Tesla recently updated its website to now offer longer loan options for customers buying a new vehicle.
Previously, the maximum loan period was up to 72 months (6 years), but now an 84-month option is available (7 years). A longer repayment term means lower monthly payments, but customers will be paying more interest over that term (via Bloomberg).
“When interest rates rise dramatically, we actually have to reduce the price of the car, because the interest payments increase the price of the car,” said Tesla CEO Musk said during the company’s record Q2 earnings call this week. “So we have to do something about that,” said Musk.
While the new 84-month loan option is now available in the U.S., other countries such as Canada have had longer repayment terms, such as 96 months (8 years). These longer repayment terms for loans were popular when interest rates were around 2% (nearly free money!), but since then, they have tripled.
Lower monthly payments, along with federal tax credits and various state EV rebates, plus Tesla’s revised referral program offering up to $1,000 off a new car, plus 3 months of free Full Self-Driving, it can definitely result in some more sales.
