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No credit history, how to best finance Model X?

No credit history, how to best finance Model X?

I make about 90 to 100k per year as a freelancer,but I'm just about to get my green card and don't have a credit history yet.

My wife also just got a credit card recently so she doesn't have much of a credit history either. We feel really strongly about having an electric car, but if there were other options with comparable range we probably wouldn't go for something as expensive as the Model X.

That being said, financing seems to be the only option for us, seeing how leasing would basically just be sending money down the drain.

I was wondering if someone here could help me figure out the best way to get a low interest loan and also shed some light on the process of reselling. We are planning on moving to Europe about 3 years from now, and since car wouldn't be street legal are compatible with European charging standards, we would have to resell and buy a new one in Europe find someone to swap with.

I was also wondering about the specifics Tesla's resale value guarantee. If I paid just over half within the first 36 months and sold back to Tesla, what would happen to the rest of the loan? If I sold independently, the new owner would probably take over the loan, if I sold independently, new owner would probably take over the loan, but how about with the resale value guarantee?

Sorry to ask so naively, but I really don't know much more about this than the fact that I want to stop throwing money at the oil industry.

Thank you so much for your help, I really appreciate it!

Best,
Ben

grant10k | 2015年7月30日

No credit history? You might be out of luck. I wouldn't give you a low interest loan if I were a bank.

I'm not an expert, but I'm reasonably certain you can't transfer a loan. The bank gave you a loan amount and an interest rate based on your credit history, so it makes no sense to allow you to just pick some guy off the street to transfer the loan to. Plus, the guy you sell the car to with great credit shouldn't have to pay some crazy high interest rate from some bank he didn't get a choice in.

When you sell a car independently, you'd just take the cash money from the guy and use it to pay off the loan.

The guy you sell to would have gotten a loan from (possibly) a different bank to buy the car, and that bank ran his credit and checked his employment and what have you to give him his own rates and terms. Or maybe the guy has a lot of money and pays cash for the car.

In your situation I would get a either Nissan Leaf + Rental car for range, or a Chevy Volt. Save up and build a credit history and buy an X down the line. Or buy whatever long range EV is available when you've saved up enough to need less financing.

vandacca | 2015年7月31日

Good advice from @grant10k. The only thing I would add is that maybe it would be best to get a cheaper car as @grant10k suggests while living in the U.S., and when you move to Europe, get a Tesla (either 2nd gen like Model-X or Model-S or the 3rd gen).

bpf.schmitt | 2015年7月31日

Thank you guys very much for your help so far!

I just wanted to clarify that paying for the Model X with financing isn't a huge deal for us and the $7,500 downpayment (remember reading that somewhere) shouldn't be either (plus, there's a $2,000 rebate for buying an EV in Pennsylvania - those incentives are one of the main reasons why we don't consider leasing in the first place).

We are aware of the other options out there, but none of them really work for us - they're simply too small (we're a family of 4 + dog + another baby on the way + family that visits often) and nothing really compares to a Tesla in terms of range (we'd like to be able to go from Philadelphia to NYC without having to stop and charge).

That being said, we are pretty much set on the Model X, and having talked to a sales rep about a week ago on the phone, it didn't seem all too optimistic to hope that we'll be able to do financing somehow.

I mean, we might not get the greatest conditions, but we should definitely be able to make it happen somehow and I was just wondering if anyone knows more about that bank/credit union someone mentioned here in the forums, where you have to have a military affilitation or make a donation to charity and seem to get pretty great conditions.

Last but no least, does anyone have experience with getting your credit history transfered from another country? I've had a credit card in Germany for about 7 years, and the Tesla sales rep told me if my bank (Deutsche Bank) has a branch in the US, they might be able to acknowledge my German credit history when determining the rate for a loan.

Sorry for the lengthy explanations and thanks so much for all your input!

jjs | 2015年7月31日

Look around and check out the large multi-national banks. I think they would have the best chance of getting your credit history from Germany.

There are a number of banks in the U.S. that still have their "local" names but are actually owned by large international banks.

One thing you might think about is getting a used S. I know you stated your heart is set on an X. However an S has LOTS of space. An S would accommodate your family of 4 and dog and new baby (congrats!) when it gets here. Might not be a perfect match for your needs but a used S, IMHO, is much better than a LEAF. Also if you plan on keeping it only for 3 years you will be money ahead doing this as opposed to buying a new X.

As an example I bought a brand new S. I have owned it for 2.5 years. It currently has 73K miles. (Yes, I drive a lot. If you drive a lot you will see the same.) The car initially was $100K. Tesla now values the car at $35K. That is an enormous amount of depreciation. (And no I am not interested in selling my S for $35K. :) )

A used S will see a much much smaller depreciation. I think a used S might be one of the best values in the car market. If you could get one for $50-$60K you would have a tremendous vehicle. One that still has many many years of warranty on the battery and drive train. If you have a large % available for a down payment you might find banks much more willing to give you a loan.

Best of luck.

KyleGoss | 2015年7月31日

To qualify for the resale value guarantee you will need to qualify for financing with one of Tesla's partner banks. Tesla Lending is not available in PA, but Tesla leasing is. If you are definitely moving to Europe in 3 years, then leasing is absolutely the right decision for you. You may view it as "throwing away money", but so is purchasing a very expensive depreciating asset. As Tesla makes improvements in batteries and other technologies, older vehicles will suffer from depreciation similar to other premium/luxury vehicles.

Here's information on Tesla leanding and leasing:

Tesla Lending
Tesla Leasing

With no credit history and only 90-100k income that isn't from a steady W2 job, it doesn't seem likely that you will qualify for Tesla Leasing. Your best bet would probably be a credit union and putting a large down payment down (25-50%). Also the large international banks that might be able to consider your Germany credit history is worth pursuing as well.

You definitely won't be able to transfer your lease or loan to anyone else when you leave the US. You'll have to sell at the current market rate, which after 3 years could be anywhere from 35-55% of what you paid for the vehicle depending on miles, options, condition, etc. The more options, battery, and performance you select, the worse your depreciation will be.

Iowa92x | 2015年7月31日

Pay cash.

eric.zucker | 2015年7月31日

You might be able to keep the car when you move back to Europe. My parents crossed the Atlantic on the "France" and their Plymouth Valiant was in the hold. Wasn't such a big deal then to get it registered.

PhillyGal | 2015年7月31日

I'm not usually big on leasing but it might be appropriate in this situation.

Also of note - if you don't already have a low Model X reservation, you probably won't be getting one this year. That might give you more time to establish a credit history.

bpf.schmitt | 2015年8月1日

Thanks for your help, everyone, especially jjs & KyleGoss for explaining in so much detail :)

I definitely get your point about depreciation, jjs, but we're planning to just get the base model without any options/extras and we don't drive a whole lot (around 15k miles/year), and although your numbers make sense in theory, they don't seem to apply when you try to find a used Model S for sale. I had a hard time finding anything under 60k, even early 2013 models.

So assuming that the base Model X would cost 70k and we would be able to after 2-3 years for 45k (or we might just be able to swap with someone moving from Europe to the US), given the 7.5k tax credit for buying plus a 2k incentive for getting an EV in Pennsylvania, we would basically just be paying 16k for 2-3 years, which strikes me as much cheaper than leasing.

I will definitely get in touch with the American branch of my German bank, and if that doesn't work, I might be able to borrow at least enough for a large down-payment by my parents.

That's definitely a good point, PhillyGal, that's what I was thinking as well, but from what my bank told me, even 6 months worth of credit history and no money owed whatsoever will probably not be enough for a decent rate (my bank (PNC) said, with a perfect credit score, the best they could offer me is 2.6%, which sounds awfully high).

Thanks so much again for all your help, everyone!

jjs | 2015年8月1日

@bpf.schmitt If you plan on reselling your S in the open market I would agree. Just because Tesla values mine at X, doesn't mean I couldn't get a lot more for it selling it on my own.

Best of luck.

bpf.schmitt | 2015年8月2日

Thank you, @jjs :)

Just to update, my mom just agreed to give us a "loan" for the car. She just has her savings lying around on a .8% interest savings account, she's gonna lend us the money at 1.5%, so everyone wins ;)

Thanks so much for your help, everyone!

Red Sage ca us | 2015年8月2日

Nothing at all better than the Bank of Family & Friends!

;-)

SD in the OC | 2015年8月6日

Penfed.org has a 1.49% rate for 4 years up to $100k. You do not need to be Military to join I used them on my Model S.

PhillyGal | 2015年8月6日

@bpf - PNC doesn't have good rates in my opinion. (I've been a customer since they were First American Savings and had no rules against a checking account for a 10 year old.)

The PNC loan we used for our solar panel installation and new roof (Home Equity) is disgustingly high. It'll hopefully be paid off in a year because "ain't nobody got time for that."