Electric vehicle giant Tesla has been ramping up its production at its Gigafactories across the world. However, the demand fails to match the company’s substantial supply of electric cars, leading to an increase in inventories.
In that sense, the Musk-led automaker has offered numerous incentives and price cuts to keep these inventory vehicles moving.
In addition, Tesla has also just launched a new financing term that offers lower monthly rates for potential customers on Friday. With this, the automaker expects to attract more customers to buy its luxury models.
Financing term details
Tesla’s newly launched financing term option offers a more extended payoff period for customers to 84 months.
For reference, the company’s previous financing terms only included 6, 48, 60, and 72 months for customers looking to buy Tesla EVs.
With the new financing term, Tesla customers can now take advantage of a seven-year loan to buy an EV from the brand. In addition to a longer payoff period, customers can also get APRs of approximately 6.39%.
However, it seems that highly-qualified buyers can only get the 6.39% APR. Tesla’s website warned, “Your payments and rates may be higher.”
Benefits and disadvantages
This new 84-month financing term will aid customers planning to buy a Tesla vehicle by reducing their monthly payments. It is especially helpful for customers that may be short of budget for buying Tesla EVs.
However, it must be noted that the longer the financing term, the more expensive the EV gets. As we all know, it will accumulate interest for the entire term.
BankRate also noted that having a longer-term loan will cause more depreciation. Customers will lose 20% of their car’s value in the initial year and 60% by the 5th year.
All that said, it will just be up to customers if they risk facing these disadvantages in exchange for getting a Tesla model for a more affordable approach.
See Also:
- Tesla competitors struggle with increasing car inventory in the US, probably due to tax credit ineligibility
- Tesla discounts some Model 3 inventory cars, now starting at $384/month
- Inventory rise in Tesla Giga Shanghai sets new record
- Tesla exceeds Q2 delivery estimates driven by price cuts and federal credits
- Tesla cuts Model S/X prices by $8,500 in big quarter-end push
Nonetheless, all will be good for Tesla. This strategy will aid the company in raising its demand levels and making its offerings more accessible to a wide range of customers.
Tesla needs this demand boost, particularly this quarter, as it already warned that production would slow down due to its ongoing factory upgrades.
