“I’m completely upside down on this car,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving. “How do we get out of these?” BMW i3 owners keep saying in a Facebook group that I frequent, in reference to their cars’ plummeting values. So does it make sense to buy an EV today knowing that, in three years, it will likely only be worth only 49% of what you bought it for? Maybe, maybe not. But one vehicle that seems like a good buy today is the Tesla Model Y, especially if you have to finance it. Because Tesla is now offering 0.99% APR.
Used Car Prices Have Been Dropping, And You Can Thank Tesla For That
In our article “Why Used Electric Vehicle Prices Are Plummeting And Why Used EVs Will Probably Get Even Cheaper,” we cited a number of reasons for enormous EV depreciation, with my colleague Matt Hardigree writing:
So why are EVs faring worse than their gas-powered counterparts? Here’s a good list of reasons:
- Well-maintained, a gas-powered vehicle maintains most of its same capability over its lifespan whereas the batteries in electric cars, currently, offer less value over time. [Ed Note: This was definitely the case with early lithium ion-powered EVs like Nissan Leafs and BMW i3s, but newer EVs aren’t expected to see nearly as much battery degradation over their lifespans. -DT].
- Many electric cars are luxury cars, which already face higher depreciation.
- Whispers: Infrastructure
- David Tracy.
- The best-selling EVs over the last few years have been Teslas.
- Tesla has continually and consistently lowered prices, causing the value of used Teslas to drop in turn.
- David Tracy.
- Tesla’s price drops have created a price war that’s caused other automakers to lower their prices.
- EV sales are rising and, eventually, most of those vehicles will become used cars.
I don’t want to understate the importance of infrastructure in deterring non-EV owners from entering the space, nor do I want to downplay that second bullet about luxury cars, but if we’re being honest: Tesla is the big reasons for EV price drops. Cox Automotive says the same in a recent report on transaction prices:
The market’s general EV price decline has been led in part by the two most popular EVs in the U.S. – the Tesla Model 3 and Model Y. Transaction prices for the Model Y last month, estimated at $49,363, were the lowest on record and were lower versus February 2023 by 16.2%. Model 3 transaction prices last month, at $43,614, were lower year over year by 12% and near the lowest level on record. High incentives and discounts on most models also continue to play a major role in lower EV prices.
That Model Y transaction price is lower than the average transaction price for an EV in 2024, which is $52,000 in the U.S. according to Cox Automotive.
Tesla Isn’t Just Competing On Base Price, Now There’s 0.99% APR
But Tesla isn’t just competing on base-price, it’s also now competing on APR (which is an indicator of how expensive it is to borrow money, accounting for interest and fees). The typical APR in the U.S. is about 6-ish percent for someone buying a new car with excellent credit and about 8 percent if that same person were buying used, per Experian. Tesla is now offering 0.99 percent.
Here, you can see that, if you put 9% down ($4,250) on a new Model Y, you’ll pay about $500 a month over 72 months when you factor in the $7500 federal tax credit:
To be sure, Tesla isn’t the only company offering cheap loans. Check out this 0% for 60 months deal that Hyundai is offering on the Ioniq 5:
Ford, too, is offering 0% financing on outgoing 2023 Mach-Es:
Obviously, all of this is subject to credit approval, but I mean, damn. Low APRs in a high-interest rate economy. That’s the state of EVs today.
With growth slowing, this is a fiercely competitive space, and all these automakers offering incentives and low interest rates has been a way to try to win customers over from Tesla. Now with Tesla offering the same, and a product that is in many ways more compelling (primarily because of range superiority and the charging network), it’s going to be harder for others to compete. On paper, the Model Y seems like the smartest new-EV buy.
It’s Still Cheaper To Buy Used, But Only By A Little
I’m sure you read the intro of this article and started thinking that the smart move is to buy used, given the 49% value drop of a typical EV over the first three years. And in some cases that is defintiely true, but in the case of the Model Y, it might actually be smarter to buy new. It depends. In my local market, I’d be buying new.
I hopped onto Tesla’s website, and check out the pre-owned Model Ys like the white one you see above listed for about $30,000. That’s quite a bit less than the $46,380 starting price on the Model Y. But let’s break things down a bit.
That used Model Y may cost only 29,700, but if we factor in the 8.79% APR, things start to get quite pricey. If you put $4,250 down, you’ll end up paying $7,389.34 in interest over the 72 month term, for a total cost of $37,089.34 (plus fees). Let’s compare that to the new Model Y.
Total cost is $46,380 (that includes the $1,010.71 destination charge). If you put the same $4,250 down, you’re now financing $42,130. At 0.99% interest, you’re going to end up paying $1,281.02 in interest for a total of $47,661.02. Subtract the $7,500 government incentive, and you’re at $40,161. That’s just $3000-ish more than the used Model Y, which has 70,000 miles on it. (By the way, if you’re curious how Tesla calculated the $499 a month figure, it’s $46,380 at 0.99 with $4250 down. That comes to $603 a month; the $7500 incentive, if you divide that by 72 months, comes to $104 a month, so lop $104 from $603 and you get $499).
To be sure, you may be able to find a better interest rate than 8.79 (that’s just the figure I took from Tesla’s own site), and if you shop around, you can probably find a Model Y for under $25,000, which would then make the car eligible for a $4,000 used EV rebate if your adjusted gross income is under $75,000 (for a single filer). So at that point, buying used would still be the smart move.
Still, while you can save money buying a used Model Y, the gap is closing. And depending upon what the depreciation vs. age curve looks like on a Model Y, it might be smarter to buy new, especially if you plan on trading up in a couple of years. There are lots fo factors to consider.
On Paper, The Model Y Is The Best EV Deal There Is
All I know is: The Model Y is an absolute slayer in the EV marketplace when it comes to value. When you factor in how compelling it is as an overall package, with its 320 miles of estimated range, its sup $40,000 asking price after federal incentive, and now 0.99% APR, it’s clearly the best car for the money on paper.
I say “on paper,” because this kind of thing is subjective. It’s the “smart buy,” sure, but I myself am about to pay Model Y money for a BMW i3, which is, on paper, an objectively worse car and thus a less “smart” purchase. But in reality – at least in my view — the i3 is a much, much more compelling machine. So, smart buys be damned: Buy the car you love. If that’s the Tesla Model Y, then you’re a lucky dog. Unless Elon announces another huge price cut in six months — then I’m sorry, your car just became that much less valuable.
Nope, never.
Last week, David told us how he’s hanging up the wrench so he can spend his life, like, living or something. Now, he’s going on about buying a new premium EV. Hollywood changes you, man.
A buddy of mine just this weekend picked up a new Busy Forks. Right now Toyota is offering a $199/month lease at 0.99% with something trivial like $1200 down, or buy it at 0%, name your down payment, pick your term, anywhere from 3 to 7 years, same 0%.
The Model 3 has it beat in range, granted. They’re both hideous to look at, albeit two different flavors of dog shit. But when it comes to interior design, general reliability, and not being owned by a fascist-curious villain, I’m going to have to go with the Toyota on this one.
Anyway, point being, yeah some really good deals out there on EVs right now.
I was awfully tempted to get a cheap lease on the bz4whatever to tip my toes on EV. Only the insurance cost stopped me. The additional premium would exceed the lease payment.
If I have to finance an EV, my preference is a used EV6 or a new Chevy. The used EV6 is a pretty good value, while the new Chevy feels like the platform that’s likely to have the best future support. Both have most of the essential controls on physical buttons, switches, and stalks.
And both of them are cheaper to insure than a Tesla. Having plugged several VINs into some insurance quotes, I found most EVs would be a slight increase for me, as would most new cars. But replacing one of my two vehicles with a Tesla would double my total insurance rate (more than double for a performance model).
I also think that worrying about depreciation is a losing proposition, regardless of vehicle. You’re definitely going to lose, so get the car you want and run it until the depreciation doesn’t matter.
A Model 3 Performance is so cheap now on a lease that it’s insanely tempting. I really do like the machines Tesla makes. The Cybertruck is ugly and essentially useless, it’s a stupid car, but I respect that it’s essentially a concept car that they brought to life, complete with all of the concept car flaws, and the engineering behind it really is impressive. I cannot deal with Musk, though, and I hate leasing. There is still a small part of me that’s like “lease an M3P, come on, do it”.
Even if Tesla and Musk weren’t together, the Tesla lease is the least attractive one I know (despite looking like a pretty good value). Sure, the idea of leasing isn’t really to buy it out at the end, but I want the option. I don’t like that there is no buyout option.
The tempting lease deal right now is the Polestar, though I still don’t like the number of screen-based controls on it.
Even if it were 0.0%, Elon being a nazi-enabler would dissuade me.
This is the right answer.
The only thing large corporations and the ultra-rich care about is getting your money. My money is an insignificant drop in the bucket for Elon, but it’s all I have, and he won’t get it.
This wallet kills fascist.
Glorious reference. Miss Pavlichenko approves.
Hold up, did David admit he’s buying another i3 here????
Yes, and apparently he’s selling Model Ys to pay for it.
YES, he did. Hint hint.
boy really did manage to bury the lede, here
DT: “Should I buy a slightly-newer i3 with an old battery or keep my old one which is perfect and has a brand new battery?”
Everyone: “Keep the old one that’s perfect and has a brand new battery.”
DT: “Never mind, I’m buying a brand new one because I need more vehicles in my fleet. Anyone wanna buy an old Jeep?”
Other than the rather old Model S and roadster, Teslas look completely bland or flat out ugly like the Cybertruck. I think the powertrain seems pretty good but the interior and exterior of the Y, the X and the 3 do absolutely nothing for me. That’s before we get into questionable build quality, lack of physical controls and supporting that wackadoodle CEO in any way, shape or form.
If I dip my toes into the EV world, it’s going to be something not Tesla.
Not gonna lie, a MY LR would be an ideal car for the next decade or so. Long commute, check. Cheap electricity, check. Garage with ridiculously easy 220v access, check. MY fits into garage, check. Can tow my little camper to the places I’d likely go, check. Can fit my hobby stuff, check. Was considering buying a new car this year to replace a 12 year old car with well over 200k miles purchased new, check. Can afford to pay off the loan any time I choose, check.
Alternatives at this moment in time: Hyundai dealer is horrid. Kia is physically smaller and doesn’t make the best use of its space. Ford can’t tow. My current car will need another big time sucking repair in the next few years. Plus it’s not keeping up with what I’m finding life tossing at me.
The low interest rate is making this really tempting. I’ve been wanting an EV to replace an already efficient gas vehicle. Yes, Musky is a troll king. But darn if that car at that rate doesn’t make for an interesting proposition. Loans are a tool to be used. Like anything, they can either help or hurt.
For the folks in the camp of “buy new and hold on for 10+ years”, yes, that’s my camp. It’s time to repeat the cycle is all.
Sounds good for you! Throw some of that money into a high-yield online account, or even better, an S&P 500 index fund, and out the door ya go, making that money work for you. 🙂
The more work it can do for me passively the better!
Although there is a point at which seeking passive income becomes rent seeking. Index funds aren’t that.
Not sure what you mean by rent seeking?
Otherwise, 500 indexes do carry a tiny bit more risk than a standard interest account, but not much when looking historically, in fact it is much better.
The returns on the 500 are more than likely gonna outperform in a lowering interest rate economy, even if it’s just the 1 drop (likely a .25% at the end of the year, so let’s say…4.85% for a top-end saving account), particularly when we seem to be allergic to stopping war, and the 500 rebalances quarterly w/dividends to offset the carrying costs of Fidelity or whomever.
That’s my view on it, anyway, and where I’m doing my thing (primarily, not singularly, of course).
Sounds like we’re both subscribing to the Boglehead philosophy of “be the market”.
By rent seeking I meant that there’s a point at which passive income gets into seeking opportunities to be the middleman without adding any value to the process. Like private equity snapping up starter houses to perpetually rent. Bleep those ghouls.
Oh, I see what you mean. Yeah, that is a thing. It’s not cool, but it is efficient. For whatever that is (metaphorically) worth,
I try not to think about it all that much. I’d like to think Seneca would feel the same.
Sure, sure. But the Y is still ugly, so hard pass.
I wonder if the Kia owner is on a 72 month loan. It is pretty easy to get underwater when you put down as little as possible and then extend the loan out as long you can.
Not saying the depreciation of EVs is helping, but it is not the only cause.
Probably not I have one on lease for 36months I put $3k down and I’m over $10k upside down after a 18 months. Musk lowering the pricing of Tesla’s has killed the value of most if not all used EV’s.
It’s a great time to buy one though.
Some of these comments make my head hurt.
Of course most cars depreciate! So does almost everything we buy! Unless you’re expecting that TV to be worth what you paid for it 5 years from now? Or that pizza? Or that shirt? Come on.
We buy things to extract useful life from them, then generally dispose of them. Some things last longer than others, but buying a car isn’t an investment and no one thinks it is! All of you proudly commenting about not financing a “depreciating asset” are only congratulating each other in a big circle jerk.
People who finance new cars do so not because it saves the most money, but because a new car has value to them and they can afford it. For some reason it’s considered virtuous here to spend as little as possible on a car and brag about it.
It’s like peak Reddit brain nonsense. There are also tons of car journalists and YouTubers who constantly make this ridiculous argument too. I love RCR but Brian is one of those dyed in the wool CASH FOR EVERYTHING people…and he just recently made a video about how he’s frustrated that he’s not doing great financially.
Credit and financing are just tools. There neither a magic bullet nor some evil boogeyman. You can use them to your advantage or you can use them poorly and recklessly tear your shit apart. I also agree with your last point-it isn’t some horrendous decision if you do it within your means and the car brings you joy whenever you’re behind the wheel.
It’s your money! If spending an extra couple hundred bucks a month on a car makes you happy, who cares? But anyway, the CASH ONLY NEVER FINANCE ANYTHING terminally online circle jerk is going to be very disappointed 10-20 years down the line. If you want to build wealth you’re going to have to take out loans in one way or another. That’s just how it works.
“If you want to build wealth you’re going to have to take out loans in one way or another.”
I agree that loans can be good decisions (home loans, reasonable student loans for a degree that offers a good return on investment, car loans for basic transportation, etc.), but I think your comment takes things a bit too far. There is something in between “always pay cash” and taking out a loan for a “car that brings you joy whenever you’re behind the wheel.”
I point this out because I am frustrated with people (not necessarily you or V10omous, but some commenters and writers for this website) conflating necessities with needs, and using imagined needs as excuses to justify poor decisions. People with expensive car loans are often framed as victims on this site. Normalizing and justifying a poor use of financial products only encourages more people to do the same.
“It’s your money!”
If the money is loaned, isn’t it literally not your money?
It is also true that contributing to a Roth IRA will improve your credit rating, financial security, and should be first priority as soon as you have income that can support it.
Experian I know for sure will include assets and accounts as part of your credit score.
On a side note Roth IRA’s rock! Investing now in a lower tax bracket and paying no taxes later? Awesome. We all know taxes will have to increase in the future, that $34,000,000,000,000 won’t pay itself!
This is one of the biggest things that made me stop listening to the RCR podcast when they were still doing it regularly. The Dave Ramsey worshiping, “my first personal finance” mentality of only even paying cash (unless it’s a theoretically appreciating asset like a house) is reductive and based on some seriously outdated assumptions. Sometimes you gotta bite the bullet and get a loan on a car because, if you only ever spent cash, you’d be stuck in a never ending parade of $2000 shitboxes and unable to actually save anything.
Debt is not a panacea nor is it always a good idea. But mindlessly spewing the opposite is just as harmful.
I really have loved RCR for a long time but outside of the cool stuff Roman is still doing I’m struggling to remain interested in their content. Brian is just coming across as a cranky old man yelling at clouds a lot and the takes and much of the content are so uninteresting at this point that I can’t take them all that seriously.
We get it, Brian. Japanese car THE BEST! Newer luxury car OVERRATED! American sports cars are loved by BOOMERS and DOUCHES HA HA HA HA ! Here’s a tasteless joke meant to rile people up that I will promptly edit out when people tell me to STFU.
I mean they posted ANOTHER goddam S2000 video today. Isn’t it their third or fourth? We get it! We really do! Japanese car BRILLIANT! OHHHH THEY DON’T MAKE EM LIKE THIS ANYMORE! HONDA MANUALS BEST MANUALS FIGHT ME IRL!!!! HERE’S WHY YOU SHOULD PAY CASH FOR JAPANESE CARS AND NEVER EVER CONSIDER ANYTHING ELSE EVER!
They’ve kind of become what they set out to parody at this point. It’s a shame. Oh and I couldn’t listen to the podcast either. Between the shitty financial advice, shitty investing advice, shitty life advice, etc. I didn’t find anything of particular value.
At the end of the day I say this out of love. I love RCR. I’ve been watching their videos for almost a decade at this point. For a long time they produced some of the best automotive content on the internet. I get that channels evolve and change. I get that creators have to diversify a bit to make a decent living. I get that opinions evolve, and I still think their content is made with love.
But goddamn. If you’re out of things to say at this point and are visibly, openly frustrated and cynical then take a break. Try something else. Let Roman do some more race to the bottom episodes. Maybe go get some therapy (I don’t say this in a demeaning way at all, I work in mental health and have a therapist). But whatever is happening now is just a waste of everyone’s time…
THANK YOU! I’ve been watching them long enough to remember when RCR was getting copyright strikes for playing ska in the intros, but there’s a certain hollowness to it these days. I think Brian put a lot of his heart and soul into the Westfalia pilot video and that failed to achieve anything. Now the Crazy Taxi build isn’t yielding the same kind of content as the Vagabond Falcon. He’s just stuck oscillating between being a cranky Weea-boomer and vulgar non-sequiturs.
I used to religiously every Monday morning, but now I barely notice when I don’t get my weekly dose of “I bought a Corolla in cash so I CAN BUST!”
“People who finance new cars do so not because it saves the most money, but because a new car has value to them and they can afford it. “
I generally agree with your comment, but I am going to take issue with your contention that most new car buyers can afford it. There are frequently stories on this website about how car payments are unaffordable or that buyers are finding themselves underwater on car loans. If buyers were taking out loans for cars they can genuinely afford, high payments and negative equity would be non-issues. Most sources state terms between 60 and 72 months are typical for new cars. I would argue that if someone needs to pay for a car over 60 or 72 months (or has to roll negative equity into their loan) they can’t afford the car.
I am of the opinion that transportation costs at most $15,000, and anything above that is a luxury purchase. Luxury purchases are great and can be perfectly reasonable. I don’t even object to taking out loans for a luxury purchase. However, I am exceptionally frustrated that media outlets (including The Autopian) frame lengthy loan terms and high payments as inevitabilities, or worse yet, sound financial decisions. This article implied (expressly stated?) a 6 year loan to buy a $47,000 luxury item was a smart financial purchase. That is ridiculous.
Delinquency rates are higher than in 2021-22, but lower than any other time in the last 35 years.
https://fred.stlouisfed.org/series/DRCLACBS
I’m not aware of an auto loan-specific chart, but I assume those defaults are well represented in “consumer loans”. If not, I welcome new data if someone can present it. My contention is that auto loan defaults are at minimum no worse than historical averages, and around 3% of outstanding loans. 3 crazy people going viral on TikTok for their $2000 car payment far outweigh the 97 typical car buyers who make payments for 72 months without issue.
High payments and negative equity are not inherently issues. They are risks, but for most people manageable ones. We just don’t hear about those people very often.
You can hold this opinion if you want, just know that you shouldn’t expect many people to take you seriously if you do.
A person would be perfectly fine buying all their clothes at a thrift store too and calling anything new a luxury purchase, but I don’t believe they should be lauded specifically for it.
Delinquency rates appear to be relatively constant, but I think a more relevant indicator is term length which has increased over time (https://fred.stlouisfed.org/series/DTCTLVENMNM). Amount financed has also increased, although that is less significant when accounting for inflation (https://fred.stlouisfed.org/series/DTCTLVENANM). New cars are also more expensive than in the past relative to inflation, but that is mitigated by longevity and that new vehicles today are generally better in most ways than new vehicles in the past.
I think we agree on a lot, but it appears we fundamentally disagree on what it means for a car to be affordable. To me, ability to make payments is less important than the ability to meet long term goals, particularly retirement. Defined benefit plans are far less common than in the past, and Americans need to actively save to compensate for this change. While I don’t see the demise of pensions as a bad thing, everything I have read suggests Americans are not saving enough to compensate and will struggle in retirement. Given this, I am not sure historical auto loan delinquency data accurately depicts how car loans affect people’s finances. My concern is that people are getting loans to buy a nicer car when they should be investing that money to fund their future living expenses. If you have data or an argument to refute this concern, please post it. I would love to be wrong in this instance.
“A person would be perfectly fine buying all their clothes at a thrift store too and calling anything new a luxury purchase”
I find this argument fundamentally flawed. Given how long cars last (as well as how much vehicles cost relative to clothing), used cars are more akin to used houses than used pants. No one thinks twice about buying a used house. $15,000 might be a bit low, but I have yet to hear a rational argument that someone needs an expensive new car to meet their basic transportation needs. As always, I am open to arguments that refute this opinion, but I haven’t heard one yet.
Well there is no rational argument that anyone “needs” a new car, just like there isn’t any rational argument that anyone “needs” new clothing or any other item either. That was the point of the comparison, so if you’re only going to be satisfied by a rational answer, I don’t have one.
People like new cars, people like fancy features, new styling, more power, all kinds of non-rational reasons to buy cars, and as an enthusiast, I find that awesome. What a boring landscape it would be if everyone bought cars purely rationally.
I do think some of your concern about people stretching their finances to buy new cars is misplaced. The average household income of a new car buyer in 2023 was $115,000, or solidly middle to upper middle class.
https://www.coxautoinc.com/news/cox-automotives-car-buyer-journey-study-shows-satisfaction-with-car-buying-improved-in-2023-after-two-years-of-declines/#:~:text=Who%20Bought%20a%20Vehicle%20in,for%20a%20used%2Dvehicle%20buyer.
Would some of those people be better off buying a used car and putting the difference into retirement savings? Perhaps from a purely rational POV, yes. But there’s more to life than that, you can’t take it with you, and the person putting 5% in their 401k rather than 10% and buying a $40k new car with 12 years of lift ahead of it instead of a $20k used car with 8 years of life ahead of it is not making a crippling mistake IMO.
I’ve walked this alley before in these comments (sometimes to you, ha!), but some of the community just don’t see it properly, imo.
Kelly on a Keegle, even DT has seen the light on what life is like to have a nice thing or two along the way. It’s ok to enjoy things a little bit, and not live like Charlie the Chimney Sweeper if you want to.
Whatever. People can do what they want. I choose to buy Adidas socks vs. Costco ones because I like the toe seam better. That’s value for my other counting hands in my book. 😉
“A person would be perfectly fine buying all their clothes at a thrift store too and calling anything new a luxury purchase, but I don’t believe they should be lauded specifically for it.”
I would. That person is living comfortably within their means. I find that laudable.
Well, username checks out I guess.
Yore god damn right!
Signed a thrifty pedant
You’re right of course.
Signed: A victim of autocorrect.
Autocorrect wasn’t a thing in the days of yore. 🙂
I suspect there’s something at play more than the thought of people defaulting on loans. I think there’s a real tendency to look at someone who has prioritized the nice car and decide that it’s a bad financial decision because they could have spent less. Or because a person knows about how much they make and it feels like too much of their income. (Or, in some cases, I think we see a car we wish we could justify and it just feels like no one could justify that car.)
But we all prioritize what we feel is worth it. Maybe it’s the big TV and a cable package. Or it’s sports tickets. Nice steak dinners. Concerts. Maybe it’s art. Or a Dodge Viper. If we all just bought exactly what we need and nothing more, it’d be pretty boring.
I think this is very well said.
There’s a very Puritan mindset around here sometimes.
“I got by with a shitbox, why can’t everyone?”
This is most often seen when it comes to luxury trucks and the hate they get, but pops up pretty much everywhere.
-It’s not virtuous to pay cash for something rather than finance something you can afford.
-It’s not virtuous to spend less and suffer in a cheaper vehicle than buying something nicer and newer.
-It’s not virtuous to police others’ spending habits, especially when they don’t impact you at all.
This is why I’ve always leased, which is a Very Dirty word in these parts. lol
If you want a new EV, leasing makes the most sense. The industry is rapidly evolving, resale value punishing, and you get full subsidy.
Exactly! Lease and look at the buy-out number. Worry about it when the time comes. It either makes sense in 2–3 years, or if it doesn’t, you wash your hands for the next small plate in some other new tapas bar. That’s how it rolls in the EV game.
It’s not DeLorean science. 🙂
At some point you will build enough equity to trade in your car. If you can’t do this with your payment, you should probably lease. Cars don’t gain equity (before 20+ years), but they retain equity, and this equity retention should be something one should try to achieve. But, this also implies that you will never get ahead, and will always be chasing.
Not exactly sure what you mean.
Here is the thing about equity, though. It’s not a static baseline. It changes all the time. So, chasing it to a “break even” point is like chasing a butterfly. The harder you try, the harder it is.
Not sure the right way to say it…
If I buy a car for $200/month, but can easily afford $300/month, I have a spare $100/month to spend.I say “retain equity” in the sense that “I can afford enough that the resell price of the car is still enough to sell for the current rate that car would normally sell for”.IOW, if I can only spend that $200/month, but after 96 months, I still don’t own the cI just mean that one should arrange their payments so they would never be underwater should they need to sell it? But, it seems that is not most people. I am still not sure I communicated that correctly.
What are your thoughts of Buy Now, Pay Later for pizza? I believe UK firm Zilch got flak for running that ad campaign in late 2022.
Granted, Affirm has active advertising campaigns for BNPL with Dominos, and Zip has active campaigns for BNPL with Pizza Hut.
What if I merely amortize the pepperoni, but put a down payment on the dough, sauce and cheese? I like the idea of not having to consider my debt-to-income ratio for pizza, or having to complicate my life with how many cubic inches of fruit paste and ripened dairy-covered flatbread my monthly cash flow could theoretically merit.
UPDATE: As an additional twist, what if I’m not BNPLing a pizza from a pizzeria or quick service chain, but I’m BNPLing the real good shit: a box of Ellio’s from my grocer’s freezer? ITS SICILIAN STYLE, IT HASTA BE GOOD!
Let’s not give Elon any more money, okay?
Even at a low interest rate, you’re still talking about $50,000 for a car with the build quality of an ’80s GM product that makes you look like an NPC.
For $12,000 less you can get the far cooler Hyundai Ioniq 6. It’s got a 6% interest rate, but over the a 5 year period, even with the extra interest it still comes in five grand cheaper – and you get a car with a much nicer interior.
Not to mention that it doesn’t make you into a rolling bumper sticker that says “I support ketamine-addled right wing trolls.”
Image is really important to you, eh?
Not supporting a nazi-enabler is important to me.
If that’s your thing, by all means, stick with it.
It is still just a car with billions of dollars behind it from millions of stockholders that aren’t Nazi’s or whatever, right? Right? Even for a guy responding to a comment not directed at him? Right?
I mean, if you are holding tight to that..ehh, whatever. May tomorrow be a great day for you in every way. 🙂
For $50k I could get over two cubic meters of dogs.
This take “Elon bad, Tesla buyers are all right wingers” is getting tiring to read all the time. Yes, Elon is an idiot and is making some highly questionable decisions about Tesla’s operations. Yes, a proposed $56B pay package is insane, especially after laying off thousands of people.
But…. I and most people who don’t live on the internet don’t really care about the billionaire shareholder. Tesla makes good cars with phenomenal electric performance and the hands-down best charging network in the nation. Their battery longevity is quite good. The cars look good. Elon’s existence is rather low on my list of shopping considerations.
The Model Y is a good-looking car in much the same way Elon Musk is a great public speaker.
The build quality isn’t that bad.
Plus, while I don’t want to support Tesla, I have a hard time throwing Hyundai in there as the better alternative. Their business practices have caused havoc in my midsized city with all the car thefts that continue to go on; think of all the people whos lives have been turned upside down because their car was stolen. A Kia Soul owner typically ain’t flush with loads of spare cash either.
After putting the tax credit into play, Model Y actually starts at $10 less than Ioniq 6. Combine that with the huge difference in interest rate and the Model Y will actually cost about $5k less than the Ioniq 6 once the loans are paid off.
Plus, the price-comparable Ioniq 6’s 240 miles is substantially less than the base Model Y 320 miles. And it’s about double the horsepower and a ton more space inside. Then there’s the Supercharger network, which Hyundai will eventually be able to use but that time has not come yet.
The build quality is fine, too. This is 2024 Tesla, not 2016 Tesla, which sure, was much worse, but that was almost a decade ago. Things have changed. The complaints you hear now as such a tiny fraction of the multiple millions of sales per year.
When my truck was stolen a year ago, I bought a $10,000 car which is now worth about $2500. So boo frikken hoo.
You must have been blindfolded and picked a random advert off Craigslist to make that bad of a used car purchase.
“Unless Elon announces another huge price cut in six months — then I’m sorry, your car just became that much less valuable.”
This line seems to completely unwind any argument that a new Model Y is a smart purchase. We have no idea what this car is going to be worth in 4 years. Tesla will probably lower prices. Also, there is a currently a price floor on the Model Y given the oldest ones are only four years old. When cheaper, older Model Ys are available it seems likely values of all used model Ys will go down.
It is unlikely this car will be worth less than $14,300 in four years (which would be the balance assuming you paid the minimum payment), but it seems reasonably likely it will be worth close to $20,000. Is it really a good idea to have paid $33,194 over four years for a vehicle that now has $6,000 in equity?? This doesn’t seem like a good decision given how frequently some people want to buy new vehicles. If you find yourself in a situation where you need a different car you have kind of screwed yourself. This car at this price/loan terms might be a reasonably sound financial decision for someone who will drive it for 12-15 years, but that isn’t the typical new car buyer.
Also, if Tesla is willing to loan you money at 1% when everyone else is charging 8%, doesn’t that suggest Tesla is aware the car is overpriced? Why would Tesla subsidize financing if these cars sold based on their objective value? Car dealers (which Tesla is acting as given their sales model) make money either by selling you the car or selling you the financing. In most cases, if you win with financing you are losing on price, or vice versa.
“So, smart buys be damned: Buy the car you love”
This logic is exactly why people screw themselves with car loans. I am not against car loans when used responsibly; I am aware most buyers can’t purchase a reliable transportation appliance with cash. However, financing a car allows buyers to spend an incredible amount of money without realizing it. For the example of the Model Y, you are paying over $47,000. That is an incredible amount of money to pay for basic transportation. A new Model Y might be a better decision than some other vehicles, but that is like arguing that getting stabbed in the stomach is somehow appealing since it is objectively better than being shot 4 times in the back.
Honestly, David, you’re killing me with this post. You are trying to come up with a rational argument (justification?) for an irrational purchase. Please don’t encourage this kind of behavior.
And…that is why you lease one. “Lease”. A word more foreign in these parts than the French Legion.
This story makes my head hurt.
FYI…. financing a car is a “bad investment” that you will probably be underwater on over a significant term of the loan. EVs have nothing to do with this.
This is far too broad to be useful as a general statement.
“Pay cash for everything” is just as flawed of advice and is downright foolish for anyone with any financial acumen.
I have financed two cars and I have literally never been underwater at any point, or even within $6-7,000 of it. I could literally pay my car off now if I wanted to, it just isn’t necessary. If you have a downpayment, can get a favorable interest rate, and can pay it off in a reasonable amount of time (5 years or less, ideally 2-4) then it’s totally fine to finance, just make sure it’s around 10% or less of your monthly income.
If you’re someone with excellent credit it’s a great way to buy a car, oftentimes even the most ideal option. If you’re someone who’s taking out an 84 month loan an 14% APR to be able to afford whatever they’re buying then obviously it’s not. Just don’t get played and ESPECIALLY don’t shop by monthly payment.
If you maintain equity in the car you can even get out of it no problem if your financial situation changes. If you wind up underwater on a car you probably overextended yourself or made a lousy choice…like financing an EV.
Why is everyone so afraid of “being underwater” with their car? Every single new car I’ve bought and new motorcycle, I’ve been underwater on them for some point in time. Typically at least 6 months to a year. Why was that bad? The car was fully insured and I had the cash (or relatively liquid assets) that could make up the shortage from insurance to pay the rest off if they were suddenly wrecked.
In the days past of 0.0% financing, why is staying above water such an important thing? As long as you don’t over buy, or exceed what you can afford (calculate what you can afford with whatever means you want, I’m using the term broadly), it’s not a big deal.
As you imply, there is a danger in being underwater. If something bad happens and the car is totalled while you are underwater, you may end up in a position that you still have debt on that car. And you may need another car to replace it. I think that’s why people want to avoid being underwater.
In your situation, it sounds like you had a backstop: high levels of insurance plus the capacity to pay off the shortage. But you have to admit, it would have been uncomfortable to make that payment if needed. Also, not everyone has that backstop in place.
Absolutely, especially when the interest rates offered are lower than you can earn on that money, which happens often enough. I decided not to pay off my last car loan early because I was earning nearly double the interest sitting on the money than I was paying on the loan. If rates had dropped significantly, I could pay off that loan to avoid paying interest. It was a good way to keep your assets working for you and keep your options open.
This statement is my only issue with your argument. TOO many simply can’t do this. IMHO, most people probably fall into this category.
When people usually took out a 36 month loan to buy a car, far fewer people were ever “underwater” on their car loan.
Now people walk into a dealership and can’t rub two nickels together for a down payment, and then finance the thing into eternity if the bank would let them.
Or hell, they don’t even know how long the loan term is, because all they did was tell Jerry Lundergaard they can afford $500 a month and Jerry came back with $509, because you can certainly swing another $9 a month right (over 72 months at 10% interest).
I guess the good thing about Tesla is there is no Jerry, although they still try and pull that BS with the “savings” in the price on the website.
That’s an overly simplistic way of looking at it. First, it ignores any utility you gain from the financed purchase over the alternate cash purchase. Let’s assume your option is to buy a car for $4250 cash or use that as a down payment on the example Model Y purchase. Assume the Model Y depreciates 60% over 6 years. That would put your total cost of financing and depreciation at about $29,109. On the flip side, that cash down payment is going to get you an SUV that’s 15-20 years old and on the wrong side of 150k miles (depending on what you want and where you are). Theoretically, you could afford to make that cash purchase every year, but that represents a lot of opportunity and productivity losses, relies on massive Tesla depreciation, and assumes you sell the new car the second the note is paid, and/or you don’t make extra payments.
You can always come up with some unique case… but the overwhelming majority of people financing cars are not making large initial payments. The typical down payment on a car ranges from 11% to 20% of the car’s value… and it loses that the moment you get off the lot.
I’m only using that as an example because it’s what was proffered in the article. Maybe that “large initial payment” is coming in the form of a trade in. If the majority of people buying new cars are relying on trade-in value and/or putting little/no money down, that actually demonstrates the utility of financing.
For most people, their car is not an investment. It’s a tool they use to live their life. Its value isn’t determined by how much depreciation they eat versus the cost of owning/financing. Even if they end up paying more over the life of the car due to depreciation and interest, the ability to buy a car and not have to spend months/years saving for a cash purchase OR buy a car without depleting your savings is worth it.
A car (barring certain specific examples) is not an investment. They depreciate as they get older. If you are worried about that depreciation, get gap insurance. Then maintain your car and drive it long past the loan period. Otherwise you’re just spending money to find happiness in something new. I’m not saying that’s bad, but be honest with yourself and don’t expect to get 90% of the original cost back when you decide to move on to something new.
Merely a concerning optic I’m sure.
I enthusiastically applaud the success of the site, and respect the risk that was taken by the founding staff. I discovered this site through tracking down where Torch went, about a month into your launch, and have enjoyed the creative mix here. Just been bothered since his medical emergency that Jason has continued to be surrounded by old busted ass collection, whereas you seem to be spending exponentially.
Or just don’t buy a new EV. It’s barely a better financial decision than converting your savings to crypto. This is readily available information too and literally everyone who understands how electronic/tech products work saw this coming a mile away…and it’s probably going to get even worse as the next generation products start rolling out.
If you have to have an EV then lease one or buy one cheap once someone else has taken the depreciation to the face. There are some very attractive lease deals out there because you get the $7500 up front when you lease (although I think they’re making it so this is the process with purchasing soon as well) and manufacturers are discounting them even further after that.
The technology is moving too quickly and manufacturers have been both dramatically overpricing their EVs and building too many of the exact same goddamn cars. How many $50-$60,000 EV crossovers are out there? More than I can think of off the top of my head. This just isn’t a class you should be putting much of your money into right now.
If you’re going to buy something to keep long term and are conscientious of your carbon footprint go get a Toyota hybrid. You’ll probably be able to sell it for $20,000+ when it’s 10 years old and has 100k on it.
Why anyone would buy a Tesla is beyond me. I just assume everyone I see driving a Tesla is an idiot. There’s so many better choices
I drive a 2021 Model 3 that I paid $22,000 for a few months ago. With what I pay in electricity it costs almost nothing to drive. It is fun to drive and very comfortable. I also think it looks nice.
Can you please explain to me why I am an idiot for driving a Tesla?
Also, could you please give me an example of one of the many better EV choices available?
Nice deal. I’m not considering a Tesla, so my favorite options for an EV crossover/hatch are a ’22 Hyundai Ioniq 5 that scores the $4k used tax deal and, ironically, leasing a Toyota Beezforks. Coming off another EV lease, I don’t necessarily want to consider one but have you seen the deals on them?! $169/month and a couple grand down for 3 years!
I am generally against leasing, but it is hard to argue against $169/month and $2,000 down. I suspect my Model 3 will depreciate less than the cost of that lease over the next three years, but it will be close. I couldn’t find a lease deal that was that good when I bought my Tesla. I would have considered leasing for that price.
The Ioniq 5 is a great option – they are nice cars. I have seen a few moderate mileage 2022s for sale for ~$23,000. That is a great deal, particularly if you can get the tax credit.
Used EVs are great. That is part of the reason I am so frustrated by David’s implication that a new $46,000 Model Y at 1% interest is a smart purchase. You can buy the same damn can for half the money in 2-3 years.
Tesla sold 670,000 cars in the U.S. in 2023. Based on the ATPs, most of the buyers are middle class or higher which means there are a whole lot of well-educated, successful idiots out there. For my wife what sets the Teslas apart is the quality of the SuperCharger network and that her Model Y is a huge step up from her previous Chevy Volt. But we leased hers since the tech is changing so quickly.
What are all the better choices? Please include prices.
Exactly – the depreciation curve is about the same as a new flagship cellphone. But that’s still only about $1,000. Why would I want to be an early adopter for something that costs 50+ times that much?
Combine the fact that a used EV loses range over time, so it’s like buying a gas powered car with a gas tank that shrinks as it ages, and depending on how it was treated, that variable is different from one example to the next, and it’s no wonder that EVs hold their value about as well as other tech products.
Also, here in the native habitat of the electric car – California – the only consumable more expensive than our gasoline is our electricity. Unless you got rooftop solar before they nerfed net metering, in a sop to the utility companies sold to the public as “equity” for those who can’t get solar, the numbers just don’t pencil out for a lot of people. It’s why communities here are backing off the natural gas hookup bans; why would I replace my gas furnace with a heat pump, when gas costs less per therm?
If I still had a commute, I’d consider leasing an EV, so that resale is the manufacturer’s finance arm’s problem. But my wife and I work from home, so our cars are essentially just used for a few errands and long trips. Why would I buy a vehicle that can only handle one use case?
Even with the high cost of electricity the cost per mile for power is much lower on EV. As long as I charge off peak, my Niro EV uses $.08 per mile, vs our previous 30mpg gas car at $.15 per mile. For anyone who can charge at work that gets even better.
The heat pump argument really depends on your area and what you are replacing. We have a traditional gas wall heater and we spend hundreds more on gas during the winter.
“why would I replace my gas furnace with a heat pump, when gas costs less per therm?”
Because rebates!
I dunno about HVAC systems but heat pump water heaters are worth looking into. Water heaters are typically a significant chunk of a household energy budget and IIRC a 12 year heat pump water heater will pay for itself in about a year vs a comparable regular electric water heater, at least at PG&E rates.
Gas is cheaper but even so I think the time to ROI is still a fraction of the lifetime of the heater.
YMMV though.
“Also, here in the native habitat of the electric car – California – the only consumable more expensive than our gasoline is our electricity.”
I find the EPAs website is a great tool for determining which is more cost effective. I like to use PHEVs as models since they give the most apples to apples comparison. Plug in your own electric rates and the local cost of gas to see which is better in the same car.
Nerdy asterisk here on heat pump water heaters from an HVAC tech. I’m a big proponent of heat pumps—but! They only move heat, so you must be careful about application: look carefully at the climate recommendations: if your local climate falls near the lower end of the range, you may well be better off with gas.
I’m also concerned with maintenance on residential units: these new heat pumps are quite efficient & compact, meaning that they are complex and often difficult to work on. Make damn sure you find a company that invests in the training & pays their techs well, or minor problems could become ongoing nightmares. Note that new models may be best on paper, but less familiar to your tech
-in general, I highly suggest everyone stay away from the companies (and they are legion) who focus on selling you shiny new high-tech units—but don’t pay enough to retain the knowledgeable & experienced techs that can keep your equipment running efficiently. Talk to your tech: make it personal and treat them well. A nicely timed glass of lemonade or cold bottle of water when they’re toiling in the sun can make a huge difference. Find out how many years experience they have. Be wary of suggestions that ‘it probably just needs more ‘Freon’ ‘ without the checklist of, ‘well, it could be low on charge, but I’d better check airflow and a couple other things first’
*change your filters regularly. Use pleated filters, not that flimsy blue poly*
sorry to run on, but these are expensive machines. Do your part changing filters and having them serviced regularly. Maintain breathing space around your outdoor unit—and also think about how your tech can easily access it (trim that holly back a good ways: it hurts!)
Also buy a high quality spare start/run capacitor. Swapping it out in my admittedly limited experience is a quick and easy job so save the repair budget for the real HVAC challenges. Worst case you can at least eliminate a bad capacitor as a reason, best case you’ll fix it in 15 minutes and be a hero instead of broiling or freezing for a few days till someone can squeeze you in and charge you hundreds.
Those capacators always seem to go out on the hottest days for A/C, I imagine its the same for extended borderline days for heat pumps.
With it living in the garage they don’t get so hot. so maybe it’s less likely to fail?
I don’t think its environmental heat although that probably doesn’t help. My A/C condenser is outside of course but on the north wall so its shaded as much as possible from direct sun. The capacitor gets more heat from the working compressor.
Heat pumps are probably the same since they are basically bidirectional A/C units and the condenser needs to be outside.
So you’re the guy I want to purchase and install mine.
I’ve got huge amounts of excess solar power and this is way cheaper than adding a home battery.
Please tell me you’re in SoCal – Corona area or you know someone reliable that is.
Even with rebates, in my area heat pump HVAC systems aren’t a better financial choice today. Maybe if natural gas and electricity prices change in the future. That being said, heat pumps don’t come out considerably more expensive, just slightly. Natural gas is just so damn cheap for the amount of energy it holds.
As far as water heaters, I installed a heat pump water heater two or three years ago and I love it. Per therm, it’s a tiny bit cheaper than a natural gas one (just because the air source it pulls from is warm enough the COE is high), but I no longer have to run a dehumidifier in the basement. I also found a weird online only HomeDepot deal that meant it was cheaper to buy up front than a natural gas replacement. But, I have had to replace a thermistor already. It was relatively easy, and the part was cheap ($5) but it does make me a tiny bit worried about the longevity.
If you’ve got solar panels, or live somewhere that natural gas is expensive (or don’t have access too) heat pumps are a easy choice over resistive HVAC or water heater.
I have said many times what this site needs is a money guru. Because as great of writers as they are I wonder if any ever took a finance class. The Tesla argument above is pretty much the same one a wife gives her husband for how she saved money buying a $300 dress that was 50% off from $600. You only saved if you needed that particular dress.
Well they did say it was the best deal *on an EV*. If an EV makes sense for someone’s use case, this would be the one to get at the moment.
Well they based it on a poor financial argument but I give credit he did mention that it wasn’t for everyone. Like Noone outside California. I mean it said values dropped 50%. Then picks a car at 70% to compare. Bases financing the lower amount for the same amount of months crazy idea. But at 50% the used rebate does come in, YES HE MENTIONED IT, but said used was better. But you can’t use 1 used car and 1 state unless the site is for one state. Not saying it’s a bad idea but need to look at everything.
Oh, you’ve met my wife!
David, after following your adventures, I was on an i3 REX hunt myself earlier this year, focusing on CPO’s. I ended up missing on a few good ones, which all tend to be in CA. I wanted one with remaining and extendable warranty because I don’t live in CA, home of free batteries for life (well, not life, but better than FL). I was looking at mostly ’21’s with 20-30k miles. These were typically priced in the $23-25k range. before transit to the East Coast.
When Hertz did their 2nd tranche of EV dumps on a Friday night, I was in when they opened the next morning at the nearest Hertz who had an EV6. They had, literally, 200-250 lookalike Tesla 3’s, maybe twenty or so Bolt EUV’s. There were two identical, mint 2023 EV6 Wind models.
The ’23 EV6’s stickered for $51k new plus normal Florida Kia dealer shenanigan add-on fees of a few grand. I stole mine for $28k. 10 months old, with 10k miles, no haggling, and 45% off new price. Factory warranty plus an extra Hertz one, too. Glad Hertz sucked up that massive depreciation.
Averaging 3.9 to 4.0 mi/km during my local commute so stupidly cheap to drive. My first 100% EV car. Had a 2013 Volt that I really enjoyed as well.
Arggghh…that should be mi/kwh, not mi/km.
Just an FYI to RC and other readers. If you post something and it autocorrects or you forgot something. Hit the wheel icon thing it will show edit click on it and just correct your error. Note I am not sure if it stays there or there is a limit but maybe Matt or someone who makes mistakes can tell us? Because that ain’t me. Lol
Yup, I was able to edit the first one. Unfortunately, I didn’t notice the oops until the 5 minute or whatever editing time-out occurred. I’m very active on my other forums, but those don’t have time-outs for editing.
Yeah I wasn’t sure if there was a time limit. Maybe they can extend it MATT? But I know many people just reposted so I figure let them know edit? It don’t cost nothing.lol
Well done sir! That’s a fantastic deal on a great car
Thank you! It was as if they were begging me to buy it. I had to pry the keys away from the store manager, who had been using it as his daily the prior week!
DT,
I test drove local i3’s during my i3 hunt. I kinda like the Panda color scheme best although it might get on my nerves, I suppose. The car is now something I think of as very cool. I love funky and different things. They have quirky personality. I look forward to hearing about your new one.
The i3 is much cheaper in CA than FL, even with transport costs to get it across the country. I loved that the BMW dealers in CA who quoted only added state tax and title fees. No BS stuff. In FL, with any car purchase one has to fight over $3,000 in nonsensical dealer fees, including prep, used car refurbishment fee, doc, admin, etc. It’s lovely.
“’I’m completely upside down on this car’,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving.”
This had better be an upcoming article!
It’s not like a car loan is like a home loan. In a home loan if the value changes you have to pay the difference if you have a stupid loan based on value. Just borrow the money and set a payment plan. Don’t buy a house you can’t afford and try to make money selling it. But car loans no matter what you borrowed it is payments for a period of time you aren’t screwed just keep it for an extra year. Or don’t use idiot for investment advice
Huh? I was interested in David’s take on the Cybertruck, hence the emphasis on that part of the quote.
He didn’t write about the cybertruck
Let me rephrase it, so there’s no way to misunderstand short of being deliberately obtuse. “Hey David, I couldn’t help but notice that you mentioned you were driving a Cybertruck in this not-particularly-interesting article. I hope you, at some point in the not-too-distant future, would grace us with an article about said Cybertruck”.
In a home loan if the value changes you have to pay the difference if you have a stupid loan based on value…
Wait a sec, lol. What in the Sam Hell kinda loan is that?
Take a look.if you buy ahouse on a 39 year loan you pay 300% over purchase price. But 6% on a car loan very reasonable. That’s why the site needs a financial writer
Sir, I wrote mortgages for a living for a time before it all went kabloowey. I don’t know where you are getting your numbers from, but they ain’t from this planet. lol
Really? That is why they went kabluey. A 30 year fixed no issue. A sliding scale or balloon loan is different. I assume you like most loan officers writing loans to screw over borrowers you either knowingly were screwing over borrowers or were ignorant on loan terms. It is why the bubble burst. Everyone knows it was predators writing loans. Don’t pretend you weren’t knowingly screwing over borrowers?
I was certainly not “screwing”anyone over.
The reason that the market went sour was because of all the collateralized/packaged loans that were legally bought/underwritten by companies like Countrywide. It also happened to be that those loan standards for sub-prime were so absurd that there was no way they would ever be fulfilled. None of it would have been possible without the express written consent of the Fed and it’s policies.
If you want to look for a boogeyman, it certainly wasn’t the Average Joe broker that operated within the legal parameters.
The face of the disaster was none other than Jay Powell, and to an extent, all that enabled his ideas/concepts to “pass muster.” One of the greatest scams ever perpetrated in the US, magnitudes larger than Madoff, even. Magnitudes.
Yes it was one person much like Elon Musk gets blamed. No it was the industry and loan underwriting agreeing to lend money on homes like cars being traded on underwater loans. You either were part of the problem or ignorant of the problem.
First of all, I don’t appreciate you intimating that I am either dumb or deceitful. You don’t know me.
Secondly, any of those “sliding scale”, (which doesn’t exist, but I’ll go with it) or “balloon payment” loans, have nothing tied to the value of a home. It’s only tied to the amount of the loan and adjusts based on current market rates, which are generally closely tied to the 10-year bond at the time of the adjustment.
Feel free to google what a 5/1, or 3/1, or anything ARM is and then get back to me. Shit, I believe they even offer I/O ARMs again, which can be a great product if you know your market and are comfortable with the higher risk associated with it.
At the end of the day, the onus is on the borrower, hence why their name is required on the bottom line and on the “payable to” line on the check. That’s the end of the line. The borrower.
The broker is just the dude in the orange apron at Home Depot that offers recommendations and pulls the product off the shelf. The borrower still has to go to the cashier and complete their transaction that they signed off on. (hope that helps 🙂 )
edited to add bold and italics for ease of comprehension.
I was under the impression that the finger was generally pointed at Greenspan, based mainly on his public shaming of anyone suggesting oversight of CDS.
Mindful of the concentration of default risk as one of the causes of the S&L crisis, regulators initially found CDS’s ability to disperse default risk attractive.[51] In 2000, credit default swaps became largely exempt from regulation by both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The Commodity Futures Modernization Act of 2000, which was also responsible for the Enron loophole,[6] specifically stated that CDSs are neither futures nor securities and so are outside the remit of the SEC and CFTC.[
Yep, I did mean to say Greenspan. It was late. Oopsie!
Still, it’s comparing apples to apples, Except now they are trying to figure out crypto, which is way more difficult because it’s not a financial tool that has been baked into the ethos of Governmental control like real estate has been.
Either way, when any of those dudes/”branches of Government” get super involved and try to put their grubby fingers in the cookie jar, we all get dirty fingers.
It’s time to volunteer yourself.
Shop that rate and you should try to take a shorter loan period on a 3 year old car than 6 year. My credit union is at 6.74% on used cars up to 84 months. I’d go for a 5 year loan at the max on a 3 year old car, since at least you’ll have a powertrain warranty on an EV for 8 years/100,000 miles or 10 years in some states.
A 5 year loan will be about $500 a month with a 60 month loan at 6.74
If you go for a 4 year loan it’s 606.37.
I’d skip the Tesla though… if you are buying a used EV, the Chevy Bolt is the one you want. 2021’s are going for around $15,000 with around 30,000 miles, and there’s even 2023 Bolt EUV’s out there for around $18,000.
$18,000 financed with nothing down on a 2023 is just $354 a month for 60 months. Remember too, all the earlier ones were recalled and got brand new batteries with a new battery warranty, if you find a high mile one, it’s going to still have a lot of life left.
Not a financial guru but rule of thumb used to be $25 for each $1,000 financed. I have no knowledge if this still applies so let’s see.
I just leafed (heh heh) through local Tesla inventory and have to admit that a RWD Model Y at $38,000 or so after the tax credit is pretty tempting compared to a mid-grade CRV, RAV4 or Escape, although I’d probably be tempted into a Long Range if I could swing it. Given Supercharger density, a real-world highway range of 200 or so miles is fine for the East Coast.
I just leafed through Tesla super charger sites near me. There are 2 150 kw sites at 25 and 37 miles, then 2 250 kw sites at a little of 50 miles. None of these are in towns I regularly go to. Driving 50 miles, 1 hour each way just to charge seems an argument for Biy a hybrid or ICE vehicle.
Having the ability to charge from 220V at home is, IMO, a prerequisite to owning an EV. If you can’t do that, an EV makes zero sense.
If you add the following “at the very least” I agree.
220V charging is not a prerequisite.
We bought a new EV in 2018, it now has >70k miles. We don’t have 220V charging at home. I don’t think our EV use case is unusual: 25 mile round-trip commute plus errands and occasional longer trips on the weekend.
We do have a gas car as well. 2 cars, 2 drivers. We use the gas car for long trips.
The SuperCharger network should be viewed as a secondary charging source. Do you have a garage or a driveway? Most EV owners charge at home at night when kWh prices are cheaper. If you don’t, then yes you should not consider an EV I agree.
I actually have a garage. I realize you can slow charge it that way. However a recent article on of course the Autopian website informed me 8 hours of charging on a 110 amo circuit doesn’t give you a full charge. If you are just doing errands and not driving all day 5 days a week you may be fine. But if you can’t charge up every day by Friday you may need another car. If I recall the secondary points of the article but primary points for my usage.
Lots of folks have level 2 220V electric dryer ports just sitting there in the garage. 8 hrs should be fine on one of those.
Even if you only have 110V you can still get a good ways on electricity alone with a PHEV.
Since I would only be using a Supercharger when I go out of town (which was infrequent before COVID and has been non-existent since) and would have them at reasonable intervals in any direction I’d travel, a Model Y would work for me as well as any other compact to mid-sized ute. I tend to keep my cars for a very long time – I bought my last car new and held it for 13 years and 105,000 miles, and it’s only up for replacement because I wrecked it – so a high resale value, while desirable because anything can happen, isn’t a primary concern for me.
I bought my last DD IN 2002. Drove it for as a DD 22 YEARS. NO worries about resale need to rebuild the motor and drive it for another 22 years.
I feel like it’s a very bad idea to buy a Tesla until the CEO is forced out. The chaos surrounding this weird tantrum where he’s firing everyone makes it difficult to guess where after sale support is going to be.
The Kia guy might be upside down on his EV6, but at least Kia is going to be quite consistent over the entire ownership period of the car.
Sandy Munro did a vid last week explaining — from the perspective of someone who’s spent a lot of time working for big automotive companies — that the layoffs aren’t chaotic or illogical, but what all legacy companies do and have done at intervals to stay viable. Elon just gets lots more media coverage (and, yes, cherrypicked coverage, since they want to double down on the message that he’s irrational — but which, of course, he makes easier for them with the wording of emails and tweets). Anyway, just to point out that there’s probably less chaos than it seems when reading about it. With Tesla’s current headcount, they can’t stay profitable, and there are parts of the company where they beefed up manpower when it was needed, but now no longer needed.
They did cut the entire teams working on new product, the supercharger network, public policy… All of those are vital to the continued operation of a car company.
There’s a difference between trimming the fat and kneecapping your future development.
I just finished a cross-country road trip in my 6-year-old Model 3. The network is well-enough fleshed out that, if they need to save money, they can now slow down on it — because buildout was going like gangbusters for a while — I keep tabs on a site that monitors supercharger site construction. I also check forums that have some insider details, suggesting that they’re still funneling huge money into the chargers — nothing has stopped there. Just less money — about half as much. I’m seeing this reflected with that supercharger status site. They’re still being built out, just maybe 50% slower. (And more of the money is supposedly going to maintenance than before to improve uptime.)
But remember, the team is gone, he fired everyone. It’s difficult to invest in infrastructure if you don’t have anyone to actually do the work.
Yes but now with partners he can rely on them to pick up some slack and build charging stations. Also as a prior article stated he might spin off or sell the charging portion of the company for hundreds of millions. You don’t invest in parts of the company you may not own much longer. Say what you want about Elon but he has no desire to be in charge of a bunch of gas stations, yeah electric stations you know what I meant.
Agreed – I’d have to think the engineering on these is mature, and with every automaker moving to the Tesla standard charging port, there will be enough demand for others to enter the market. Investing in the charging stations made sense when it was a competitive advantage; as you say, moving forward, it’s basically managing gas stations.
But you didn’t give me a smiley face? I feel sad.
I never remember to do that. There you go.
And one for you as well. I am no longer sad.
I gave you both smiley faces for having a civil discussion, not so common these days.
Thanks to be honest I have been guilty of the not so nice discussions in the past. It’s this site both writers and community that slowly convinced me that here is different and I’m trying to be better.
That’s the definition of being unsustainable. It was “bad growth” – not some public works project or wartime call to action, but treating ostensibly permanent employees as contractors to keep a meme stock price in the stratosphere.
Musk’s doubling down in this case *is* irrational because he just eviscerated the likeliest candidate for sustained income and prospective growth within Tesla, and keeps blurting nonsense from down inside that deep deep k-hole in which he lives. How is AI going to charge my electric car?
Actually, it was a public works action. All part of the Infrastructure Act (IIJA).
We all paid for this. Not to butt in, but the facts are the facts here.
Straight from the White House:
“Build a national network of electric vehicle (EV) chargers. U.S. market share of plug-in EV sales is only one-third the size of the Chinese EV market. That needs to change. The legislation will invest $7.5 billion to build out a national network of EV chargers in the United States. This is a critical step in the President’s strategy to fight the climate crisis and it will create good U.S. manufacturing jobs. The legislation will provide funding for deployment of EV chargers along highway corridors to facilitate long-distance travel and within communities to provide convenient charging where people live, work, and shop. This investment will support the President’s goal of building a nationwide network of 500,000 EV chargers to accelerate the adoption of EVs, reduce emissions, improve air quality, and create good-paying jobs across the country.”
https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/
Heh, well said. I meant, and could not have chosen a worse example for, a large workforce knowingly mobilized for a known temporary period of time. Normally, this is the part where I’d be frustrated that we as a society literally did pay for this but Tesla gets to profit, but for reasons I can’t fathom, are determined not to do so. There is something to be said for “private” public works – governments have a long history of subsidizing industry that stands to benefit the public at large. I’m just gobsmacked that Musk is so determined to throw away the entire advantage of having been subsidized and moving first.
I’m glad we can break this down. Because, I have a brief thought about this misconception.
-No one in (Global) Government thought this through. It was conveniently timed to quell the discontent of “post-covid” life. The gen pop ate it up. Which (at the time) was A+ politics, as people were “flush” with money for staying in their P.J.s., and were only thinking of a “new” short-term panacea with their whopping $2400 or whatever.
-This is also why no one wants to really bring up the waste of it all, because we were all complicit in the “Heck Yeah! Let’s re-design the whole thing!” Even though it was short-sighted and a silly waste, compounding on silly waste. Except for those that bought Zoom and Moderna stock 6 months earlier (I kinda did), etc. Those folks were smoking $100 bill cigars, lol. Those that held are lucky to find the butt of a Swisher Sweet in Buffalo.
-Anyway, I’m not going to get into a whole diatribe here. I have more detailed thoughts published elsewhere, (no it is not some whackadoo thing, lol), but just consider this thought after what is almost 4 years of “economic recovery”…
Our economy is a phantom one that was/is reliant on SE Asia. (It sure as shit ain’t Europe or anything in the Southern Hemisphere).
So, this dude Musk, among a few others, capitalized on the panic at the time and took the checks. Fair enough. Well played, Sir or Madam.
Now is when the proof needs to be in the pudding, and it is in some ways. But, the thing about pudding is that it is malleable. So…everybody’s “best friend” Elon (among a few others) want’s to keep the faucet open and the pudding flowing.
The most effective way to do that is to tighten the seal on the faucet to prevent leaks. Which is exactly what is happening. Ol’ Musky says, (temporarily, mind you) “I’m out of the charging game…sorta. Unless, you give me more money.” He’s not alone, many others are doing the same. They all know that this is a critical time (election season) to put their footprint in the sand. None of it is permanent, but it will affect the tides.
This is why private space travel has evolved so quickly. This is why AI has evolved so quickly. This is why Governments around the world are trying to reel back in the social media tidal wave they themselves created between 2019-2022. Government lost the power and are desperate to claw some of it back, and it’s not gonna be easy. And, like everyone knows, easy chicks are…well, Downtown Julie Brown.
Elon is messing around and “pulling” supercharging funding the same way a conquistador is messing with the much larger bull, knowing full-well that the bull is stupid and bloated. He’s still getting his space money, his car money, his satellite (war) money, etc.
He’s just goofing around with this election by pulling funding, just to tighten the said screws. It’s way high-level thinking that is pretty intricate. It’s not like the CEOs of other companies aren’t seeing the same thing. They are doing the same thing.
All these bastions of money and power know this. The problem is, is that us “plebes” only think farther than our insurance rates to think that maybe it’s just “NAZI BAD!” or whatever else helps us sleep at night.
Might as well have a vested interest in how some rookie pitcher did in his first outing because he’s sleeping with some LSU gymnast.
Anyway, that was too long.
Hi, Rootwrym, or Nsane, or V10, or whatever your name is in real life, ha 🙂
Point of fact: Sandy Munro owns Tesla stock. He has a vested interest in making you believe whatever he says about Tesla.
I do recall that being a concern about four years ago, so he sold his stock to make it clear his statements are impartial and addressed it in one of his videos.
So does anyone that participates in any broad-based 401k fund offered at their job. Or anyone that buys into any index.
Is this some sort of expose on your part? Because…big whoop.
Some middling amount, which probably includes scads of other car stocks, is quite different from Sandy’s amount.
It’s been disclosed on this site already. I’m going to choose not to believe much if any of what he says about Tesla.
Tesla has to cut costs somewhere. Where do you think the money for his $56 billion pay package is going to come from.
Tesla isn’t going anywhere anytime soon. Shit, all of Stellantis (Ram doesn’t count) will probably go poof in the US before Tesla.
Tesla won’t go out of business, but there are going to be pretty major fluctuations in quality – both of manufacture and after sales service – until someone with a steady hand takes the wheel.
I’m not the one to say that your prediction is flawed or valid, but I tend to think it won’t ever really get that dramatic. Time will tell, I suppose 🙂
“I’m completely upside down on this car,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving. “How do we get out of these?” BMW i3 owners keep saying in a Facebook group that I frequent, in reference to their cars’ plummeting values.
The value of my all ICE mid naughts Honda Accord is about 1/4 to 1/5th its purchase price! I want a bailout too!
+1, my thoughts can be summarized as “tough kitties.”
If you’re not happy with the price you originally agreed to pay (and the terms have not changed out from under you – I’m looking at you, bullshit software subscriptions) – that’s your own fault and problem. If you are happy with the price you paid but are unhappy with how much it’s worth now compared to that price, you’re not happy with the price you paid.
Not everything is or should be a vehicle for investment; not everything can or should give you your money or back after you use it. You’re definitely not owed that money at any rate.
“I’m completely upside down” is not the same as “I want a bailout”.
It’s legitimate to be angry that you wasted money, so long as you accept it was your mistake.
How is anger even justified? Did they really expect appreciating assets?
Same goes for people who went to college on loans they could not afford after completing (or incompleting) college with a non-STEM degree (or no degree).