Tesla Motors, in partnership with Wells Fargo and US Bank, has created an automotive financing product that combines elements of ownership and leasing for Model S customers. Essentially, said Tesla CEO Elon Musk in a conference call describing the product, the new approach allows one to buy a new Model S for no money down net of the tax credit and as low as about $500 net out of pocket cost per month, depending upon the model, specific state incentives, and personal parameters (e.g., driving distances, etc.). Tesla offers a calculator on its Web site to allow potential buyers to make their own calculations.
Elements of the new program include:
- US Bank and Wells Fargo have agreed to provide 10% down financing for purchase of a Model S (on approved credit.)
- The 10% down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000. New Jersey, Washington and DC also have no sales tax for electric vehicles. These advantages are not available when leasing.
- After 36 months, customers have the right, but not the obligation, to sell their Model S to Tesla for the same residual value percentage as the Mercedes S Class. Tesla guaranteeing that resale value, and Musk is personally standing behind the guarantee to give customers assurance about the value of the asset they are purchasing.
The product is in essence a 66-month loan with a 2.95% APR that can be collapsed at the end of year 3 with no hassle, with the car returned to Tesla or resold. Should the consumer decide to hang on to the car after the 3 years, he or she would continue to make the monthly payments.
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