Tesla Shock: Why Financing a Model 3 Long Range Just Got Thousands More Expensive
If you’ve been eyeing a Tesla Model 3 Long Range, you might want to sit down for this one. This week, Tesla threw potential buyers a curveball by discontinuing its promotional financing on the much-coveted Model 3 Long Range. The timing of this move is particularly interesting since it coincides with the vehicle becoming eligible for a $7,500 federal tax credit.
The Price Tag vs. Financing
According to Electrek, Tesla confirmed the Model 3 Long Range AWD’s eligibility for the hefty tax credit on June 17. That means the car’s new price sits at $34,990, which includes the credit and an estimated gas savings. It’s even $1,000 costlier than the Model 3 Rear Wheel Drive, which remains ineligible for the tax credit due to its Chinese LFP battery cells.
With this tantalizing offer on the table, prospective Tesla buyers should feel like they're in for a sweet deal. However, there's a catch that could throw a wet blanket on their excitement. Tesla has increased the interest rate on loans for the Model 3 Long Range to 6.39% APR on loans up to 72 months. In stark contrast, the Model 3 Rear-Wheel Drive still enjoys more attractive financing terms – 1.99% APR for 36 months or 2.99% for 60 months.
Crunching the Numbers
Now, you might wonder how all this impacts your wallet. Although the initial $7,500 price reduction may seem like a win, the increased interest rate could erode these savings significantly. According to a detailed analysis by CarsDirect, the real-world financial implications of these new rates mean that, over a five-year loan term, the Model 3 Long Range now offers only about $4,200 in savings compared to the advertised $7,500.
That’s a staggering $3,200 difference that's essentially sneaked in through the financing terms. With these conflicting figures, you’d be forgiven for feeling more than a little perplexed. While the federal tax credit does factor in as a significant price drop, buyers need to be aware that the total cost of financing can offset a large chunk of these savings.
Strategize Your Purchase
If you’re considering buying the Model 3 Long Range, it’s crucial to look beyond the headline grabbing $7,500 tax credit. Take CarsDirect's advice to heart: weigh all your options meticulously. Compare different lenders and their terms to ensure you’re actually getting the best deal.
There are other ways to circumvent this potential financial trap. For one, you could explore credit unions or smaller banks that might offer more favorable auto loan rates. Another potential savior could be a strong credit score, which can sometimes help in negotiating a better rate even within Tesla's financing options.
Lastly, if your heart isn’t set on the Long Range model, the Rear-Wheel Drive version still offers competitive financing options that are worth considering, especially if you're leaning more towards reasonable monthly payments over the total cost of ownership.
Final Thoughts
While the Tesla Model 3 Long Range continues to captivate with its advanced features and longer driving range, the financial landscape surrounding its purchase has become unexpectedly nuanced. The federal tax credit is undoubtedly an advantage, but prospective buyers need to be astute about the totality of their financing commitments.
If you're a savvy shopper who’s willing to do the legwork, you can still make the most out of this situation. However, always remember the devil is in the details when it comes to financing. Keep your eyes wide open and your calculator handy to ensure the deal doesn't lose its shine.