topic Re: Tesla Loan? in Auto Loans

Tesla Loan?

Anonymous — Thu, 21 Sep 2017 22:00:33 GMT

Thoughts on how to go about getting a Tesla loan?

Wanting to buy a Tesla Model X, about $100,000.

Current monthly verified income: $8466 gross

Unverified income: rental, $1600 cash, no real way to prove but it's steady.

Debts:

$1650 mortgage

$500 Car1 loan

$470 Car2loan

$505 RV loan

Total: $3125 monthly debt = 37% DTI

5 credit cards with total of about $20k available, all reporting 0 balance.

Credit in 700-720 range. Last late payment 2013. 4 collections, all paid.

I have the $100k in cash. It is currently earning huge returns.. I started with only $20k last year and it just passed the 100k mark after about 14 months of high stress investing. I would like to leave as much of this 100k in the bank as possible to continue to earn interest, even though I could buy the car outright, as I think the interest on the loan would be less than I’m earning and I’d like to pay down high interest loans first/instead.

My RV loan has an atrocious 12% interest rate, owe $25k. I am considering paying off the RV loan in full, and asking the bank (First Tech Credit Union) if they will turn around and give me a $60k car loan for around 2-5% interest. The RV loan is only 3 months old, but potentially that will show a good relationship, if I pay off one loan so early and then ask for another? It’s dinging my credit as “too many new accounts” and “ too many new inquiries” unfortunately since it’s so new.

I can also pay off one of the car loans in full, as I’m skeptical I can get 3 car loans at once? I may need to pay off the $505 loan to help my DTI but I’d prefer to pay off the car I owe the least on, about $14k on the $470 a month car.

If I pay the RV and the car off, I’d be looking at..

$8466 verified + $1600 unverified monthly income

$2120 monthly debt between mortgage + 1 car loan = 25% DTI

If car loans will go up to 40% DTI that leaves me $1266 monthly expenses I can add

700-720 credit score with old baddies on there.

Think a bank would be willing to give me a $60k car loan with 40k down on a 100k car? I have a good relationship with NFCU and my local credit union, First Tech (although only for the 3 months of the current RV loan).

Main concern are… too many new accounts/inquiries on credit, baddies including collections and lates although they are all paid and 3+ years old, and low income to support a 100k car loan, high DTI.. basically all of it.

How does one get into a good car buying position?

(why the third car? I want to gift it to my mother, who went through foreclosure, homeless living in shelters to enrolling in college and she graduates with a degree in nursing at age 59 in three months. She’s never had anything nice in her life at all and I want her to start out her new career in style. I’m finally in a position to give her something nice and it’s her dream car. I’m going to buy it one way or another for her.. just trying to figure out the most financially smart way to do this to lower my other payments/interest rates or maximize my cash staying in high yield investments. We’ve never had money before this and so I have no financial sense whatsoever. My concern here isn’t to become wealthy, it’s to make my mom happy)

Re: Tesla Loan?

sccredit — Thu, 21 Sep 2017 22:55:06 GMT

First - refinance the RV loan with another CU. Logix rates are 4.9%-5.9%

Second - I think qualifying for the loan based on income is going to be difficult

Re: Tesla Loan?

Anonymous — Thu, 21 Sep 2017 23:00:40 GMT

I was a bit worried about the income piece myself. However, I am not sure if auto loans consider compensating factors like how much down payment you have? Even if I have to throw down 80k and finance 20k, I'd rather do that instead of putting down my entire 100k and having nothing left in the bank.

Do you know if banks for auto loans care more about your DTI, or more about what your gross income is?

I am hesitant to refinance anything because it will be yet another new account and bring down my AAoA even more which is really hurting me right now. I'd rather just pay off the loan completely I'm just not sure which loan to pay off first. I'm thinking RV b/c of the awful interest rate, but then that leaves me with 2 car loans trying for a third, so maybe it is better to just pay off my next highest car loan which is about 7% interest rate.

Right now my 3 vehicle loans total 60k, two of them are 2+ years old so I can at least show that I can handle 60k in vehicle loans and pay on time each month. Not sure if that will help at all, when asking for a 60k loan.

Also not sure if showing I have the available cash in my bank to pay off the car will help at all, or if they even look at that kind of thing.

Re: Tesla Loan?

Anonymous — Fri, 22 Sep 2017 00:03:13 GMT

Options that you might consider:

Margin loan from a brokerage for a portion of your investments (no taxable event.)

Selling some positions for verifiable income (triggers taxable event.)

Pay off another loan (more likely two) to reduce DTI (doesn't reduce the cash outlay in any meaningful way.)

I'd consider it pretty improbable that you would get approved for a third car loan (fourth if you count the RV) with your DTI. After the Tesla purchase it would be around 60%, which no one is touching. Lenders will be concerned that a job loss with another $1500-2000 (80k loan, 60 months, depends on interest rate) of debt payments per month would eat through whatever reserves you have very quickly. They additionally will struggle to explain to a supervisor how they think you can pay for this, even if it really won't be a problem for you.

Thoughts from someone that has experienced rapid gains in speculative investments:

500% in 14 months is crazy; be very careful about building your future plans around that kind of return. I would suggest you take a look in the mirror and ask if you're stepping on to the hedonic treadmill. Those adaptations are hard to let go of if things come crashing down around you. I've had investments with over the top gains, but I'd be hard pressed to say that I expect more than 7% after inflation going forward. Part of that is a natural lowering of risk taking behavior now that I've 'made it,' but part is just a reminder to myself that I always knew the outcome was more likely to be failure than success.

I don't want to pass judgement on your reasons for purchasing, and hope your mom likes the car. I'd suggest borrowing 20-50k. If you can't get a traditional auto loan or don't like the rates, check into margin. Make sure you really understand margin calls and keep a substantial reserve for market crashes.

Re: Tesla Loan?

Anonymous — Fri, 22 Sep 2017 17:47:08 GMT

Thanks for the practical advice and reply!

First of all, I know the investment return was a short term crazy kind of thing. A wealthy family member had a good investment opportunity and let me borrow $20k basically so I could invest with him and it turned out surprisingly well for both of us. He expects it to continue to grow for another maybe 6 months to one year or so and then level out so I'm trying to keep cash in there until then. I don't plan on repeating it and thus won't really be investing anything after this. I'm basically just following the advice of my relative who knows what he's doing more than me. To be quite honest I have no clue whatsoever about investing.

I've had the same government job for 10 years now so my salary is stable and the job isn't going anywhere. I'm not concerned about job loss but potentially it is a risk the bank will look at.

I am thinking if I pay down my biggest two loan payments, I should still have a spare $1200 a month or so to add with a new loan to still keep my DTI under 40% which seems reasonable?

I am not expecting to get a 2nd/third car loan but hoping maybe I can pay off the RV and maybe 1 car and then the Tesla would just be my second car loan.

The one thing I haven't considered was the tax impact of all of this. I will have to look into that.

I suppose it may be best to just go buy the Tesla outright and have no money... but I'd really really like to pay off some of these high interest loans instead if I can figure out how to make it work.

Does the bank see a difference between lending 20k on a 25k car vs lending 20k on a 100k car? Since the loan payment should be smaller, will they care about the car being 100k if I dump 80k of my own money into it? Even keeping 20k in the bank and spending my other 80k would make me feel much better.

Re: Tesla Loan?

Anonymous — Fri, 22 Sep 2017 21:31:13 GMT

Depending on who the loan goes through, they'll likely care very little that you're borrowing on a small percentage of the car. They won't feel much risk since you have virtually no chance of ever being underwater on the loan.

Have you asked your relative if you can get out now? I'd be concerned about letting that kind of gain ride; there is a very real chance you'll lose everything with the level of risk needed to receive that kind of return. If you get a no, you really need to figure out what you're invested in.

Re: Tesla Loan?

Appleman — Sat, 23 Sep 2017 02:11:22 GMT

I would love a Tesla as well, but that is not in my future....

This is one of those decisions that will come down to NEED versus WANT and if this is a good financial move for you. What does the person who is helping you with your current investment think about buying such an expensive vehicle. If I read your post correctly it would be a third vehicle for you plus you have any RV.

Simply paying off the RV will earn (save you) 12% which honestly is a great return on investment.

I work with quite a few people who drive Teslas and other expensive cars but they all have solid incomes of $300,000 plus. $25,000 a month opens up some options.

Bluntly, you might be able to buy a Tesla and have it paid for in 6 or 7 years, or you could very well be debt free including your house in 7 years. It sounds like you are on a great track having some supplemental rental income.

Re: Tesla Loan?

Creditaddict — Sun, 24 Sep 2017 15:06:12 GMT

Why go outside the box on this one?

Tesla is in the business to sell cars so they have selected lenders that understand the cost of the car and are willing to lease or lend on those amounts. Taking a look at the website, when you apply they automatically push it out to:

The words "you," "your" and "yours" mean each person submitting this application. The words "we," "us," "our" and "ours" as used below refer to Tesla Motors, Inc., its affiliates (including Tesla Finance LLC), and the Financial Institutions selected to receive your application,which include the following: Wells Fargo Bank, N.A. (Wells Fargo Dealer Services) 23 Pasteur Irvine, CA 92618 US Bank N.A. 17659 NE SandyBoulevard Portland, OR 98230 JPMorgan Chase Bank,N.A. 1111 Polaris Parkway Columbus,Ohio 43240 TD Auto Finance 27777 Inkster Rd Farmington Hills,MI 48334 Alliant Credit Union 11545 W. Touhy Avenue Chicago, Illinois 60666-0945 Technology Credit Union P.O. Box 1409 San Jose, CA 95109

Re: Tesla Loan?

StartingOver10 — Sun, 24 Sep 2017 19:11:13 GMT

OP, I am just a bit older than your mother (IIRC from a post above) - but I'm in the same general age range and if one of my children purchased a Tesla for me - I would be a bit sad and maybe even not want it at all. I have been through some of those hard times (cancer, losing everything except my family, bk and having to start over at a late age) and I would rather see you keep the money and put it to good use through investments. Good true investments. Even if you take it out of the high growth investment and move it to something more conservative.

I don't know if you have children yet or not, but one of the things that gives us Mom's and Dad's a great source of pride is how well our children do in life - emotionally, financially and in all things. Material items become much less important the older you become - at least IME and those of my contemporaries.

I just think that your Mom may appreciate your thoughts - and maybe a much less expensive car. Having a dream is a good thing and sometimes it is best to not have the dream fulfilled KWIM? JMO

Re: Tesla Loan?

Anonymous — Mon, 25 Sep 2017 01:35:31 GMT

I just did got a loan for a Tesla. We got approved through Alliant credit union for up to 85k 90% LTV Joint app. (Pulled transunion 740 credit score) We also got approved through PenFed but they would only would do 60k max even tho our credit scores were in the low 800s (Fico 9 they used) we have 20k a boat loan, 13k current auto loan and a 10k auto loan we just paid in full to drop DTI. Alliant had a promotion of 0.99% which we didn't make. We got the 2.7, their next best. 750 to make the .99 cut. Our DTI was around 20% our joint income was like over 11k a month. Tip: income is non verifiable through those banks so you can balloon your income and that will help with your DTI.

I hope you get it! We are taking delivery next week of a model S 90D. Check out EV-CPO.com to find inventory models with no miles (well, shoes 50 miles as standard) for discounts! Already built and ships to you within a couple weeks! Ours had a $8,500 showroom discount on a brand new tesla! There's even some P100Ds inventory ones one there you can find with up to 30k off MRSP! Like no kidding. Best hidden deals out there for a new tesla. That's where we found ours.

Moderator Edit - It is against forum rules to post referral codes. Thank you for your understanding and cooperation.

Re: Tesla Loan?

Anonymous — Sun, 24 Sep 2017 23:37:39 GMT

Oh, another tip, when it ask for how much you pay for rent/mortgage, you can lower this amount on the app to also help with DTI. Again, no verifiable. Time on job, you can also ballon. The more years, the better.

Re: Tesla Loan?

StartingOver10 — Mon, 25 Sep 2017 00:22:10 GMT

@Anonymous wrote:
Oh, another tip, when it ask for how much you pay for rent/mortgage, you can lower this amount on the app to also help with DTI. Again, no verifiable. Time on job, you can also ballon. The more years, the better.

^^^No, don't do this. State your actual rent or mortgage as putting down a lower amount is loan fraud and we don't condone that here at all. Read the Terms and Conditions. No misrepresentation of job term either. You either qualify with the true info or you don't, but loan fraud is not the way to get your car financed.

I'm am happy for you Keith, but we don't encourage loans of any type by misrepresenting your income or your debt or your job.

Re: Tesla Loan?

Appleman — Tue, 26 Sep 2017 22:29:50 GMT

Go to Credit Sesame and get a free account. They will give you your current DTI that the lenders will likely see.

Re: Tesla Loan?

Anonymous — Tue, 03 Oct 2017 21:26:07 GMT

I'm new to this forum so I didn't know how to start a new thread.

I have a current Tesla loan, and I'm about to apply for another. The Tesla loan app online doesn't ask many questions considering the stratospheric prices of these cars. How would my application be handled if my credit report still shows an active lease on a vehicle that will be sold by the time I take delivery of my new Tesla?

In other words, applying for the loan with the current lease payment included puts me at a DTI of 36%, but removing the lease payment but adding the second Tesla loan payment puts me at 33%.

Will I need to get rid of the leased vehicle first, and be willing to do with one less car for several weeks, before applying for my second Tesla loan?

Thanks.

Re: Tesla Loan?

Anonymous — Tue, 03 Oct 2017 23:19:24 GMT

Well everyone I placed my order! $2500 down, $104,000 reminaing =/

Car should be here mid-December. FWIW I test drove it and I hated it. My mom however who is a terrible driver loved it. I was impressed with how much auto pilot could do, and also terrified. My main worry now is my mom will forget it doesn't stop at red lights for you automatically.

I pulled my credit and my auto scores are worse than my regular fico 8, EQ is only 649 ;( TU was 714 and EX was 701. There were a lot of errors on my EQ report.

I am a member of NFC and of Alliant CU. Does anyone know which credit agency they or Tesla use? Hopefully not EQ. I disputed the errors so lets see if I can get a bump before December.

I also paid off my trailer loan in full. It was open for a total of 3 months, haha. Hopefully that won't hurt. As far as my income, do they ask for verification?

I wouldn't think to lie about my mortgate payment ($1600) because it's there on all my reports what I pay. I am considering including my rental income even though I'm paid in cash. I have 3 months of cash deposits for the full amount that I can use to verify. Before that I didn't think to deposit the cash all at once or I'd spend the cash. I also do Airb BNB on my trailer and make about $300 - 400 a month that way. I may be able to include that? That would bring my total monthly income to $11,000 or so which would really help with DTI issues and low income issues. I'm not sure what they ask for income verification though as my paycheck only grosses $8400 a month or so

Anyway, everyone on these threads are so helpful!! I feel encouraged that I can do this.

I have 2 months or so to perfect my credit and get all my income verification and pay down as much of my other debts as possible. I am going to apply with NFCU, Alliant, and Tesla themselves. Anything else I should consider??

Is there a way to include pictures in these posts? I took pictures of the car, and of my order receipt! Very exciting stuff. The car looked very cool, I must say.

Re: Tesla Loan?

Appleman — Wed, 04 Oct 2017 00:31:31 GMT

avesraggiana, welcome to myFICO. It looks like with both loans/leases included you are at 36% DTI. As long as you have a solid credit file, anything below 40% should be easy. You did not list your scores but anything north of 740 should be easy for the lender along with the other info you provided.

They will look at income, scores, auto loan history DTI etc.

Re: Tesla Loan?

Anonymous — Wed, 04 Oct 2017 02:24:49 GMT

Wow! Thanks for your prompt reply and your useful input. How did you work out my DTI? Curious since I don't remember updating my income or recurring obligations anywhere recently.

The useless credit karma karma scores are 780 and 777, and my FICO scores range from 782 to 823, depending on where I check, what time of the month it is, the phase of the moon, the alignment of the planets, and a bunch of other things over which I seem to have no control.

Thanks again for for your comment.

Re: Tesla Loan?

Anonymous — Wed, 04 Oct 2017 02:28:17 GMT

@1kristarose. Hated it?! Those are fighting words! Hahaha! I'm curious, what did you find that you disliked so much? I can't stop myself from grinning whenever I drive mine. In fact I look for excuses to go out driving.

Re: Tesla Loan?

SSH0126 — Wed, 04 Oct 2017 11:00:50 GMT

Who is your investment broker? Pm me!

Re: Tesla Loan?

Anonymous — Wed, 04 Oct 2017 18:02:21 GMT

I grew up driving old finicky manual pickup trucks without power steering. I learned to rely heavily on my own driving abilities and we always drove our cars 200,000+ miles by being gentle and kind to the cars. So it really freaked me out to have a car want to do nearly everything - turn on its own, brake, etc. When you release the gas, I am used to coasting but the Tesla started engine braking right away. It didn't help that our sales guy had it set to "1" which I guess is the most aggressive driving setting. I am just not used to that! I am used to having to control every single aspect of the car and giving cars lots of extra room because I can't fully trust my old falling apart cars!

I will say it was a beautiful car and a comfy ride. I am just not ready mentally for a car that thinks it can (and likely so) drive better than me!

It will be great for my mom though who is a terrible driver and has done her share of rear-ending in her days. I hope the auto braking feature helps her and she doesn't learn to rely on it too much.

All of my investing/brokerage is done through USAA and I absolutely love them as a bank. I've been with them for 32 years and they always mention that every call and thank me for my loyalty. For credit though I prefer NFCU.