Tesla Lending Rates Jump for Second Straight Quarter | Auto Finance News | Auto Finance News

Tesla Lending Rates Jump for Second Straight Quarter

Tesla Model X

Tesla Model X; Courtesy of Tesla Inc.

After Tesla Inc. increased the interest rate on Model S and Model X vehicles in the fourth quarter of last year, the company has again increased the interest rate for the second quarter in a row — this time by 100 basis points.

In 3Q17, the electric car manufacturer’s U.S. interest rate was 0.99%, before jumping in 4Q17 by 50-basis points to 1.49%. Now the interest rate has again omcreased and is set at 2.49% in the first quarter of 2018. That’s 150 basis points higher since 3Q17.

To put that into perspective, previously for every $50,000 borrowed, it would be an extra $10 for the monthly payment, which is $660 over the course of a 5-year loan (Tesla currently offers 5- and 6-year loans). Now for the same $50,000 borrowed, more than $1,300 would be added to the total purchase.

These interest rates affect other countries as well. Norway, a hot spot for Tesla purchases previously experienced 0.25% interest and now has 0.99%.

Additionally, during 4Q17, the company also cut production of the Model S and X, which led to U.S. sales of the two high-end models to decline by 1,325 units sequentially from 3Q to 4Q, according to a published report. At the same time, production issues with the cheaper Model 3 led the company to focus on its strong growth in used sales, which is a strategy Chief Executive Elon Musk said would be implemented at the annual shareholders meeting in June.

“The used Tesla section of the website is going to get a lot more attention and particularly if the car is four years old, it’s got a lot of mileage, you can buy a Model S for as much as a Model 3,” Musk said.


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