Tesla Now Offers 7-Year Loan Terms on All Its EVs: Here's What You Need to Know

Tesla is introducing seven-year loans to lower monthly payments on its electric vehicles amid high-interest rates. Introducing these longer loans as part of its new financing options seeks to provide customers with greater financial flexibility during challenging economic times.

Tesla Introduces New Financing Options

Amidst its impressive delivery rates, Tesla is achieving an all-time high in vehicle production. Notably, the electric vehicle manufacturer has shifted its approach towards inventory retention.

Previously, Tesla had kept a limited number of Model 3 and Model Y cars in stock. However, the situation has evolved, and distribution facilities now have access to a substantial inventory of submissions, indicating a shift in the company's inventory management strategy.

In addition to offering discounted Model 3s priced as low as $37,490 at various delivery points, Tesla is also introducing a new enticing financing option. Electrek reported that this new financing plan aims to attract a broader range of potential buyers by providing cheaper or more affordable monthly rates.

Considering the projected interest rate, opting for a prolonged term to finance a Tesla might not be the most financially wise decision. With an estimated 6.39% Annual Percentage Rate (APR), the base Model 3 would cost around $551 monthly. After a $4,500 down payment, the total payments would exceed $46,000 by the end of the loan term.

Is It Worth It?

While extended, CBT News reported that high-interest auto loans may be advantageous for automakers due to their impact on reducing consumers' monthly payments, but they come with significant drawbacks. The higher cost of these long-term loans stems from the high-interest rates and the inherent risk of default for borrowers.

Having a diverse array of options can be pretty beneficial. However, the availability of an extended seven-year or 84-month payment plan has sparked discussions about the affordability of certain Tesla vehicles.

While some appreciate the flexibility these extended terms offer, others argue that if one must resort to such prolonged financing to purchase a car, it might signal that the vehicle's price is beyond their means, especially when factoring in the interest rates.

Despite achieving a record-breaking delivery of 466,140 vehicles in the three months ending June, HT Auto reported that Tesla had encountered a challenge in matching sales to its impressive production rate for the past five quarters. The situation was further complicated by a notable drop in share prices following Elon Musk's remarks during a recent call.

Musk has expressed concerns about the impact of rising interest rates, saying that the company may need to continuously reduce prices to adapt to the evolving financial landscape. This uncertainty surrounding interest rates and their potential consequences on pricing strategies has become a critical point of discussion for Tesla and its investors.