How to Get 33% off a New Tesla Model Y (0.99% APR Promo)
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- Опубліковано 22 тра 2024
- In this brief video I’m going to show you how to effectively get 33% off a new Tesla Model Y in May 2024 and no I’m not including gas savings.
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Tesla is currently offering 0.99% APR financing on new Model Y’s through May 31, 2024. That’s almost free money. You can also extend the loan term to 5 years.
Using round numbers,
- The base long range rear wheel drive model is $45,000.
- It qualifies for a federal EV tax credit of $7,500 deducted from the purchase price, dropping it to $37,500.
- Let’s assume a down payment of $3,500, which is about 9%, and a loan of $34,000.
- The loan would end up costing about $1,000 in interest over 5 years for a total loan cost of $35,000.
- Suppose I took the $34,000 I would have paid cash for the car and put it in a high-yield savings account currently paying 5% APY.
- Let’s also assume you’re making the monthly car payment of about $581 from your earned income so you don’t have to dip into the savings at all.
- 5% is pretty juicy right now. Let’s be pessimistic and say rates might drop half a percent each year over the next 5 years.
- The $34,000 in the savings account earns me about $7,500 in interest over 5 years, growing to about $41,500, disregarding taxes.
The salient takeaway here is not that it’s then suddenly a cheap car (it’s not) or even that you should buy one, but rather that, via a tax credit and some simple, virtually riskless interest rate arbitrage, you’ve effectively reduced the initial price by about 33%.
This is also why we say it makes little sense to pay off your mortgage early if you’ve got a low rate like 2-3%.
This does again ignore taxes on earned interest, which is going to be highly personal, but it also ignores gas savings, so those probably easily cancel out.
Does this financing offer have you considering buying a new Tesla Model Y in 2024?
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#tesla #teslamodely #tesla2024
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EDIT June 2, 2024: The Tesla 0.99% APR financing promo is now over. See my announcement about it ending and about the new Dark Gemini wheels being included for Model Y on my new channel here: ua-cam.com/video/dPqWz5rVYlU/v-deo.htmlsi=g0PLa_twK-3Jxtsn
Tesla is also now offering 1.99% APR financing on the standard range and long range Model 3: ua-cam.com/video/bclNkNX12KQ/v-deo.html
By the way, get that M1 high-yield account here: www.optimizedportfolio.com/go/m1-cash
This one is admittedly a bit outside my usual lane, but I found Tesla’s 0.99% APR financing offer for new Model Y’s pretty intriguing from a purely financial perspective in terms of the arbitrage opportunity.
EDIT: Some people seem to perhaps miss the point here, so I'll try to clarify. The advantage of utilizing this financing offer does NOT require having $34,000 cash on hand, which admittedly may be unrealistic; that was just my hyperbolic example to illustrate the opportunity cost.
It works the same on the other extreme. As long as you have $1 more than the minimum monthly payment, it's advantageous to put that $1 in a high-yield savings account as described for the interest rate arbitrage and NOT pay down the loan more. That's sort of the whole point - here it makes objective sense to utilize the low-interest debt and pay the minimum monthly on the loan.
Using round numbers again, to break even on the financing cost per se (about $1,000), with earned interest of about $1,000 over 5 years (about the interest on the loan) at 5% APY, it would require an initial investment roughly equal to the down payment of about $3,500 with zero additional contributions, or alternatively, about $125/mo. for 5 years.
Obviously if you can't afford the minimum monthly payment, you shouldn't be looking at this car in the first place.
Hopefully this helps clear up any potential confusion.
got damm shit I missed it :(
@@EVRENSELADAM Wouldn't be surprised if they do a similar promo again in the future to clear out existing Model Y inventory before the "Juniper" refresh rumored to come in 2025.
Even before watching this video, I financed the car with a $0 down payment and 0.99% APR, planning to put all the money needed for the car into a high-yield savings account and make monthly payments from that account over 5 years. I’m glad you think the same way.
Thanks for sharing!
How timely! Assuming you could pay all cash, or you could afford maximum monthly payment, Is 9% down the optimal percentage down for this experiment? If you can afford more down, does it work out better, or is it better to put a minimal amount down if you can afford the max payment? How would you consider depreciation? I see a lot of pissed off Tesla owners because Elon dropped the price after they bought.
My wife wants one of these, our lease is up next March on our CX-5. I'm trying to theory craft the optimal situation. We have solar and electric car plug already installed in the garage in our "Smart home" we bought last year. So, there shouldn't be any additional expenses. But we don't use the car much anyway. I work from home and my wife is medically retired. She just likes to take day trips on the weekend, like 3 hours this way or that.
Technically the minimum % down would be optimal due to the arbitrage opportunity described, as that frees up more cash to put in the high yield savings account. I chose 9% down because that was the suggested down payment when I clicked into the financing offer on Tesla's website, and it also made for a nice round number of $34,000 for the loan for the subsequent calculations. It may also be the minimum down payment required by Tesla; I'm not sure.
Depreciation would make things murkier but we could assume length of ownership is the same for either option. I don't know much about how much Teslas depreciate.
Yea, I've seen that Tesla changes pricing and terms on a dime. Even with this 0.99% APR offer, initially it was able to be extended to 6 years, then the next day they took that away and made it 5 years. I had to redo all my calculations. I think you'd have to accept the possibility of being disappointed with a future change after buying, but then the price could also go up; probably no way to know for sure. Hard to pass up 0.99% APR though IMHO if you're seriously considering this specific vehicle. If you're open to any car, there may be other comparable financing offers out there.
I had to double-check if it was the correct channel!
Hah me too! ;) I suppose this could go on my other car-focused channel too, but it's more for the financial education aspect of interest rates so I put it on this one.
@OptimizedPortfolio You could also add the business part and tax part. If you use Tesla for shuttle and delivery, one can deduct mileage and business expenses.
True true
That is pretty clever.
Not really a unique idea on my part; I just took the time to do the math.
@@OptimizedPortfoliowhat about leasing and buyout after 24-36 months since they seem to depreciate
@@hersheywalker6447 Leasing is usually the worst option financially, though I didn't look at it in this instance.
You are also assuming that you are not paying monthly payments with any of that money. In which case you should make sure you are cash flow positive after all other expenses (food, shelter, utilities...and um car payments) each month. If you ARE using that money then the your return will be much smaller than what you say here.
Right. This is why I noted we're assuming you're making payments from earned income and not from any savings. Using the full loan amount as a lump sum of cash to go into a savings account at the start is admittedly an extreme example to illustrate the concept, but you'd still come out ahead, albeit with a lower return like you said, with smaller amounts invested in a high yield savings account over time.
The beauty of mathematics;)
Indeed! 🙌
@@OptimizedPortfoliodon’t let the taxes and fees get in your way😂
@@hersheywalker6447 I'll try.
Concerning paying off your mortgage, you can't live in your investment portfolio. Admittantly the benefits to paying off a mortgage are more psychological than financial. There is a non monetary benefit to the stability of ownership and the lowering of expenses.
True true. Absolutely there are psychological benefits to paying off the mortgage. 👍
When people can’t control their minds😂
@@FlyWithTyy Sometimes deeply ingrained biases 😌. I discussed them here: ua-cam.com/video/xgWYvVhiL4E/v-deo.html
Very true... if you have the $34000 on hand. If you do not then you would be better off saving till you did than taking the financing and paying more.
No you wouldn't.
As long as you have $1 more than the minimum monthly payment, it's advantageous to put that $1 in a high-yield savings account as described for the interest rate arbitrage. That's sort of the whole point - here it makes sense to utilize the low-interest debt.
Obviously if you can't afford the minimum monthly payment, you shouldn't be looking at this car in the first place.
@@OptimizedPortfolio Yes you would be saving on financing the vehicle, but that assumes it is rational to finance a depreciating asset, which even a Tesla Model Y is. I suppose my question is what amount saved in a 5% interest bearing account would you need to cover the interest you are paying over the 5 year length of the loan. The break even for financing in the first place.
@@LeeNobody Ah ok I may have slightly misunderstood your original verbiage then. So yes, let's make that assumption you noted. Using round numbers again, to break even with earned interest of about $1,000 over 5 years (about the interest on the loan) at 5% APY, it would require an initial investment roughly equal to the down payment of about $3,500 with zero additional contributions, or alternatively, about $125/mo. for 5 years.
Bro just went to order its gone 😢😢😢😢.
Yea it ended May 31. :/ I edited my pinned comment to reflect that.
Interested in a Model 3? They just added 1.99% APR financing for it: ua-cam.com/video/bclNkNX12KQ/v-deo.html
@@OptimizedPortfolioWorse financing tho
@@YourSoulPrince True true. 1.99% APR and only for 3 years. Comparatively worse than the 0.99% APR deal I described here for the Model Y, but still way better than average rates right now.
Resale of Tesla not good. Hertz getting rid of entire fleet for peanuts.
Thanks for sharing.
I have some peanuts. Would love to buy a Tesla with them! Please get back to me! Seriously thought, Carvana has 2020 model Y’s for about $34k with that 6.5% interest. cheaper to buy new
@@johnlocke3481 Thanks for sharing!
They are blowing-out the old unsold Model Y's , because a new improved Model Y is coming soon.
Many people will wait for the new model.
I figured that was probably the case.
You mean for the y refresh?
@@SpiritualTraveler888 Yea. I think they're calling it "Juniper."
lol your taxes will drop that interest by half so more like 16% off
I don't know about you but my marginal tax rate isn't 50%. In fact, in the US, no one's is. So that prediction makes no sense.
Also, again, gas savings.
Your video should be : How to get a free Tesla, invest in BTC with $34k. In 2029 your BTC value will be over $100k and now you have a free Tesla with some extra cash.
Maybe
@@OptimizedPortfolio I was going to say invest it in google or fb or nvda but decided on btc because statistically btc at minimal doubles every 3-4 years.
@@mulletshizzle "I was going to say invest it in google or fb or nvda but decided on btc because statistically btc at minimal doubles every 3-4 years."
Past performance is not indicative of future results, particularly with BTC, which is a purely speculative asset with no intrinsic value.
@@OptimizedPortfolio so past performance since the creation of btc (15 years ago) how is it doing? How has it done last 10 years, last 5 years, last 3 years. Why has institutional investors and governments now buying into this? What is the market cap for btc vs gold? Lets revisit in 2029 and see how well your 5% thesis does against btc.
@@mulletshizzle "so past performance since the creation of btc (15 years ago) how is it doing? How has it done last 10 years, last 5 years, last 3 years. Why has institutional investors and governments now buying into this? What is the market cap for btc vs gold? Lets revisit in 2029 and see how well your 5% thesis does against btc."
You seem to continue to miss the point entirely. Once again, A) past performance does not indicate future performance, and B) BTC and a savings account are 2 completely different things with very different risk levels. For this plan to work reliably, we want virtually zero risk, hence the savings account idea. How BTC performs versus the savings account over the next 5 years is irrelevant.
hahha funny how y'all like to talk only on 1 side. 1) most people dont have $37k laying around to put in high yield saving to get 5% interest to off set .99% rate , so they have to refi. 2) if any one has extra lump sum cash they would of bought at $5k-$8k discount back couples months ago (at $30-32K model Y). you try to be smart when if and if you hit a lottery or if your aunt has a pi pi , she would be your uncle etc..
Ugh, I knew this BS was coming because someone wouldn't understand the math and wouldn't read my stickied comment.
Once again, "$37k laying around" - which should be "lying," by the way - is not required. I used it as an extreme example to illustrate the concept, which you clearly don't understand.
I would have gladly been more patient and polite here and I would have even walked you through the math, but I figured I'd try to match the unnecessary snark and insult of your comment.
Someone "would of" - which should be "would have" - bought a Model Y when they were discounted months ago, sure, but many people may not have been interested or aware at that point.
Even if only for the grammar lesson, at least now you can't say you didn't learn anything...
I'm also not even sure who "y'all" is supposed to be referring to.