Tesla Financing

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diehard
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Tesla Financing

Post by diehard » Tue Sep 12, 2017 9:49 pm

I've made the decision to go fully green with my next car and go with a Tesla Model X for a variety of reasons. Now I have to decide on how to pay for it. I have been told by the sales guy that Tesla offers financing as low as 0.99% APR (depending upon your credit rating). I always thought that APR stood for "above prime rate" but they tell me that in the industry it means "annual percentage rate." They will not tell me what my rate will be until I submit an application. So, since I am getting over 1% in the money market at Capital One, this looks like free money (I have a great credit rating). Do any of the Bogleheads out there have experience with Tesla's financing?

mega317
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Re: Tesla Financing

Post by mega317 » Tue Sep 12, 2017 11:54 pm

Well your 0.21% arbitrage will earn you 14 dollars the first month, and will gradually decrease from there. If I did the math right it's less than $500 over a 60 month loan. If you're buying an 80k car that's got to be an incalculable fraction of your income.

I'm not saying don't do it but if you're just going to leave 80k in an online savings account it's not worth the time. Smarter people than me can do some other math for you, but you'd get more benefit if you want to cash flow the car by paying down the principle of your mortgage, for example.

Edited to add more thoughts

Valuethinker
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Re: Tesla Financing

Post by Valuethinker » Wed Sep 13, 2017 3:42 am

mega317 wrote:
Tue Sep 12, 2017 11:54 pm
Well your 0.21% arbitrage will earn you 14 dollars the first month, and will gradually decrease from there. If I did the math right it's less than $500 over a 60 month loan. If you're buying an 80k car that's got to be an incalculable fraction of your income.

I'm not saying don't do it but if you're just going to leave 80k in an online savings account it's not worth the time. Smarter people than me can do some other math for you, but you'd get more benefit if you want to cash flow the car by paying down the principle of your mortgage, for example.

Edited to add more thoughts
Does that calculation include tax -- ie gives post tax interest income?

I entirely agree that the only reasons to do this are:

- to avoid liquidation of investments that would cause a taxable event

- to maintain investment programme into tax deferred accounts with annual allowances that can be lost if not used

- to repay another, higher interest rate, debt

In the case of merely investing the money in a taxable account, you have to be *sure* your returns (post tax) will exceed cost of borrowing. Otherwise what one has done is take a leveraged position-- most of us are not comfortable with that and do not advise it due to the risk of margin call or carrying a debt through a long bear market. The exceptions are usually long term personal debt: mortgages and (low interest rate) student loans.

That's basically impossible to guarantee your post tax return. You could invest the money in equities and have a -20% return (or minus 50%). You could invest it in US Treasury bonds and have about a 2% return, but of course -10% is possible. However US Treasury bonds are about as perfectly safe an investment as you can get.

Coachrhino11
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Re: Tesla Financing

Post by Coachrhino11 » Wed Sep 13, 2017 5:11 am

diehard wrote:
Tue Sep 12, 2017 9:49 pm
I've made the decision to go fully green with my next car and go with a Tesla Model X for a variety of reasons. Now I have to decide on how to pay for it. I have been told by the sales guy that Tesla offers financing as low as 0.99% APR (depending upon your credit rating). I always thought that APR stood for "above prime rate" but they tell me that in the industry it means "annual percentage rate." They will not tell me what my rate will be until I submit an application. So, since I am getting over 1% in the money market at Capital One, this looks like free money (I have a great credit rating). Do any of the Bogleheads out there have experience with Tesla's financing?
Dime a dozen out where I live and for whatever reason most here drive like entitled little butts, cutting you off, doing dangerous and stupid things. Not saying you will. That's a lot of cash to "go green". Each to their own. Many choices in the green line up now much cheaper than Tesla. We tend to pay our cars off so fast interest rates don't even matter. We generally put nice down payment and pay off car within 6-9 months it seems. Just hate paying on a car for years since they depreciate so fast. My wife helps balance us out driving a Prius and I have all the fun driving my Jeep, certainly not green. :D

Coachrhino11
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Re: Tesla Financing

Post by Coachrhino11 » Wed Sep 13, 2017 5:12 am

And I'll admit Jeeps are dime a dozen as well out here but they sure are fun. Nothing like being able to go off road, on road with convertible.

mmcmonster
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Re: Tesla Financing

Post by mmcmonster » Wed Sep 13, 2017 5:17 am

diehard wrote:
Tue Sep 12, 2017 9:49 pm
Do any of the Bogleheads out there have experience with Tesla's financing?
When I bought my Model S in 2014, they didn't finance at all. They did hook me up with a credit union that they had a lot of dealings with. In 3/2014 I got a rate of 1.49 APR, which was quite good at the time.

I still have that loan. As you mentioned, it's free money compared to time in the market.

The Wizard
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Re: Tesla Financing

Post by The Wizard » Wed Sep 13, 2017 5:17 am

I accumulate funds for my next vehicle purchase in the Total Stock Market fund in my taxable account.
Taxes on growth there are 15% there vs 28% for a savings account.
If the market is down when I need to buy the next vehicle, I have various options, but I've never used dealer financing...
Attempted new signature...

Coachrhino11
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Re: Tesla Financing

Post by Coachrhino11 » Wed Sep 13, 2017 5:25 am

The Wizard wrote:
Wed Sep 13, 2017 5:17 am
I accumulate funds for my next vehicle purchase in the Total Stock Market fund in my taxable account.
Taxes on growth there are 15% there vs 28% for a savings account.
If the market is down when I need to buy the next vehicle, I have various options, but I've never used dealer financing...
This is fantastic idea and most likely route we begin going. Also, for OP, I generally go with my credit union. They gave me 90 days no payment, 2.29ish. We generally get longest loan in case something happened but like I said above pay off very quickly regardless of rate.

dcd72
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Re: Tesla Financing

Post by dcd72 » Wed Sep 13, 2017 6:52 am

diehard wrote:
Tue Sep 12, 2017 9:49 pm
I've made the decision to go fully green with my next car and go with a Tesla Model X for a variety of reasons. Now I have to decide on how to pay for it. I have been told by the sales guy that Tesla offers financing as low as 0.99% APR (depending upon your credit rating). I always thought that APR stood for "above prime rate" but they tell me that in the industry it means "annual percentage rate." They will not tell me what my rate will be until I submit an application. So, since I am getting over 1% in the money market at Capital One, this looks like free money (I have a great credit rating). Do any of the Bogleheads out there have experience with Tesla's financing?
Unless your house is fully solar, and you'll only charge your Tesla there, you're not going "fully green," you're just changing the fossil fuel you use to power your car. Look, if you can afford it, there's no reason not to buy a kick-ass car if you want one. No need to rationalize it with shaky environmental justifications.

DanMahowny
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Re: Tesla Financing

Post by DanMahowny » Wed Sep 13, 2017 7:31 am

Tesla vehicles are powered by coal. Nothing "green" about that.

Love the car tho. They are great- I did a test drive and was fully impressed.

Valuethinker
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Re: Tesla Financing

Post by Valuethinker » Wed Sep 13, 2017 7:46 am

DanMahowny wrote:
Wed Sep 13, 2017 7:31 am
Tesla vehicles are powered by coal. Nothing "green" about that.
Why do you say that?

Coal is less than 50% of US electricity generation by kwhr.

In California, for example, it's below 30%.

In the Pacific NW it is essentially 0 per cent.

https://www.scientificamerican.com/arti ... ily-clean/
As it stands, a conventional Toyota Prius hybrid vehicle, which burns gasoline when its batteries are not engaged, and the all-electric Nissan Leaf produce roughly the same amount of greenhouse gas pollution: 200 grams per mile, according to data from the U.S. Department of Energy.
That's an average across the U.S. In California, which has one of the highest proportions of clean electricity in the country, the electric vehicle would produce only 100 grams per mile, half that of the hybrid. Ditto for Texas and even Florida. But in the Midwest and South, where coal fuels the bulk of electricity generation, a hybrid produces less CO2 than an electric car. In fossil fuel–dependent Minnesota an electric car would actually emit 300 grams per mile of greenhouse gases. As a result, some researchers suggest that a regional approach to clean vehicle standards makes more sense than national standards that effectively require electric cars across the board. Minnesota could go for hybrids and California could go for electric vehicles.
Note though the comparison is with a Toyota Prius. If your comparison is with any normal ICE engined sports car, you are cleaner with a Tesla.

If you source your electricity through your own solar panels, or buy renewable energy (where profits from your money are reinvested in new renewable capacity as opposed to just buying permits) then of course the pollution content is much lower.
Love the car tho. They are great- I did a test drive and was fully impressed.
Well you can rest at ease about your first objection. The US electricity system is decarbonizing. To date, most of that is the switch from coal to natural gas. Renewables are, however, growing quite quickly.

http://shrinkthatfootprint.com/electric-cars-green

takes the objection by looking at international evidence.
In coal heavy India, China, Australia and South Africa electric cars using grid power are just like typical gasoline vehicles, in the 25-30 MPGUS range. In the UK, Germany, Japan and Italy they are as good as the best petrol hybrids, in the 45-50 MPGUS range. But in low carbon supply places like France, Brazil, Switzerland and Norway they are in a different league, averaging well beyond 100 MPGUS for equivalent emissions.

It is important to remember that the electricity you get might not match your national average for any number of reasons. The night time intensity might vary, you might have solar panels or live in a country like the US, where the grid is actually a bunch of separate grids. For example in Colorado a grid powered electric car is equivalent to about 30 MPGUS, whereas in California it’s up around 70 MPGUS.

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just frank
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Re: Tesla Financing

Post by just frank » Wed Sep 13, 2017 8:11 am

@Valuethinker...the US grid average number for 2017 is 33% Coal energy, not 50%. California shut down its last coal plant years ago...its at 0%. :mrgreen:

Jack FFR1846
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Re: Tesla Financing

Post by Jack FFR1846 » Wed Sep 13, 2017 8:35 am

Massachusetts also just shut down it's last coal fired power plant. But just as California does, we also buy electricity on the open market, not just from generators located in state. We buy quite a bit from Quebec Hydro. Coal fired electricity goes into the grid just as renewable energy goes into the grid. I think of it as a big bucket with hoses coming in from coal, oil, natural gas, solar, wind. We take the output from a hose that comes from the bottom of the bucket. Unless we are completely off the grid, we're all using coal generated electricity.
Bogle: Smart Beta is stupid

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just frank
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Re: Tesla Financing

Post by just frank » Wed Sep 13, 2017 9:13 am

Jack FFR1846 wrote:
Wed Sep 13, 2017 8:35 am
Massachusetts also just shut down it's last coal fired power plant. But just as California does, we also buy electricity on the open market, not just from generators located in state. We buy quite a bit from Quebec Hydro. Coal fired electricity goes into the grid just as renewable energy goes into the grid. I think of it as a big bucket with hoses coming in from coal, oil, natural gas, solar, wind. We take the output from a hose that comes from the bottom of the bucket. Unless we are completely off the grid, we're all using coal generated electricity.
That's a bit of an overstatement...we actually have several separate buckets with relatively little exchange between them. North America is actually split into a number of separate grids covering different regions....I am on the Mid-Atlantic grid that stretches from NJ westward through PA, OH, IN and includes Chicago. Your New England grid includes Quebec and Nova Scotia.

In general these sub-grids are NOT synchronized, so exchanging power between them is difficult....it needs to be converted to DC and then back to AC, and this process is a bit more expensive than just running a HV AC power interconnect. The volume of exchange between these grid is quite a bit smaller for this reason. So YOU can buy Quebecois Hydro....I cannot in practice, despite just being a few hundred miles away.

Image

And that said...the amount of power exchanged is all accounted for....and easily propagated in a spreadsheet. So it IS possible to say how much a given grid gets from coal. California reports its at zero.

Another corollary: when I buy wind power, I buy it from a generator on my grid...in western PA. They literally put more power onto the grid I am drawing from, and my money goes to them for that. I could also 'get' wind power from Texas....its a lot cheaper (almost zero upcharge). In that case, wind operators are selling the power to someone on the TX grid AND getting a credit that they sell to my utility....no electrons are actually transferred between the wind turbine and my grid. The reason that the TX wind power is cheap to me...because the TX grid is already saturated with wind...its hard to add more and transmit what they have now. I would rather send my $$ to an unsaturated wind market to develop more turbines on my local grid.

If we had one national grid...then we would have one bucket. We don't.

mega317
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Re: Tesla Financing

Post by mega317 » Wed Sep 13, 2017 9:18 am

Valuethinker wrote:
Wed Sep 13, 2017 3:42 am

Does that calculation include tax -- ie gives post tax interest income?
Haha nope I can't believe I skipped that part.

Valuethinker
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Re: Tesla Financing

Post by Valuethinker » Wed Sep 13, 2017 9:23 am

DanMahowny wrote:
Wed Sep 13, 2017 7:31 am
Tesla vehicles are powered by coal. Nothing "green" about that.

Love the car tho. They are great- I did a test drive and was fully impressed.

https://greentransportation.info/energy ... icity.html

good data. Turns out if you are 100% coal fired in your electricity, then that's equivalent to a 30 mpg gasoline powered car. I doubt many sports cars do better than that.

If it is 100% Natural Gas fired, then 54 mpg.

All other sources of electricity generation in the USA are going to do better than that. However in Hawaii there is quite a bit of fuel-oiled generation, so a Tesla in Hawaii would be relatively dirty. It also leads the US states in terms of solar power installations-- not surprising given the retail price of electricity is well over 30 cents/ kwhr.

Valuethinker
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Re: Tesla Financing

Post by Valuethinker » Wed Sep 13, 2017 9:44 am

Jack FFR1846 wrote:
Wed Sep 13, 2017 8:35 am
Massachusetts also just shut down it's last coal fired power plant. But just as California does, we also buy electricity on the open market, not just from generators located in state. We buy quite a bit from Quebec Hydro. Coal fired electricity goes into the grid just as renewable energy goes into the grid. I think of it as a big bucket with hoses coming in from coal, oil, natural gas, solar, wind. We take the output from a hose that comes from the bottom of the bucket. Unless we are completely off the grid, we're all using coal generated electricity.
As per just Frank, it is quite complicated.

Yes electric power is electric power-- sources are all blended BUT (you can tell whose father worked for an electric utility ;-))

- time of day matters, and whether you are the marginal kwhr of demand matters

generally renewables squeeze out all other sources of power. Because renewables are fixed cost, they bid into power markets at zero (and take whatever price clears the market -- negative power prices actually do happen, see nuclear). Nuclear has the same characteristic because it is quite difficult to curtail nuclear power plants (take them off the grid). You get the negative power prices (at the wholesale level) because for example Ontario is c. 60% nuclear and has to sell power on the grid at a time when the grid does not want it.

This is why you get Hydro Quebec power. HQ runs a big surplus much of the year on its hydro electric generation and so it sells it to New England and New York State.

So the time of day that you charge then becomes quite important. I tend to run my washing machine and dryer on weekends in daytime. Demand is higher than after 10pm, but solar has gone from zero on the UK grid to c. 10% at peak times.

In general, the lowest carbon parts will be after c. 11pm and before 6.30 am. Demand can be c. 40% of peak at that time, and nuclear, wind and hydro tend to dominate the grid. Increasingly in the mid day hours solar makes its appearance-- that's really an incredibly new phenomenon in most grids.

Then you get to the mid merit and peak hours. Coal fired stations are expensive to run in spinning reserve, so they tend to be used more in mid merit-- run as many hours as possible.

If you add demand at those hours, they are probably the most carbon intensive because the kwhr are produced by coal fired stations. But not everywhere, and not always.

That takes us to the upper end of the daily demand curve. There, carbon intensity drops again because the CCGT gas turbine stations kick in (half as dirty). So in fact in peak hours carbon intensity is lower (roughly 9 am to 7 pm weekdays - depends on location & season; historically Ontario had a winter peak and could sell power to NY for its summer peak, however with hotter summers and more AC that is no longer true).

There's a final spike to carbon intensity when you get to the very peak hours-- a very few number of hours in a year. There, the grid calls on backup power generators-- either reciprocating engines or gas turbines, fueled by natural gas or diesel/ fuel oil distillate. Thermal efficiencies are low (say 28-32%?) and so you get relatively dirty power.

The short answer is one could:

- use the blended average power production for your region taking into account the fraction that is coal, gas, nuclear + renewables - that's a reasonable approximation

- consider the marginal kwhr when you happen to be charging. I doubt most of us charge our electric cars from say 3 pm to 7 pm on a weekday, but it's a possibility. If your grid has a lot of solar then mid day is probably the cleanest, if a lot of wind then usually after 10 or 11 pm

http://www.earth.org.uk/note-on-UK-grid ... tions.html gives you a sense of consideration for the UK grid, which has a lot of similarities to the New England grid, I suspect.

- buy renewable electricity as per just Frank

Unless one lives in Appalachia and parts of the South or Midwest, then 100% coal is a considerable overestimate.

As per my cite in the other post, 100% coal and an EV is equivalent to a car making 30 mpg.

Chuck
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Re: Tesla Financing

Post by Chuck » Wed Sep 13, 2017 9:55 am

Regarding "greenness," an electric car is the only car that gets cleaner over time.

HoberMallow
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Re: Tesla Financing

Post by HoberMallow » Wed Sep 13, 2017 11:37 am

Concerning the California electric grid, it's 53% natural gas, 29% renewable, and 12% hydro. Coal is not quite zero - it supplies 0.76% of the energy.

Data from the grid operator California ISO: http://www.caiso.com/Pages/TodaysOutloo ... uel%20Type.

Edit: Removed comment on storage batteries, I misread the chart.

malbecman
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Re: Tesla Financing

Post by malbecman » Wed Sep 13, 2017 9:59 pm

Coal?

As a PG&E rate payer (NorCal), I have signed up for their Solar Choice program...it costs us an extra ~15% on our electrical usage but means PG&E is buying solar power for us on the open market. For us, its like an $12-15 per month, makes us pretty green and avoids the $15K required to purchase PV panels. We still have NG, though, for the furnace.

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BrandonBogle
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Re: Tesla Financing

Post by BrandonBogle » Wed Sep 13, 2017 11:45 pm

Back on the financing topic, I financed my Model S at 100% of purchase price at 1.49% for 65 months at Digital Federal Credit Union. It was an easy process and my payments are all ok autopilot (pun intended). I could have paid some down or even all of it, but it meant using rollover capital losses and I'd rather get the $3k rollover each year and pay 1.49% than burn it up to not pay any finance charge.

denovo
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Re: Tesla Financing

Post by denovo » Thu Sep 14, 2017 12:20 am

diehard wrote:
Tue Sep 12, 2017 9:49 pm
I have been told by the sales guy that Tesla offers financing as low as 0.99% APR (depending upon your credit rating). I always thought that APR stood for "above prime rate" but they tell me that in the industry it means "annual percentage rate."

If you were buying a car from a traditional dealer, there would be a catch because the available promotion is usually 0 percent APR OR $x,xxx cash back on the car. My understanding is that Tesla doesn't negotiate on the price of the car so that is moot. I suspect if your credit score is over 740 you will qualify for that 0.99 percent rate. Go for it.

Valuethinker
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Re: Tesla Financing

Post by Valuethinker » Thu Sep 14, 2017 4:31 am

just frank wrote:
Wed Sep 13, 2017 8:11 am
@Valuethinker...the US grid average number for 2017 is 33% Coal energy, not 50%. California shut down its last coal plant years ago...its at 0%. :mrgreen:
Which is an object lesson in checking before posting ;-).

I have the UK grid numbers in my head (coal is almost 0, now) and not the US ones.

I had thought that CA still imported coal fired electricity from Utah? Clearly not.

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