How Hard and Easy It Is to Get Approved for Tesla Financing (Update 2022)

Tesla financing has its pros and cons. It provides the comfort of a completely online procedure at every step from placing your order, deciding financing terms, and delivery at your location.

There is no doubt about the convenience provided by Tesla financing, but the conditions of loan and leasing might not suit everyone.

For instance, it can be the best option for someone who has a good credit rating and is ordering from any of the states where Tesla’s services are operational.

But for someone who is outside Tesla’s target market and does not have a credit rating above 720, it might not be the best option.

Similarly, a person who has leased a model 3 and model Y wants to buy it at the end of the lease duration won’t be able to do so, as it is not a part of the policy of Tesla and other similar limitations are there. Other than that, the process is short and easy.

Nevertheless, it is advisable to explore other financing institutions like the Bank of America and PNC auto loan and then decide which suits you well. However. Let’s understand detailed aspects of the financing provided by Tesla.

Tesla Financing

Provided the unique features, luxurious look, and sophisticated technology of Tesla products, especially Tesla cars, we can say that the high demand and extraordinary price charged for them are justified.

Therefore, Tesla has introduced online Tesla Financing to make payments convenient.

How does Tesla Financing Work 2022?

Other than the customer, a financier makes the payment in full to Tesla for the vehicle while the customer is given a period to return the amount to the financier. The lender can either be a partner of Tesla, or it can be a third-party financier.

Here, Tesla acts as a ‘loan broker,’ i.e. a middle man between the financier and the buyer. Being a loan broker, Tesla helps the borrower find the right lender according to his/her interest needs or financial goals.

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Also, Tesla will help the lender know about the authenticity of the borrower and his/her ability to return debt in due course by analyzing their credit score.

A credit score is any number from 300 to 850, which represents a borrower’s creditworthiness. The closer the number is to 850, the higher the chances of getting the loan.

Tesla does not put a credit score limitation for receiving financing, but typically a minimum requirement is to have a credit score of 720 or above to receive such funding.

Methods for Tesla Financing

There are three methods of Tesla financing:

  1. Loan
  2. Lease
  3. Cash

1. Loan

Loaning provides the convenience of periodic payments at an interest rate. The duration of a loan in Tesla financing ranges from 36 to 72 months, and it can be provided either by a Tesla financier or a third-party lender for either a new or used car.

There are certain conditions for the loaning of Tesla vehicles.

  • The buyer must have a good credit score to qualify for the loan.
  • The loan is offered to residents of a few states of America like Alabama, California, Florida, Georgia, Arizona, Colorado, etc. but NOT for Delaware, Iowa, Kentucky, New Hampshire, etc.
  • The loan is offered for Model S, X, Y, and 3 only. If a customer wants to buy a Tesla model other than these, then he/she would need to explore other loan brokers like credit unions or banks.
  • The loan duration is 60-72 months for Model X.
  • Loan duration ranges from 48, 60, or 72 months for Model 3 and Y.
  • The loan must be returned in 36, 48, 60, or 72 months for Model S.

2. Lease

A lease is a term used for renting an asset for a particular period. Tesla vehicle lease duration ranges from 24 to 36 months. The number of miles per year the vehicle can travel can be 10,000, 12,000, or 15,000.

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A leased car allows you to use it without paying its full price. Also, a lease has low monthly payment requirements, which is a plus point.

But as a drawback, you will pay more for a vehicle’s price and use less of its useful life in 36 months. There are certain conditions for leasing Tesla vehicles.

  • The customer must qualify for a good credit score to receive a lease.
  • Leasing is provided to residents of particular states mentioned in Tesla’s policy.
  • Lease is offered for Model S, X, and 3 only.
  • The leasing duration is 36 months for Model 3.
  • Leasing duration ranges from 24 to 36 months for Model X and Model S.
  • The customer has to agree to one of the following upon completion of the lease duration:
  • Buy the leased vehicle (this option is not valid for Model 3)
  • Buy a new Tesla vehicle
  • Return the leased vehicle
  • Extend the Lease

3. Cash

The customer can also purchase a Tesla by paying the full amount in cash.

Process of Tesla financing

Tesla’s complete financing process takes place online, and it consists of the following steps:

  1. Select payment method
  2. Submit a Credit Application
  3. Approval
  4. Delivery

Background of the company

Tesla Inc. is the pioneer in manufacturing and selling electric vehicles, power train components, and clean energy storage products.

Currently headquartered in Texas, the USA, it is a corporation that started as Tesla Motors in the Silicon Valley of America in 2003.

Today, after almost two decades of progress and continuous improvement, it has become Tesla Inc., the top choice for one-of-a-kind electric auto-motives and energy products.

Elon Musk, one of the biggest financiers and co-founders of Tesla, was designated as its CEO in 2008 and holds the title. Before that, Martin Eberhard and Marc Tarpenning led the company as CEO and CFO.

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Tesla’s efforts are centralized on creating a greater acceptance among the world for alternative energy products to reduce dependence on non-renewable fossil fuel energy. Following are the big show products offered by Tesla:

  • Roadster (the first electric car introduced by Tesla)
  • Model S
  • Model 3
  • Model X
  • Model Y
  • Solar Roof
  • Solar Panels

To diversify its product mix, Tesla has also included women’s and men’s apparel, car and mobile accessories like wireless charging devices, and lifestyle products like mugs and water bottles.

Conclusion

If you think of getting the car on credit, Tesla financing can be a good option. However, it’s limited to some states, and certain conditions are associated with it.

These conditions include maintaining a good credit score and being a resident of the approved state.

Further, there are some restrictions in terms of getting ownership. Likewise, the complete process of registration, choosing payment methods, and delivery is convenient and online. 

Frequently asked questions

Does Tesla charge a fee for making financing applications?

Tesla does not charge any fee for loan applications.

Is it possible to get pre-approval financing before ordering configuration?

Currently, Tesla does not offer such a facility. However, if you intend to finance your car with a bank loan, you may arrange some facility with the bank. But, a credit application to Tesla can only be made if you have placed an order for the vehicle.

How much time does Tesla take to approve the credit application?

Generally, the credit approval period may vary from case to case. Some of the applications are approved within a few minutes, and some might take weeks, depending on the clarity of information provided. However, it takes around 48 hours for approval most of the time.

Can we track credit application status?

Yes, the credit application can be tracked. Further, once the decision is reached, you are notified of the approval/rejection of the credit application.