December 6, 2023

Car Auto Finance

Car Auto Finance FOR Everyone

What to Know (August 2023 Guide)

Tesla has become one of the largest auto manufacturers in the United States, bringing in more than $53.8 billion in revenue in 2021. As a car manufacturer, the company offers Tesla financing for its vehicles through outside lenders. You can apply for financing on the Tesla website as part of the car-buying process after picking out the make and model you want to purchase.

We at the MarketWatch Guides team will explain Tesla financing options for new and leased vehicles. We’ll also discuss how financing works and explain other options from leading companies that provide some of the best auto loan rates of 2023.

About Tesla

Year founded: 2003
Headquarters: Austin, Texas
Better Business Bureau (BBB) rating: Not Rated

Tesla was founded in 2003 by engineers who wanted to provide an alternative to gasoline-powered vehicles. Today, the company builds all-electric cars and scalable energy and storage products. Tesla models currently include the Model S, Model 3, Model X and Model Y. Each features an electric powertrain.

Pros and Cons of Financing a Tesla

How Tesla financing works

Tesla is a loan broker and acts as a middleman between you and the lender. You can apply for financing through the Tesla website when you order a new vehicle. After you submit your loan application, Tesla will send it to its lending partners, which will relay a decision to you for approval.

The company doesn’t list a minimum credit score requirement for a Tesla auto loan or lease. However, borrowers with good or excellent credit have a higher chance of qualifying and getting a lower interest rate. Below are the factors that affect your credit score.

Pie chart showing the five factors that determine FICO credit scores

Raising your credit score can seem daunting, but there are many things you can do to raise your score and get lower rates on Tesla financing. Here are some steps to help you raise your credit score.

Graphic showing seven ways to improve your credit score

If a Tesla loan or lease isn’t for you, you can seek financing through a third-party lender, such as your bank or credit union.

Buying a Tesla

Tesla’s lending partners offer auto loans for its new and used models, including the Model S, Model 3, Model X and Model Y. According to our research, annual percentage rates (APRs) start at 3.24% for those with excellent credit, and loan terms range from 36 to 72 months. There are no lender or application fees when applying for an auto loan with a Tesla financier.

Tesla provides a financing calculator on its website to help you estimate your payments for purchasing or leasing a Tesla vehicle. The calculator doesn’t include taxes and registration fees in its estimates. Loan approvals are valid for up to 60 days.

*Rate range as of 5/19/22.

Leasing a Tesla

Leasing a Tesla allows you to drive a new vehicle without paying the price for the entire car. All Tesla models qualify for a leasing contract, though terms vary by model. Lease approvals are valid for up to 90 days.

Term lengths for leases last up to 36 months for all models, with an annual limit of 10,000, 12,000 or 15,000 miles per year.

Here’s a look at the lease terms we were quoted for each Tesla model:

*Rate range as of 5/19/22.

You can transfer the lease of your Tesla to a credit-approved assignee if you have more than 13 payments left on your lease. Depending on your lease agreement, you may be eligible to purchase your Tesla at the end of your lease.

Insurance requirements for leasing a Tesla
You must meet minimum coverage requirements to lease a Tesla unless you’re subject to state-specific requirements. These include:

  • Bodily injury liability: $100,000 per person and $300,000 per accident
  • Property damage liability: $50,000 for property damage
  • Physical damage insurance for the full value of the vehicle

You must also have a maximum insurance deductible of $2,500 to lease any Tesla model.

Who is eligible for Tesla Financing?

Anyone looking to purchase or lease a Tesla can apply for financing. However, Tesla financing offers are only available in certain states.

State availability for Tesla auto loans

To qualify for a Tesla car loan, you must have your vehicle delivered to one of the following states:

State availability for Tesla car leases

Tesla leasing is available in the following states:

Tesla finance application process

Whether you choose to finance your Tesla through a lease or loan, the process can be completed in a few simple steps after you place an order and confirm your delivery details. Steps include:

  1. View financing options on your Tesla account: In the “Payment Method” section of your account, select “Finance” to view the financing options available.
  2. Select your financing method: Choose between a lease and a loan. Have your Social Security number handy to submit your credit application.
  3. Confirm your loan or lease information and personal information: Select Tesla as your financier and confirm the amount you want to finance, along with your preferred monthly payment and loan or lease term. After this, you can complete your application by submitting your Social Security number, phone number, address and employment information.
  4. Wait for approval: Tesla will review your credit application once you submit it. If your information changes or credit approval expires, you can resubmit your credit application by following the same steps above.
  5. Receive a financing decision: Tesla will notify you of a credit decision within the “Payment Method” section of your account. Most credit decisions are available within a few minutes, with others taking up to 48 hours.

Note that Tesla doesn’t offer a credit pre-approval process, and you may be required to place a large down payment to receive your car. You’ll have to seek preapproval through your bank or another financial institution if you want to know what financing offers you may qualify for.

Tesla reviews

Compared to other lenders in the industry, Tesla has average reviews. The company’s motor division isn’t rated or accredited by the BBB. Tesla earns an average customer review score of 1.1 out of 5.0 stars on its BBB page.

In addition, the company has an average of 1.8 out of 5.0 stars on Trustpilot, based on over 1,000 reviews. While these ratings are low, they’re just a tiny percentage of the company’s entire business.

Our team reached out to Tesla for a comment on its scores and negative reviews but did not receive a response.

Positive Tesla reviews

Positive Tesla reviews from customers on Trustpilot mention a smooth vehicle delivery process and knowledgeable repair staff. Additionally, 21% of the reviews on Trustpilot give the company an “Excellent” rating.

Negative Tesla reviews

Of the customer reviews on Trustpilot, 71% give Tesla a rating of 1.0 out of 5.0 stars. Common complaints on Trustpilot center on issues with the car ordering system, electrical problems with vehicles (mainly recharging and key problems) and poor customer service.

Bottom line on Tesla finance

Tesla offers lease and loan options for new and used Tesla models. Compared to other financial institutions, its underwriters charge high APRs and lack flexibility with loan term lengths. It may be worth considering other financial products before turning to Tesla financing.

Recommendations for auto loans

While Tesla financing offers are available for new and used vehicles, we recommend shopping around for the best auto loan rates before deciding on a provider. Auto Approve and myAutoloan are worth reaching out to, as each ranked among our top choices for the best auto loan rates for 2022.

Auto Approve: Top Choice for Refinancing

Auto Approve is one of our top choices for vehicle refinance and lease buyouts. The company offers refinance rates starting at 2.94% for those with good credit. You can purchase gap insurance and an extended warranty from Auto Approve whether you refinance your auto loan or buy your car once the lease ends.

Auto Approve has a strong industry reputation. The lender has an A+ rating and accreditation from the BBB, and customers on Trustpilot give Auto Approve an average of 4.7 stars.

Read more: Auto Approve review

myAutoloan: Most Popular Marketplace

The myAutoloan online marketplace lets you comparison shop for auto loans and auto refinancing loans. Auto loan rates for new vehicles start at 3.99% for borrowers with good credit. Auto refinance rates can be found for as low as 2.49%.

The company has an A+ rating from the BBB and is accredited by the organization. The marketplace also has a 4.2-star average rating from customers on Trustpilot.

Read more: myAutoloan review

Tesla Auto Finance: FAQ

Below are some common frequently asked questions about Tesla auto finance:

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best extended car warranty companies. We collected data on dozens of auto warranty providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation (25% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
  • Rates (25% of total score): Auto loan providers with low APRs and high loan amounts scored highest in this category.
  • Availability (25% of total score): Companies that cover a variety of circumstances are more likely to meet consumer needs.
  • Customer Experience (25% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data accurate at time of publication.