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If your plan on buying a Model S, how much do you earn?

If your plan on buying a Model S, how much do you earn?

Im on 80k a year, its going to be hard for me to afford a Model S but im going to get one as you only live once, so, what do you get paid?

carlk | June 23, 2013

It really depends. Are you married or single, how many kids you have, you have a house payment... all matters. However I remember the first new car I bought cost about half of my annual salary and I have never paid more than that portion for any other cars I bought after that. It's probably is a little too high for your situation.

S4WRXTTCS | June 23, 2013

This one is a little different than usual because of long term fuel cost savings. Normally it would be a no go because you're not in that magical 2:1 or 4:1 mark. It's not the normal case because in certain situations it can go a considerable ways in paying for itself.

However, that being said there are so many things in life outside of a car. Financial obligations have a way of feeling like a prison so one has to be careful. Even with the fuel savings I'm not sure if one really wants to violate the 2:1 rule when we're really honestly only 3-4 years away from something just as sweet at half the cost. So why not just invest in Tesla, and let the money build for 3-4 years and then use that money to buy a Tesla.

Life is short, but timing is everything.

S4WRXTTCS | June 23, 2013

and let me also add that I do speak from experience. When I was younger I was making about $50K to $60K I bought an Audi S4 (around the mid 40's).

Was it a brilliant decision? Hell no.
Did I have a lot of fun with it? Hell yes

But, then the market crashed in 2001-2001 and I wasn't getting bonuses and pay raises and my debt went up. Eventually I got out of it it by trading it in on a WRX.

I was young and single so it wasn't necessarily a bad decision. It's just something a financial advisor would hand plant upon hearing.

Dcp9142 | June 23, 2013

You might try making a monthly payment into a savings account of as much as you'd plan to pay for your Tesla, probably about $1k a month. If you're still thinking you can afford it after doing that for 12 payments, then you're ready to buy, and have a good part of the down (or an emergency fund) set aside.

carlk | June 23, 2013

Dcp9142 +1

ghillair | June 23, 2013

My earnings are ZERO. I am however collecting a nice social security check, just reach the point where I have to take a minimum required distribution from my IRA, have other investments paying sufficient interest and dividends to live comfortably. Townhouse is also paid for 40' RV also paid for.

I looked at the MS said yes I can afford it, but I actually like a smaller car, have no need for a car that big (also tight fit in townhouse garage) I drive less than 5000 miles a year, current car is paid for. Conclusion it is a luxury I don't need, rather spend the money travelling.

That being said, you need to consider the following:
- What are your other expenses and how will they change before your car is paid for? Marriage, kids, bigger house.
- How secure is your income? Can you be sure of it until the car is paid off?
- How good is your insurance, both health and long term disability? If you are unable to work can you still make the car payments?
- Are you funding a savings/retirement account? If not you are much better off using your money for that.

Just my humble thoughts!

ghillair | June 23, 2013

I should also say I plan on being a day one reservation holder for the GenIII!

stuey81 | June 23, 2013

Yeah, two kids, mortgauge, married, i might have to wait for gen 3, or purchase a second hand model s in a few years time, just wondered what other prospective buyers were earning, and im prolly looking at a sticker price of over 150k buy the time it lands here in australia with taxes, wonder if it would be possible to purchase a right hand drive dash and then wait a few years to buy a second hand american MS and have it shipped over and converted

Sudre_ | June 23, 2013

+1 Dcp9142

I have been making less than 80K for a while... probably since 2001. Never stopped me from getting whatever I want. I have my S but started saving for a car somewhere around 2001 because I knew sooner or later I'd need a car when my existing one stopped working.

One of my friends was all excited they finally paid off their car. I told them to just keep making that car payment into at least a saving account if not a modest investment account. They just laughed. Do you know how many extra packs of cigarettes and/or beers they can buy now! Yet they just can't figure out how I could afford my Model S. Kids or no kids. If you have ever had a loan for a car and could afford the loan payment then you can afford to save once you pay that car off.

On the other hand there are some people who just can't get a break and as soon as they get one thing paid off, another thing breaks.

GReese | June 23, 2013

If you make $80k and are going to finance most or all of the car cost, that's a bad decision. If you make $80K and have the cash set aside for most or all of the car, there's nothing wrong with that decision.

An $80-$100 auto loan on a $80K salary with no offsetting assets is very risky.

AlMc | June 23, 2013

I am amazed when I read on the TMC and this site how people are getting 100% financing and taking out 6 year loans. Thank you for supporting the EV/Tesla revolution. I would not have the 'kahunas'
to have done that.

To the OP....Invest your money wisely...Tesla stock?....and you may have a nice down payment or be able to purchase the S, X or Gen III sooner than you think.

An aside: I doubt anyone is going to (or should) share the answer to 'how much do you make/get paid' question.

satyrias | June 23, 2013

@stuey81

I assume you are an Australian and that is AUD 80K.

The price of Tesla S is anywhere from USD 70K to USD 100K depending on the options. That is about AUD 75K to AUD 108K.

When this car comes to Australia, there is a customs duty you have to pay. Do you know what is the percentage? Add that to that amount.

I am assuming that you may end up paying ~AUD 150K, including customs duty and transportation.

So, I am quoting the gentleman, “S4WRXTTCS”, who has posted above.

“Financial obligations have a way of feeling like a prison so one has to be careful.”

michael1800 | June 23, 2013

Short version? 82-88k/yr. I made it manageable by habitually saving and a decent trade-in.

ADVICE: Budget. Include the insurance for a Tesla S, the annual service if you depend on the car, *project* $3.5K for tires every ~10k miiles if you have the 21-inchers, and your initial accessories and sales tax.

It is AWESOME to have a Tesla now, but don't wreck your life to make it happen. You can enjoy it instead of living with constant guilt stress. Save up enough to make the above commitments and you'll be able to enjoy your Tesla to the fullest, without the baggage of bad decision-making.

langzaiguy | June 23, 2013

We make $80k a year. I have no debt but a mortgage. I plan to put to pay 25% down and finance the rest. After gas savings, it will be about $500 a month. I've crunched the numbers and if I hold onto the car for 10 years, it will save me money. I'm not counting on saving money, however. Over that 10 years, I estimate that it will save me about $35,000. That money normally would have burnt up in my gas tank. Instead, I re-directed that money into something tangible that I can enjoy.

Brian H | June 23, 2013

Check out teslarumors.com/teslanomics for some thoughts and comparisons.

Skotty | June 23, 2013

If you can't afford one immediately, you can always plan ahead and budget for one later. Like some others here (I would guess), I'm not just buying a Tesla because it's a really cool car; I also consider it to be investing in the future of humanity. I'm therefore willing to stretch my budget waaaay beyond what I normally would for an automobile (about 2.5x what I would normally consider). With my current budgeting, I will be ready to buy in mid-2016 (yes, I plan that far ahead).

While it would be awesome to have one sooner, it will probably work out rather nicely, as by then the superchargers should be fully rolled out and there will likely be enough information to expand my choices to Model S, Model X, or Gen3, rather than being limited to only getting a Model S. In the meantime, I will continue to piddle around in my Volt; at least it's electric some of the time.

skymaster | June 23, 2013

@Skotty

What, you can afford a Volt, but not a Model S? Do not take this the wrong way. I love my Volt and have driven it 6,000 miles on 11.5 gallons of gas....but the shit-eating grins are all in the Tesla!!! You are really missing out. I could not wait until mid-2016.

It does not sound like you have driven a Tesla Model S.

Xerogas | June 23, 2013

+1 Dcp9142. If you're making 80K, then the current model might be a tight squeeze, and you might consider waiting for Gen III. If you truly set aside $1000 per month between now and then, you will easily be able to afford it, and feel good about your discipline!

In my case I had the cash to pay for the 40kW model, but Alliant Credit Union was offering 1.49% financing for 6 years. That is such cheap money, and I know I can make more than 1.49% on dividend stocks, so I opted for the loan and put the cash into some good stocks that will actually make more money in the long run.

skymaster | June 23, 2013

@Skotty

I just found another of your posts.
You live in Kansas City and have never seen a Tesla Model S in person.

If you ever get to Denver (600 miles), I have 2 Tesla's you can check out and drive.

keichhor | June 23, 2013

If your salary is not very high, I would just wait for the Gen III. It will be an awesome car at a reasonable price, with or without Tax Rebates available.

I agree with the above MS owners.

nwdiver93 | June 23, 2013

Single/~$100,000 salary

Upgraded from a Jetta TDI I sold for ~$3000

Would have never thought twice about an ICE >$25000

The Model S is so much more Great Car / Efficient Car / Social Investment / Living by example

DutchieN | June 23, 2013

I don't make much as I am on a disability pension. I have the cash. I love the car but I am still reluctant on spending that much money on a car. I still have some time to think about it as I have a reservation for a Model X. By the time I have to finalise there, hopefully, will be more known on the Gen III and the long term reliability of this new technology making my choice (Model X or wait for Gen III) easier.

stuey81 | June 24, 2013

Thanks everyone for the input! Really apreciate it, i hope the gen 3 is a sexy looking as the MS but, im so in love with the s i just cant see how they can top it, to me the exterior is perfect, the interior, well i thought the prototype dash looked way better to be honest, anyway after reading the above posts im going to wait for gen 3 and if it doesnt do it for me, a second hand s it is.

elguapo | June 24, 2013

I agree with others that you shouldn't buy a new MS - too much risk. However, I don't think you have to wait for a GIII. I think in a year or so, there will be plenty of used MS for sale as the thrill will wear off for some (I can't imagie how) and others will decide they want to upgrade, etc. I love mine and hope to keep it for a long time.

Given all the talk of people fiancing 100%, I think banks may be the biggest owners of Teslas in a year, so that may increase the used supply. Better to be safe ad sound now than stretch youself and end up sorry.

Skotty | June 24, 2013

@skymaster

I actually will be out to Denver at some point. I have family out there. There is a Tesla store in/near Denver that I was going to visit while there. I know Tesla had issues in Colorado -- not being able to open new stores I think? -- in the store that's there, do you know if they can do test drives?

Atlantis | June 24, 2013

It is not the price of the car that matters, but how much of it you need to finance (which as @Xerogas pointed out, is different from what you actually finance).

If you woke up with $100K under your pillow, by all means, buy it even if you make $60K

If you are single and don't support anyone, 2:1 is a reasonable ratio (make twice the amount you need to finance).
If you support 1 person (for example unemployed spouse, or a parent), then you need 2.5:1.
If you support 2 (perhaps married with a kid), then 3:1.

However, if you own your place (no rent, no mortgage), that gives you wiggle room. If your spouse earns a stable income, or you are done with school and paid all those student loans and 0% intro credit-cards, you can reduce the ratio above a bit, in favor of making a purchase.

Regard cost saving, realistically you still have an electricity bill to pay, even if it is 1/4 your normal gas cost. Your insurance will be expensive compared to a cheap car (by less than $100 a month), and 10 years down the road, you could have to put in over $10K for a new car battery (that is shy of $100 a month)

skymaster | June 24, 2013

Yes, I did my test drive at the store here. Someone told me that they will not let you test drive until your production date is getting close. I bought my P85+ specifically to rent it out. (This might have been a big mistake) I will let you test drive one of my cars for free. you can contact me at bsbomber@comcast.net or supergreencarrental.com Jim

skymaster | June 24, 2013

OOOPS @Skotty Test drives in Denver!

bcimae.co.us | June 24, 2013

@skotty In Denver the tesla store is in the Park Meadow mall, southern end of Denver just off I25. On Sat, it would be best to call to reserve a time. On weekdays, you could do a walk-in, but you MIGHT need to wait an hour for availability .

AmpedRealtor | June 24, 2013

In my case, the Model S is the following all rolled into one:

Mid-life crisis vehicle - I turned 40-something this year and am thinking about death more than usual.Business investment - as a Realtor, this vehicle will add to my business and help me grow it. I will surely promote the hell out of it and some of the vehicle costs are deductible.Rental income pays for car - I have two rentals generating about $1,000 total in positive cash flow each month (25% return on cash) which essentially makes my car payment at 1.75% interest without spending a dime of my regular income.

I'm sure a financial advisor would probably still tell me not to buy this car, instead advising me to invest that much money each month into an appreciating asset. But that kind of advice is true of any vehicle purchase. My Prius is now six years old and just broke 120,000 miles. No problems with the car, but given the mileage and consumer perception of battery lifespan, I need to sell it now. There is no other car out there except the Model S that excites me. The thought of ever stopping at another gas station depresses me. So I'm taking the leap. I'm getting older, this car has me by the balls, I qualified for the loan, my rental property income makes the payment, and some of my vehicle expenses will be tax deductible for the business. At 1.75% interest the loan is basically free money, so why not?

Donato | June 24, 2013

Hi gang! First posting and future Model S owner.

I'm 81 and retired and after providing security for my Mrs (Annie) and $125,000 for our daughter's University of Washington education (she graduated this month) Ol Donato may verywell order a Mode S, 85KW in January 2014 with delivery ~ Feb 4+ the date an ample amount CD matures!! Have a Count Down App on my iPhone - A little pain each day that goes by.

BTW to answer the question, the family grosses 75K per year with zero debt and haven't paid any interest in the last 20 years.

I'm a retired Telephone Company Engineer and the high tech of the Tesla S has got me hooked!

Shakespeare | June 24, 2013

Don't wait... I have more $ than I know what to do with... Retired and 66 years, and have a $5000 deposit since Feb 2013. The problem is I waited to long... can't fool with Mother Nature or the Tesla -god.
Lost my ticket to ride. So, don't wait, enjoy and buy the car. Or you will regret it later.

Mathew98 | June 24, 2013

@Shakespeare - You can call Tesla's toll free number and let them know you are ready to finalize your order. You can even expedite you order and skip the two weeks by asking them to waive the automatic "change your mind" period.

Since I was in a middle of a job search when my invitation to configure came in, I had to push my order back by four months and did the same thing. After I call Tesla, I was immediately place in the front of the queue. I finalized on 5/10/13 and the car was delivered on 6/15/13.

Call them and the Tesla god will answer right back!!!

Bubba2000 | June 24, 2013

If I was making $80k/year, unless I had substantial assets, I would prioritize as follows:
1. Max out 401k/SEP/Roth
2. Own a modest home with 20% down payment, and debt no more than 150k - if possible. Pay off in 15 years with extra payment if you can.
3. Have cash in the bank for at least 1 year of living if not more.
4. SS provides disability, but makes sense to have some extra coverage, if you can afford.
5. Got to have some kind of health insurance, even with hi deductible.

For the environmentally conscious, I think the Toyota Plugin Prius is probably the best car, imo. It is very reliable and very efficient with small carbon foot print. It can last more than 10 years. Don't take me wrong, I like the Model S and I am getting one, but it is more like a want than a need. At this stage of my life, the next auto I would be riding could be a van with electric drop down walk way.

In the end, just an opinion. What do I know? These kinds of purchases are personal preferences.

archibaldcrane | June 24, 2013

I make right around 100k, 20% down on a 400k house 18 months ago, $1900/mo mortgage+tax+insurance, self-pay high deductible insurance for myself and wife, and decent savings.

I was right on the verge of buying a 60kwh until I found out it didn't fit in my garage, but honestly it was kind of a relief, since I was stressed about the money part as well.

Just hoping my 10 year old Nissan Sentra holds up until the GenIII. I WILL own a Tesla.

langzaiguy | June 24, 2013

@Bubba Very wise advice. My employer doesn't do 401k matching, so I do what I can. I've got a modest home with ~100,000 mortgage. Perhaps a Model S isn't the best financial move--it does go against traditional advice.

Still, I currently spend $4500 a year in gas. I believe a MS would save me AT LEAST $3500. Money spent on gasoline is like money spent on interest--it just gets burnt up. I've found myself becoming bitter when I'm at the pump twice a week and see $40 on the pump that just gets consumed, gone forever. I figure I might as well redirect those gas expenditures into something I can enjoy. I'll try to keep an open mind toward constructive financial advice, however.

scole04 | June 24, 2013

@Bobba good stuff. I'm actually in your position. I make a similar amount of money. I've been fortunate to not have a dime of debt out of college. I've been in the market for a new car for a while and I took the time to save up a sizeable downpayment while comparing Tesla to the usual suspects of Audi, BMW & MB. If you max'n out your Roth and 401k and have a nice emergency fund I would take a chance. I'm 26 now and I freakin love this car. My gf is very jealous.

Mathew98 | June 25, 2013

@scole04 - Just think of a new MS loan as your college debt...

If you are in your mid 20's, you might attract a few more gf's once you strut around with a new MS.

If you were in the market for a car loan (assuming your finances are in order), check out Alliant Credit Union or Penfed. I have my loan with ACU @1.49% for 6 years.

jq5073 | June 25, 2013

This is a pretty interesting thread. I particularly like the discussion about income to car cost ratios. I know everything is very personal, but without substantial savings and essentially "ready to retire now" assets, I wouldn't consider spending anywhere close to 1/2 or 1/4 of my annual income on a car. Our most recent car purchase (new, 6 yrs ago) was about 1/20.

I'm very seriously considering the Model S, but it still makes me a little uneasy. I don't normally spend anywhere near that much money on things that rapidly depreciate and aren't revenue-generating.

If I could justify a business expense on it, things change somewhat.

AmpedRealtor | June 25, 2013

What would Suze Orman do? :)

Bighorn | June 25, 2013

@AR
Denied!

cmaso | June 25, 2013

I assume you are wrestling with the question, is this car worth the money? The quick answer is no… it’s a car. HOWEVER, I took delivery on Thursday, and already cannot imagine life without it…

I purchased a 60 kW with a few options and it took the price to $78k. but I didn’t buy a $78k car… It’s true cost over 5 years is more like $50k (quick math - $15k tax credits and $14k in gas savings).

Now the question you need to ask isn’t, is this car worth it… but rather, would you buy a $50k ICE car? If the answer to that is “yes”, then I promise you one thing, there isn’t a $50k car on the market that comes anywhere close to what it’s like driving a 60 kW MS with a few options.

Hope my quick math helped you.

tobi_ger | June 25, 2013

@Corey: even better with savings on repairs compared to luxury ICE cars

DallasTeslan | June 25, 2013

"Money spent on gasoline is like money spent on interest--it just gets burnt up"

@langzaiguy, I say this all the time myself. Buy gasoline and quite literally you watch that money go up in fumes behind your vehicle. I drive a Camry Hybrid right now. It's fairly fuel efficient and it's a pretty darn good vehicle but it's just a bit vanilla. It is almost six years old. People I work with who make a fraction of what I make drive nicer cars than I do and have for many years. I am not typically a big spender but I would say I fit in the mold of many others here, I am that passionate about this vehicle that I will be buying one in the very near future.

On paper I can't justify the purchase but we don't live our lives on paper, and I feel that I have been frugal long enough. Soon to turn 36 years old and never had a luxury car.

FWIW if I was in my 20's and made 80K I don't think I would buy just yet. Based on Musk's new plan to sell their loaner vehicles and depreciation of 1% per month as I recall reading somewhere, in about two years you should be able to get one for a bit of a discount compared to current prices on new ones.

Brian H | June 25, 2013

Not to mention about $1000 less on Mobil One‼ ;P

ALSET | August 8, 2013

Just out of curiosity to see if there is a 'housing bubble' forming around Tesla MS buyers here. For all the people saying "salary of $80k" is that your take home for the year or your pre-tax? If we are talking about pre-tax of $80k a year and buying a $80-100k car then yes that would probably make me uneasy, but I'm assuming you are all making six figures and you're take home is 80k right?

Renegade | August 8, 2013

Currently, my gross annual work salary is $77k but with rental income it jumps to $102k per year.

With my promotion in Dec, my work salary will increase to $93k annual gross, with rental income it's $116k.

I live and rent in Missorri but own a home in Cali, which I'm renting out. Owning a home gives you lots of tax breaks, and renting it out gives you even more so that helps.

Not married, no kids. Have a Lexus that's been paid off for years and I've been putting aside a fake car payment after I paid it off since I was use to have that money anyway, which helped to put down a nice 31% down payment, including the sell of my car.

I have a 6yr loan at 1.49%, goal is to pay it off in 4yrs, the $7.5k fed rebate helps me pay off in 5yrs... So I'm halfway there.

DeLaneyEV | August 8, 2013

@Bobba good stuff. I'm actually in your position. I make a similar amount of money. I've been fortunate to not have a dime of debt out of college. I've been in the market for a new car for a while and I took the time to save up a sizeable downpayment while comparing Tesla to the usual suspects of Audi, BMW & MB. If you max'n out your Roth and 401k and have a nice emergency fund I would take a chance. I'm 26 now and I freakin love this car. My gf is very jealous.

scole04 - I will comment that @ 26 and making about 6 figures is a great accomplishment - buying a car equal to your salary is a mistake, trying to justify it by claiming gas savings is just fooling yourself. the insurance costs for a luxury car, mods to your home (assume you have one and not renting. your life will change dramatically in the next 5 years as marriage, kids, etc will alter your priorities and having a 1k car payment plus will hinder your long term plans. your 26, have patience, get a car that will allow you to have cash to have fun with gf and not just drive around. I know that today everyone wants it all now, but maintain a debt to income ratio that won't bankrupt you if life throws you a curve. IMO, priority #1 401k,roth, etc, #2 home, #3 savings #4 WAM

toby_wan_kenoby | August 8, 2013

Its not about how much you earn but how much your free cash flow is.

I make substantially more than $80k but between mortgage and vacation home payments, tuition payments and other expenses a $100k car is probably just in the books for me.

The alternative would be to put the money into the Tsla stock and wait a year. Have your cake and eat it.

EC7 | December 9, 2013

Im wondering, what is the likelihood of an $80K salary getting approved for a $70K, 72 month loan. Assuming the borrower has a DTI of less than 45%, will this still qualify for the best rate?

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