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The trials of buying a MS

Have not posted on here for months, but wanted to share my story.

First was interested in TM about 5 years ago. The roadster was a unique 'dream car': cool as a Ferrari, electric, clean and made (mostly) in the USA. A cool car for the rich in LA, cool website to read about it, hoped they would make a Delorean type number of them so they would not be super rare and could get my hands on one someday.

First visited a Tesla store early in 2011 and drooled at the roadsters. The sedan concept did not interest me much, the roadster was cool and made Tesla interesting to me. I am a sports car guy, was disappointed that Tesla was going to discontinue making them for some boring sedan...

In the second half of 2012 I saw they launched the MS and it did not seem so bad for sedan, I had bought a lightly used Mercedes sedan a year and half before for a 'run around car' and put over 100k miles on it and grew rather fond of it. It did not have the presence of my KITT like Firebird or grab the eye like my Delorean but it had class, was not bad on fuel and was super reliable. I watched with growing interest.

By December 2012 started posting actively on the forums, having a bit of fun and really liked what I saw and read, especially from happy owners. Looked like electric cars had really arrived, they could pay for themselves if you kept them long enough (unlike any ICE car) and they did not look like a Prius (yuckkkk).

By Febuary I knew the Mercedes would be the last ICE car I would ever buy, when it died I wanted to replace it with a MS. Sure I would keep my classic ICE cars but electric was the way to go for daily and distance driving (since the advent of supercharging), which make up 95% of my driving.

In May the Mercedes started to become unreliable after 260k miles... It was time to prepare to replace it. So went to the Tesla Store... Test drove the MS it and loved it, reserved one. A week later the Mercedes died. Needed a car NOW, could not wait for the MS. So went to Chevy to look at a Volt, it was no Tesla but was a solid good car and need needed a reliable car NOW. Financing was easy and drove away with the Volt a few hours after, got 0.0% with 6k down.

Drove the Volt to NY and back, got used to electric driving (and saving a lot of money) though wanted to do the next trip on I-95 with a MS with SCs... The Volt is a great around town car or good if you are going to the boonies and are not sure if you can get a charge, but MS makes driving to NY or across the US comfortable and FREE... yeah.

As the late July delivery date got closer got pre-approved with Wells Fargo, but still would need a big down payment. Tesla surprised me by building the car early, did not have the full down ready in cash (TM would not take credit cards like GM for payment) so had a problem. Had a annoying time applying with credit unions that were less than interested in doing business with people outside their service area trying to get financed with 10% down.

So waited for the money to be ready. It arrived, had 20% down and ready to go, but Wells Fargo could not do it now? What? Tesla could not hold the car in inventory so sold it. I do not blame them, if they have cash laden customers at the ready.

A bit crazy, MS are a big ticket item and the key to selling them in large numbers is getting people financed. Sure there will be those that can not qualify but those customers that can put 20% down cash (or 25% if could use credit card and pay off after 30 days) are pretty good risks... I had no problem buying the Volt, GM knows that getting people financed is the key to moving cars, and making money. If I walk into any dealership with 10% down, I will drive away the same day... Not with Tesla. Ok no problem you need time to build the car. I put down 5k and was assured financing would not be a problem. But after the customer has waited and they have put money in your hand you got to help them seal the deal... Especially if they have 20% down...CASH!

So TM, you have a great product, people want to buy them, but you are selling cars not Rolexes and need to learn from GM if you want to sell to middle class people...

So here I sit, waited in line, have 20+% down and TM can not get the deal done... I gave them 5k down interest free for a quarter, the least they could do TRY to get a sale... Come on, I have to chase them down for answers. GM got me financed in 45 minutes... at 0.0%! And SC are going up so now is the time to take delivery, grrrr. Do not really want the deposit back, want a MS. But if Tesla does not want to be prepared for middle class buyers I will keep driving the Volt, me and tens of thousands of other would be MS buyers.

I want Tesla to be successful and sell a lot of cars, they are different from the ICE makers which is good in many ways, but if they want to sell cars to normal people, they have to get the financing thing worked out.

Tesla is not a finance company, period. And 20 percent cash is not CASH. Its
80 percent loan. You need to straighten out your finances.

Why didn't you approach the credit unions that don't require much cash down--Alliant and Penfed and USAA are the ones that keep coming up around here?

And I dont mean that in a rude way. Please dont take it that way. Just a statement of what seems to be fact based on the info you provided.

I agree with @jbunn. Tesla isn't a bank or a finance company. They are a carmaker. There ARE credit unions out there that will give 90% loans. If none want to give you a loan then it probably means they don't find you to be a good credit risk or that you can comfortably afford it.

I'm not saying that is the case. I'm just telling you how it is from a lender's risk perspective. The fact that no lenders feel you can comfortably afford the car is not Tesla's concern.

Why couldn't Wells Fargo do it? Did something change with your credit? Tesla is not GM, they do not finance vehicle purchases.

@jbunn - 95% of the car buyers out there do not have nor are able to easily get 75k in cash, so even higher income buyers need to finance. Big ticket items like houses, cars and boats are rarely sold cash. Every boat dealer (high income buyers) has lenders that they work with to get their customers financed. Many put down 10%, someone putting down 20% is considered a good sale and not hard to close with.

If you sell furniture and do not take credit cards you will make very few sales, sales are motivated by the ease of making the transaction. With items like houses and cars the retailer always works with preferred lenders to get the deal done. RE agents advise and refer clients to mortgage brokers, car dealerships work closely with lenders to get a deal funded and the customer behind the wheel.

TM is not intending for its vehicles to be only for the wealthy or silicon valley types. It is a car that appeals and is within reach of a wide demographic. But what makes the sale happen for GM or even Mercedes is good finance products.

TM is not a bank, but it needs to get people financed if it hopes to sell to the middle classes, that means learning from traditional car companies.

If I take my $20k and walk into a Jaguar dealership I will be able to drive out the same day. Risk management will tell you that someone putting down 20% or more for a big ticket sale with no bankruptcies, foreclosures and a primary residence paid off is a not a bad risk.

My finances are not as strong as most of the Sig buyers but I can afford the $1,200/m payment without any problem and as middle income person with sufficient income and few debt payments, my example does not bode well for TM's plan to expand in to the mass market. TM stands to lose out if it does not make purchasing easier for customers that are not necessary flush with cash.

@Bighorn

I applied though Tesla's preferred lenders (Wells Fargo and US Bank) as they have experience financing Tesla vehicles, the loan officer at HSBC had no idea what a Tesla is. I have no experience with credit unions and never been a member of one. At this point if they would finance at 75% that would be sufficient and the deal could close by mid August.

So why was Wells Fargo not able to do your loan?

@ FLsportscarenth...

Point well taken and frustration felt.

TM is however a "start-up" focusing on making a limited number of luxury cars targeting the upper market segment, ergo not required to be a full service provider as demand (still) surpass supply.

My two pennies worth is that when Gen III is coming around, TM will team up with a number of financial institutions to provide the easy credit in order to make inroads in a highly competitive market segment. New and improved EVs are waiting in the shadows and will be ready by then to give head on competition.

Being an early adopter in a luxury car segment without the financing is not a good place to be.

@amped

I thought it was strange too. Wells Fargo gave me a pre-qual for 57k then yanked it, three weeks ago... Since that time the amount available for down payment increased by 5k and I have a good history with them on an equity line on one of my income properties... Maybe they are tightening parameters to ridiculous proportions?

The thing is that if they sideline customers like me, then how are they going to sell to the broader market once they run out of ex M5 drivers (ie rich guys, techies and people that hit windfalls) to sell to.

Is disappointing but I can still drive electric without the MS. Maybe it is a blessing in disguise, just meant to wait till the pent up demand among wealthy early adopters dries up and prices reduce slightly and the SC network is fully developed.

Missing some info. Why is your loan getting denied? What's your credit like?

Try Alliant Credit Union or USAlliance. USAlliance got me 100% @ 1.8%.

@Geir

Good observation. I agree, I have a lot of patience with TM as a know how difficult it is to grow a business in a competitive field.

But it may behoove TM to require a proper bank approval before taking peoples money if they can not pay cash... until they can put together better financing arrangements.

If they can not lend like GM can that is ok, simply inform the prospective customers that can not yet qualify that they need a bigger down payment before they can proceed.

Do not take their money and string them along for months...

The lowly middle class buyer that you do not need this quarter may be your bread and butter in years to come and you are producing at a much bigger scale.

@soma

Not sure, maybe because my income is paid out in FL but primary residence, drivers license and insurance is in WA, so difficult to match up everything? I bought the house in FL cash and the house in WA is owned by family so do not pay any rent or mortgage for it, only pay the prop. taxes for both.

If I was lending, someone that has that profile would seem very safe. I have some disputed older items on my credit report but major credit cards are always paid in full each month.

You mentioned low debt and sufficient income, but you left out FICO.

@amped

Out of Westchester? I will make an inquiry. Used to live in NY and still have income property north of there... They are for sale if interested (listed through Century 21)

75-80% is enough, I will take the lower interest rate and put at least 20% down. Are you a longtime member or get a better rate because you have a mortgage with them?

@sky

They did not list the score when I got the report from Equifax and Transunion, just corrected the data on there with the bureaus.

@amped

They are listing lowest rate as 2.24% for 60 months.

No mortgage or rolled card balances actually hurts FICO. They track payment history of outstanding bills and debt; eliminating them eliminates their only data! Pay off the cards a month later than usual for a year or two, and you'll look better.

Uncle credit union in Livermore was able to finance me at up to 115% at 3.1 and 90 delayed payment. Wells Fargo wanted 40% down. Traditional banks are good for home loans not car loans. Credit unions are the best for car loans not home loans. Everyone has their market

The underlying problem described here is real. Tesla is riding the early adopter curve and will run out of M5 (and other) types.

I posted on this subject after working with Tesla on my first MS purchase (sorry, M5 type here). The IPhone sales model works well for $800 phones, especially when the network providers are picking up the tab for most of it by underwriting the purchase with a subscription contract. Selling $100K items will require a bit more thought and fineness.

Tesla is getting better. MS #2 went much smoother and Tesla was able to quickly and efficiently deal with a lot of the standard dealer issues (DMV, not franchised dealer) like trades and sales tax consequences. I've no experience with them on the financing side but I suspect FLs' experience is not uncommon. Having smooth no hassle financing options available is a must if you expect to sell $80K-$110K items in reasonably large numbers.

Elon/Tesla has probably already identified the need to ease the financing process and pull it into line with their vision of the Tesla buying experience. It is not an easy task so I suspect change will be slow but I believe you will see change.

Alliant Credt Union has financed a fair number of Tesla's. I financed $50k of $64k at 1.4% with them and only have to make a small donation to an affiliated charity of your choice to become an out of area Credit Union member. Very simple and painless.

Another fan of Alliant CU here. I hadn't heard of them until reading about them on this forum, but they got me 90% financing approved in 2 days and we're a delight to work with. Sometimes doing your homework in advance pays off.

Saying Tesla shouldn't work on improving financing because they are not a finance company is like saying Tesla shouldn't work on supercharger infrastructure because they are not a refueling company.

FLsports, I feel for you. Some folks like us have to work to own a car like the Model S rather than just pouring $90K cash out of some enormous financial empire, which to the rich means we are not entitled like they are and should be happy with our Festivas. Keep at it, you'll get there. It will still be another couple of years before I am in position to buy myself.

Part of the problem you have is with Wells Fargo. Too bad Tesla works with them. Really dysfunctional (putting it generously) big bank, in my experience, and not reliable. Credit Union financing is much better. Lesson 1: stay away from Wells Fargo.

Yep. Just like cfOH, I never even heard of Alliant Credit Union before reading about them on these boards. Heck, I usually just pay cash for my cars. But I figured with 1.49% rate it didn't make sense not to finance.

Make a small donation and you can become a member. They are VERY efficient. I signed up online and within 3 or 4 days I had my checkbook and ATM card. I applied online on a Sunday night for a car loan, and by the next morning I had an email from Andy V. with Alliant. He said I could get a loan up to $100,000. I just had to send my last 2 years tax returns to him to verify my income.

And they were ready to send a check to me once I sent them my VIN #, Invoice from Tesla showing I was paying at least 10% above the $100,000 . That was their only requirement that anything that went over $100,000 I'd have to pay for. They allow you to add on the TTL so by the time I added that up it was $117,000 or so.

Alliant is VERY good to work with and I highly recommend anyone that is going to finance to contact them. Of course, if your FICO is questionable, then you're probably going to have a problem with ANY lender including credit unions.

@ FLsportscarenth, which CU are you referring to when you quote the 2.4% rate? USAlliance has a special promotional rate for those with a 700 or higher FICO of 1.8% for 84 months, contact:

Jon Krumdick
USAlliance Federal Credit Union
Senior Manager - Sales and Service
Phone: 800.431.2754 ext. 2319
Mobile: 978.833.1962
eFax: 914.881.3475
jkrumdick@usalliance.org

If you want to set something up with Alliant, contact:

Robert Hardy
Relationship Advisor
Alliant Credit Union
San Mateo & SFO Airport Offices
toll free: 800.328.1935 ext. 3705
direct: 773.462.3705
fax: 773.462.3719

Those are the folks I've been working with at both establishments.

It would convenient if I could see when in the ordering, manufacturing and shipping timeframe is the Model S I ordered... in real time. Have all the info, requirements, contract info, etc in one page. Kind like Fedex does with its packages. Prove PW protection with VIN.

Two thoughts. As an ex car dealer NEVER get dealer arranged financing. Dealers skim points. Part of how they make money. Tesla is possibly an exception as they are not a dealer, per se.

Next, to the OP, if you have never dealt with a credit union, time to start. Better rates, better terms, lower fees. For everyday business in WA, consider BECU. For Tesla loan, try PenFed. Great rates, and the do lots of Tesla S.

Part of the issue, as others have said is Wells Fargo. In fact they did the same exact thing to me. I've had an account with them for 18 years and my mortgage with them. Never missed or had a late payment. I called to set up a Tesla loan with them and they promised me 80% and a great rate. I called back a few weeks later to confirm and they changed the story claiming that Tesla is not a financially viable risk. Suddenly they wanted 2.8% and would only give me $25k. I told them to take a hike and after reading about them on the forums called PenFed and Alliant. Both offered great rates and more money.

It was a week after my conversation with Wells Fargo that Tesla announced they were working with them. Sounded pretty funny after WF just finished telling me that Tesla isn't a viable risk.

Don't give up on Tesla, give up on Wells Fargo.


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