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Need a sanity check on a purchase plan

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coldworld
Regular Contributor

Need a sanity check on a purchase plan

Just wanted to solicit some advice from the MyFico community on my thought process. 

 

I have been car shopping recently, and have an opportunity to buy a new Tesla Model Y for $52k @ 0.99% for 72 months ($757/mo). I currently owe $26k @%7.94 ($523/mo) on my current vehicle (Jeep GC). My Jeep is has a trade-in value of $21.8k, leaving me with about $5k in negative equity. Household finances are secure and my FICOs are between 770-780. 

 

Based on the numbers I ran, savings in interest between the two scenarios is roughly equal to the negative equity I have in my current vehicle. Am I crazy for considering this? What am I not thinking about?

 

More DPs:
My income: $230k/yr
My Wife: $220/yr

3B Scores 03/2024

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Message 1 of 8
7 REPLIES 7
cashorcharge
Community Leader
Super Contributor

Re: Need a sanity check on a purchase plan

The primary challenge was EV's at this time...especially Tesla is that they are notorious for lowering the prices of their cars over and over.  This latest deal with very low financing is great...though if they continue to lower the prices of their cars as they did in 2022 and 2023, your investment will eventually lead you underwater so unless you decide to keep it for the full term...you will still or potentially add to your negative equity on your next purchase.

Message 2 of 8
CreditCuriosity
Moderator Emeritus

Re: Need a sanity check on a purchase plan


@cashorcharge wrote:

The primary challenge was EV's at this time...especially Tesla is that they are notorious for lowering the prices of their cars over and over.  This latest deal with very low financing is great...though if they continue to lower the prices of their cars as they did in 2022 and 2023, your investment will eventually lead you underwater so unless you decide to keep it for the full term...you will still or potentially add to your negative equity on your next purchase.


Right I would never buy an EV any EV at this time they lose their value extremely quickly.  Friend bought a porsche taycan 200k approx 1.5 years ago put about 3k miles or so on it and just traded it into porsche for 95k..  EVs at this time depreciation is nuts.  Consider leasing if possible and makes sense?

Message 3 of 8
sccredit
Valued Contributor

Re: Need a sanity check on a purchase plan

My understanding is that Tesla does not allow negative equity to be rolled into the new loan so double check that.

Message 4 of 8
Gollum
Established Contributor

Re: Need a sanity check on a purchase plan


@coldworld wrote:

Just wanted to solicit some advice from the MyFico community on my thought process. 

 

I have been car shopping recently, and have an opportunity to buy a new Tesla Model Y for $52k @ 0.99% for 72 months ($757/mo). I currently owe $26k @%7.94 ($523/mo) on my current vehicle (Jeep GC). My Jeep is has a trade-in value of $21.8k, leaving me with about $5k in negative equity. Household finances are secure and my FICOs are between 770-780. 

 

Based on the numbers I ran, savings in interest between the two scenarios is roughly equal to the negative equity I have in my current vehicle. Am I crazy for considering this? What am I not thinking about?

 

More DPs:
My income: $230k/yr
My Wife: $220/yr


You may not be thinking about EV range, EV depreciation, being upside down (regarding how much the EV is worth compared to how much you owe) on an EV loan, charging problems/availability with an EV (I am always amused to read about bums stealing the EV public charging stations' charging cables for the copper wire), EV battery drain/overheating after spirited driving, EV capacity/capability "falling off a cliff" during cold weather, EV exorbitantly expensive battery replacement, recent federal government pullback from unrealistic federal EV mandates, the inability of the US power grid to handle EVs if they were to become popular, etc.

 

Edit: Your Jeep Grand Cherokee can be refueled with gasoline, and gasoline refueling stations are ubiquitous.

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Message 5 of 8
coldworld
Regular Contributor

Re: Need a sanity check on a purchase plan

I appreciate all of the input from you folks. I ended up selling my Jeep for $29k, used the positive equity as additional downpayment money for the Model Y. I take delivery on 5/20. 

 

 

3B Scores 03/2024

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Message 6 of 8
coldworld
Regular Contributor

Re: Need a sanity check on a purchase plan


@Gollum wrote:

@coldworld wrote:

Just wanted to solicit some advice from the MyFico community on my thought process. 

 

I have been car shopping recently, and have an opportunity to buy a new Tesla Model Y for $52k @ 0.99% for 72 months ($757/mo). I currently owe $26k @%7.94 ($523/mo) on my current vehicle (Jeep GC). My Jeep is has a trade-in value of $21.8k, leaving me with about $5k in negative equity. Household finances are secure and my FICOs are between 770-780. 

 

Based on the numbers I ran, savings in interest between the two scenarios is roughly equal to the negative equity I have in my current vehicle. Am I crazy for considering this? What am I not thinking about?

 

More DPs:
My income: $230k/yr
My Wife: $220/yr


You may not be thinking about EV range, EV depreciation, being upside down (regarding how much the EV is worth compared to how much you owe) on an EV loan, charging problems/availability with an EV (I am always amused to read about bums stealing the EV public charging stations' charging cables for the copper wire), EV battery drain/overheating after spirited driving, EV capacity/capability "falling off a cliff" during cold weather, EV exorbitantly expensive battery replacement, recent federal government pullback from unrealistic federal EV mandates, the inability of the US power grid to handle EVs if they were to become popular, etc.

 

Edit: Your Jeep Grand Cherokee can be refueled with gasoline, and gasoline refueling stations are ubiquitous.


I appreciate the input. The scope of the sanity check was limited to the financial aspect. Not looking to have the combustion engine vs electric debate. 

3B Scores 03/2024

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Message 7 of 8
coldworld
Regular Contributor

Re: Need a sanity check on a purchase plan


@sccredit wrote:

My understanding is that Tesla does not allow negative equity to be rolled into the new loan so double check that.


This was never a consideration.

3B Scores 03/2024

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Message 8 of 8
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