that Tesla partners with, which may not offer the best rates or terms for your situation.

2. High down payment: You may have to pay a high down payment depending on the vehicle model and your credit profile. For example, for a Model 3 long-range, you may have to pay around $21,000 as a down payment if you finance $40,000 at 2.74%.

3. No prepayment penalty: You can pay off your loan early without any penalty, but you will not receive any interest savings or rebates.

Self Arranged Financing

Self-arranged financing is when you obtain a loan from a lender of your choice, such as a bank, credit union, or online lender.

You can shop around for the best rates and terms that suit your needs and budget.

You can also use online tools like Credit Karma or Jerry to compare different loan offers and find the best deal.

Some of the benefits of self-arranged financing are:

1. More choices: You can choose from a wider range of lenders and loan products that may offer better rates, terms, or features than Tesla financing.

2. Lower down payment: You may be able to pay a lower down payment or no down payment at all depending on the lender and your credit profile.

3. More flexibility: You may be able to negotiate the loan terms, such as the interest rate, loan term, monthly payment, or fees with the lender.

4. More control: You can decide when and how to pay off your loan without having to follow Tesla’s guidelines or policies.

Some of the drawbacks of self-arranged financing are:

1. More hassle: You may have to spend more time and effort researching and applying for different loans and comparing their offers.

2. More paperwork: You may have to provide more documentation and information to the lender and Tesla to finalize the loan and purchase process.

3. More risk: You may face higher interest rates or fees if your credit score drops or if the market conditions change before you close the deal.

Conclusion

There is no definitive answer to whether Tesla financing or self-arranged financing is better for buying a Tesla. It depends on your personal preferences, financial situation, and goals.

You should weigh the pros and cons of each option and compare their offers carefully before making a decision. Here is a summary table of some key factors to consider: