Tesla Financing

Tesla Financing

Tesla should offer its own financing for its vehicles. It would solve many of its cash flow problems. Ford and other companies also provide there own financing. Imagine if 200,000 of the model 3 is financed through Tesla and not through another bank. Tesla can charge interest and keep the cash flow coming in. I myself financed my vehicles through Ford and Toyota when I purchased my vehicles. What do you think ?

Red Sage ca us | 24/09/2016

Tesla Motors is likely not interested in being a bank. They have partnered with different banking institutions to offer financing in times past, though. Mostly I believe their relationships with banks are for the sake of leasing. I doubt there will be a 'TMAC Financing Division' anytime soon.

Jcastillo18 | 24/09/2016

True but getting a loan through a bank is a tedious process. Dealer financing seems easier for the customers. I will save up and try to pay for it in cash lol.

leskchan | 24/09/2016

First, Tesla is partnered with Alliant Credit Union to provide directly leasing and financing to customers. The process is streamlined online from placing the order to completing the loan applications. Tesla just provides the customer service to facilitate the process. Of course customers can elect to pay cash or finance through any banks of their choice.

Second, offering your own financing is the exact opposite of solving cash flow problem. Just like credit card, when customers buy something, the sellers get paid immediately for the full amount, less processing fees. In Tesla case, they get paid immediately for the sales for the full amount, end of transaction for Tesla. You can't get better cash flow than that. The rest is between customers and Alliant Credit Union for collecting.

Other large businesses offer their own financing, on the surface, is to make money on the financial side of the transactions. It's not like they have cash to lend out, it's that they have a large pool of car buying customers to work with. They borrow $1B from some bank at x% and turn around and lend it out to customers at x+y%. Win for the manufacturing side as they move cars regardless wether customs have cash or not.

Tarla's Driver | 24/09/2016

@leskchan explained it well.

I do think I heard something where Tesla's deal for leases with their financial partners only covered a set number of cars, and it ran out, so Tesla is doing some leases in-house. For the leases with a partner, Tesla sells the car to the partner, who then leases it to the end customer, which means Tesla gets the full cash, while Tesla only get the cash over time with the in-house leased cars, which isn't as good for their cash flow or for their quarterly numbers. If what I heard is correct (it was on the Internet, so it must be true), then I also suspect they moved quickly to secure additional leasing partners.

I would like to see a future where in five years, Tesla is rolling in more cash than they know what to do with, so they offer their own financing. That would be good news for all of us.

Red Sage ca us | 24/09/2016

leskchan: +1! General Motors made the mistake of spinning off their GMAC financing arm into a separate entity. Then, during the 2008 financial collapse, GM asked to borrow money from that division to support their daily operations and were surprised when they were told, "No." That was one of the contributing factors to GM going bankrupt. Since then, GMAC has changed their name to Ally Auto Finance instead.

Jcastillo18 | 25/09/2016

Thank you guys

NomoDinos | 27/09/2016

yeah, another +1 to leskchan, who explained it all much more succintly and completely than I would have.

Alliant was incredibly easy to use for our X, and the rate was amazing. We just gave our DS some information, and they even entered all the data in the website while we were there, got an answer immediately and only filled out two other forms online to fund the loan. All together, I think the whole process took about 30-45 minutes of my time.

andy.connor.e | 29/09/2016

When do you think insurance companies will be able to give you a quote for M3 insurance?

makobill | 29/09/2016

@andy.connor.e - I don't think they can do it until they get the safety ratings, pricing on options/models, etc. Would expect that to be pretty close to first units shipped...

jsawyer | 29/09/2016

@andy.connor.e. I live in Utah and my insurance guy has already given me a quote and let me lock in the rate!

dsvick | 30/09/2016

My wife works for State Farm, when I first mentioned the M3 to her she called me an hour later and told me the rates were outrageous - she was looking at the rates for a MX :)

daryl | 04/11/2016

Tesla cannot make those kinds of loans, because they are not a bank or affiliated with the Federal Reserve. Only they can create money our of thin air and loan it to you at interest!