Home » 0.99% APR: Another Reason Why The Tesla Model Y Is The ‘Smart’ Buy If You Want A New EV
“I’m completely upside down on this car,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving. “How do we get out of these?” BMW i3 owners keep saying in a Facebook group that I frequent, in reference to their cars’ plummeting values. So does it make sense to buy an EV today knowing that, in three years, it will likely only be worth only 49% of what you bought it for? Maybe, maybe not. But one vehicle that seems like a good buy today is the Tesla Model Y, especially if you have to finance it. Because Tesla is now offering 0.99% APR.
Used Car Prices Have Been Dropping, And You Can Thank Tesla For That
In our article “Why Used Electric Vehicle Prices Are Plummeting And Why Used EVs Will Probably Get Even Cheaper,” we cited a number of reasons for enormous EV depreciation, with my colleague Matt Hardigree writing:
So why are EVs faring worse than their gas-powered counterparts? Here’s a good list of reasons:
- Well-maintained, a gas-powered vehicle maintains most of its same capability over its lifespan whereas the batteries in electric cars, currently, offer less value over time. [Ed Note: This was definitely the case with early lithium ion-powered EVs like Nissan Leafs and BMW i3s, but newer EVs aren’t expected to see nearly as much battery degradation over their lifespans. -DT].
- Many electric cars are luxury cars, which already face higher depreciation.
- Whispers: Infrastructure
- David Tracy.
- The best-selling EVs over the last few years have been Teslas.
- Tesla has continually and consistently lowered prices, causing the value of used Teslas to drop in turn.
- David Tracy.
- Tesla’s price drops have created a price war that’s caused other automakers to lower their prices.
- EV sales are rising and, eventually, most of those vehicles will become used cars.
I don’t want to understate the importance of infrastructure in deterring non-EV owners from entering the space, nor do I want to downplay that second bullet about luxury cars, but if we’re being honest: Tesla is the big reasons for EV price drops. Cox Automotive says the same in a recent report on transaction prices:
The market’s general EV price decline has been led in part by the two most popular EVs in the U.S. – the Tesla Model 3 and Model Y. Transaction prices for the Model Y last month, estimated at $49,363, were the lowest on record and were lower versus February 2023 by 16.2%. Model 3 transaction prices last month, at $43,614, were lower year over year by 12% and near the lowest level on record. High incentives and discounts on most models also continue to play a major role in lower EV prices.
That Model Y transaction price is lower than the average transaction price for an EV in 2024, which is $52,000 in the U.S. according to Cox Automotive.
Tesla Isn’t Just Competing On Base Price, Now There’s 0.99% APR
But Tesla isn’t just competing on base-price, it’s also now competing on APR (which is an indicator of how expensive it is to borrow money, accounting for interest and fees). The typical APR in the U.S. is about 6-ish percent for someone buying a new car with excellent credit and about 8 percent if that same person were buying used, per Experian. Tesla is now offering 0.99 percent.
Here, you can see that, if you put 9% down ($4,250) on a new Model Y, you’ll pay about $500 a month over 72 months when you factor in the $7500 federal tax credit:
To be sure, Tesla isn’t the only company offering cheap loans. Check out this 0% for 60 months deal that Hyundai is offering on the Ioniq 5:
Ford, too, is offering 0% financing on outgoing 2023 Mach-Es:
Obviously, all of this is subject to credit approval, but I mean, damn. Low APRs in a high-interest rate economy. That’s the state of EVs today.
With growth slowing, this is a fiercely competitive space, and all these automakers offering incentives and low interest rates has been a way to try to win customers over from Tesla. Now with Tesla offering the same, and a product that is in many ways more compelling (primarily because of range superiority and the charging network), it’s going to be harder for others to compete. On paper, the Model Y seems like the smartest new-EV buy.
It’s Still Cheaper To Buy Used, But Only By A Little
I’m sure you read the intro of this article and started thinking that the smart move is to buy used, given the 49% value drop of a typical EV over the first three years. And in some cases that is defintiely true, but in the case of the Model Y, it might actually be smarter to buy new. It depends. In my local market, I’d be buying new.
I hopped onto Tesla’s website, and check out the pre-owned Model Ys like the white one you see above listed for about $30,000. That’s quite a bit less than the $46,380 starting price on the Model Y. But let’s break things down a bit.
That used Model Y may cost only 29,700, but if we factor in the 8.79% APR, things start to get quite pricey. If you put $4,250 down, you’ll end up paying $7,389.34 in interest over the 72 month term, for a total cost of $37,089.34 (plus fees). Let’s compare that to the new Model Y.
Total cost is $46,380 (that includes the $1,010.71 destination charge). If you put the same $4,250 down, you’re now financing $42,130. At 0.99% interest, you’re going to end up paying $1,281.02 in interest for a total of $47,661.02. Subtract the $7,500 government incentive, and you’re at $40,161. That’s just $3000-ish more than the used Model Y, which has 70,000 miles on it. (By the way, if you’re curious how Tesla calculated the $499 a month figure, it’s $46,380 at 0.99 with $4250 down. That comes to $603 a month; the $7500 incentive, if you divide that by 72 months, comes to $104 a month, so lop $104 from $603 and you get $499).
To be sure, you may be able to find a better interest rate than 8.79 (that’s just the figure I took from Tesla’s own site), and if you shop around, you can probably find a Model Y for under $25,000, which would then make the car eligible for a $4,000 used EV rebate if your adjusted gross income is under $75,000 (for a single filer). So at that point, buying used would still be the smart move.
Still, while you can save money buying a used Model Y, the gap is closing. And depending upon what the depreciation vs. age curve looks like on a Model Y, it might be smarter to buy new, especially if you plan on trading up in a couple of years. There are lots fo factors to consider.
On Paper, The Model Y Is The Best EV Deal There Is
All I know is: The Model Y is an absolute slayer in the EV marketplace when it comes to value. When you factor in how compelling it is as an overall package, with its 320 miles of estimated range, its sup $40,000 asking price after federal incentive, and now 0.99% APR, it’s clearly the best car for the money on paper.
I say “on paper,” because this kind of thing is subjective. It’s the “smart buy,” sure, but I myself am about to pay Model Y money for a BMW i3, which is, on paper, an objectively worse car and thus a less “smart” purchase. But in reality – at least in my view — the i3 is a much, much more compelling machine. So, smart buys be damned: Buy the car you love. If that’s the Tesla Model Y, then you’re a lucky dog. Unless Elon announces another huge price cut in six months — then I’m sorry, your car just became that much less valuable.
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NosrednaNod
18 minutes ago
This story makes my head hurt.
FYI…. financing a car is a “bad investment” that you will probably be underwater on over a significant term of the loan. EVs have nothing to do with this.
Spikersaurusrex
34 minutes ago
A car (barring certain specific examples) is not an investment. They depreciate as they get older. If you are worried about that depreciation, get gap insurance. Then maintain your car and drive it long past the loan period. Otherwise you’re just spending money to find happiness in something new. I’m not saying that’s bad, but be honest with yourself and don’t expect to get 90% of the original cost back when you decide to move on to something new.
Merely a concerning optic I’m sure.
I enthusiastically applaud the success of the site, and respect the risk that was taken by the founding staff. I discovered this site through tracking down where Torch went, about a month into your launch, and have enjoyed the creative mix here. Just been bothered since his medical emergency that Jason has continued to be surrounded by old busted ass collection, whereas you seem to be spending exponentially.
Nsane In The MembraNe
2 hours ago
Or just don’t buy a new EV. It’s barely a better financial decision than converting your savings to crypto. This is readily available information too and literally everyone who understands how electronic/tech products work saw this coming a mile away…and it’s probably going to get even worse as the next generation products start rolling out.
If you have to have an EV then lease one or buy one cheap once someone else has taken the depreciation to the face. There are some very attractive lease deals out there because you get the $7500 up front when you lease (although I think they’re making it so this is the process with purchasing soon as well) and manufacturers are discounting them even further after that.
The technology is moving too quickly and manufacturers have been both dramatically overpricing their EVs and building too many of the exact same goddamn cars. How many $50-$60,000 EV crossovers are out there? More than I can think of off the top of my head. This just isn’t a class you should be putting much of your money into right now.
If you’re going to buy something to keep long term and are conscientious of your carbon footprint go get a Toyota hybrid. You’ll probably be able to sell it for $20,000+ when it’s 10 years old and has 100k on it.
GumpertApolloGuy
1 hour ago
Reply to Nsane In The MembraNe
Why anyone would buy a Tesla is beyond me. I just assume everyone I see driving a Tesla is an idiot. There’s so many better choices
Stig’s Cousin
43 minutes ago
Reply to GumpertApolloGuy
I drive a 2021 Model 3 that I paid $22,000 for a few months ago. With what I pay in electricity it costs almost nothing to drive. It is fun to drive and very comfortable. I also think it looks nice.
Can you please explain to me why I am an idiot for driving a Tesla?
Also, could you please give me an example of one of the many better EV choices available?
Steve_the_Nomad
32 minutes ago
Reply to GumpertApolloGuy
Tesla sold 670,000 cars in the U.S. in 2023. Based on the ATPs, most of the buyers are middle class or higher which means there are a whole lot of well-educated, successful idiots out there. For my wife what sets the Teslas apart is the quality of the SuperCharger network and that her Model Y is a huge step up from her previous Chevy Volt. But we leased hers since the tech is changing so quickly.
Reply to Nsane In The MembraNe
Exactly – the depreciation curve is about the same as a new flagship cellphone. But that’s still only about $1,000. Why would I want to be an early adopter for something that costs 50+ times that much?
Combine the fact that a used EV loses range over time, so it’s like buying a gas powered car with a gas tank that shrinks as it ages, and depending on how it was treated, that variable is different from one example to the next, and it’s no wonder that EVs hold their value about as well as other tech products.
Also, here in the native habitat of the electric car – California – the only consumable more expensive than our gasoline is our electricity. Unless you got rooftop solar before they nerfed net metering, in a sop to the utility companies sold to the public as “equity” for those who can’t get solar, the numbers just don’t pencil out for a lot of people. It’s why communities here are backing off the natural gas hookup bans; why would I replace my gas furnace with a heat pump, when gas costs less per therm?
If I still had a commute, I’d consider leasing an EV, so that resale is the manufacturer’s finance arm’s problem. But my wife and I work from home, so our cars are essentially just used for a few errands and long trips. Why would I buy a vehicle that can only handle one use case?
Reply to Nsane In The MembraNe
I have said many times what this site needs is a money guru. Because as great of writers as they are I wonder if any ever took a finance class. The Tesla argument above is pretty much the same one a wife gives her husband for how she saved money buying a $300 dress that was 50% off from $600. You only saved if you needed that particular dress.
Reply to Mr Sarcastic
Well they did say it was the best deal *on an EV*. If an EV makes sense for someone’s use case, this would be the one to get at the moment.
Mr Sarcastic
47 minutes ago
Reply to Joe L
Well they based it on a poor financial argument but I give credit he did mention that it wasn’t for everyone. Like Noone outside California. I mean it said values dropped 50%. Then picks a car at 70% to compare. Bases financing the lower amount for the same amount of months crazy idea. But at 50% the used rebate does come in, YES HE MENTIONED IT, but said used was better. But you can’t use 1 used car and 1 state unless the site is for one state. Not saying it’s a bad idea but need to look at everything.
David, after following your adventures, I was on an i3 REX hunt myself earlier this year, focusing on CPO’s. I ended up missing on a few good ones, which all tend to be in CA. I wanted one with remaining and extendable warranty because I don’t live in CA, home of free batteries for life (well, not life, but better than FL). I was looking at mostly ’21’s with 20-30k miles. These were typically priced in the $23-25k range. before transit to the East Coast.
When Hertz did their 2nd tranche of EV dumps on a Friday night, I was in when they opened the next morning at the nearest Hertz who had an EV6. They had, literally, 200-250 lookalike Tesla 3’s, maybe twenty or so Bolt EUV’s. There were two identical, mint 2023 EV6 Wind models.
The ’23 EV6’s stickered for $51k new plus normal Florida Kia dealer shenanigan add-on fees of a few grand. I stole mine for $28k. 10 months old, with 10k miles, no haggling, and 45% off new price. Factory warranty plus an extra Hertz one, too. Glad Hertz sucked up that massive depreciation.
Averaging 3.9 to 4.0 mi/km during my local commute so stupidly cheap to drive. My first 100% EV car. Had a 2013 Volt that I really enjoyed as well.
Last edited 1 hour ago by RCAddiction
Reply to RCAddiction
Arggghh…that should be mi/kwh, not mi/km.
Reply to RCAddiction
Just an FYI to RC and other readers. If you post something and it autocorrects or you forgot something. Hit the wheel icon thing it will show edit click on it and just correct your error. Note I am not sure if it stays there or there is a limit but maybe Matt or someone who makes mistakes can tell us? Because that ain’t me. Lol
Last edited 1 hour ago by Mr Sarcastic
DialMforMiata
3 hours ago
“’I’m completely upside down on this car’,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving.”
This had better be an upcoming article!
Shop that rate and you should try to take a shorter loan period on a 3 year old car than 6 year. My credit union is at 6.74% on used cars up to 84 months. I’d go for a 5 year loan at the max on a 3 year old car, since at least you’ll have a powertrain warranty on an EV for 8 years/100,000 miles or 10 years in some states.
A 5 year loan will be about $500 a month with a 60 month loan at 6.74
If you go for a 4 year loan it’s 606.37.
I’d skip the Tesla though… if you are buying a used EV, the Chevy Bolt is the one you want. 2021’s are going for around $15,000 with around 30,000 miles, and there’s even 2023 Bolt EUV’s out there for around $18,000.
$18,000 financed with nothing down on a 2023 is just $354 a month for 60 months. Remember too, all the earlier ones were recalled and got brand new batteries with a new battery warranty, if you find a high mile one, it’s going to still have a lot of life left.
Reply to 3WiperB
Not a financial guru but rule of thumb used to be $25 for each $1,000 financed. I have no knowledge if this still applies so let’s see.
I just leafed (heh heh) through local Tesla inventory and have to admit that a RWD Model Y at $38,000 or so after the tax credit is pretty tempting compared to a mid-grade CRV, RAV4 or Escape, although I’d probably be tempted into a Long Range if I could swing it. Given Supercharger density, a real-world highway range of 200 or so miles is fine for the East Coast.
Mr Sarcastic
58 minutes ago
Reply to AlterId
I just leafed through Tesla super charger sites near me. There are 2 150 kw sites at 25 and 37 miles, then 2 250 kw sites at a little of 50 miles. None of these are in towns I regularly go to. Driving 50 miles, 1 hour each way just to charge seems an argument for Biy a hybrid or ICE vehicle.
Reply to Mr Sarcastic
Having the ability to charge from 220V at home is, IMO, a prerequisite to owning an EV. If you can’t do that, an EV makes zero sense.
Mr Sarcastic
46 minutes ago
Reply to Joe L
If you add the following “at the very least” I agree.
Steve_the_Nomad
22 minutes ago
Reply to Mr Sarcastic
The SuperCharger network should be viewed as a secondary charging source. Do you have a garage or a driveway? Most EV owners charge at home at night when kWh prices are cheaper. If you don’t, then yes you should not consider an EV I agree.
Mr Sarcastic
18 minutes ago
Reply to Steve_the_Nomad
I actually have a garage. I realize you can slow charge it that way. However a recent article on of course the Autopian website informed me 8 hours of charging on a 110 amo circuit doesn’t give you a full charge. If you are just doing errands and not driving all day 5 days a week you may be fine. But if you can’t charge up every day by Friday you may need another car. If I recall the secondary points of the article but primary points for my usage.
I feel like it’s a very bad idea to buy a Tesla until the CEO is forced out. The chaos surrounding this weird tantrum where he’s firing everyone makes it difficult to guess where after sale support is going to be.
The Kia guy might be upside down on his EV6, but at least Kia is going to be quite consistent over the entire ownership period of the car.
Reply to Citrus
Sandy Munro did a vid last week explaining — from the perspective of someone who’s spent a lot of time working for big automotive companies — that the layoffs aren’t chaotic or illogical, but what all legacy companies do and have done at intervals to stay viable. Elon just gets lots more media coverage (and, yes, cherrypicked coverage, since they want to double down on the message that he’s irrational — but which, of course, he makes easier for them with the wording of emails and tweets). Anyway, just to point out that there’s probably less chaos than it seems when reading about it. With Tesla’s current headcount, they can’t stay profitable, and there are parts of the company where they beefed up manpower when it was needed, but now no longer needed.
Reply to Harmanx
They did cut the entire teams working on new product, the supercharger network, public policy… All of those are vital to the continued operation of a car company.
There’s a difference between trimming the fat and kneecapping your future development.
Reply to Citrus
I just finished a cross-country road trip in my 6-year-old Model 3. The network is well-enough fleshed out that, if they need to save money, they can now slow down on it — because buildout was going like gangbusters for a while — I keep tabs on a site that monitors supercharger site construction. I also check forums that have some insider details, suggesting that they’re still funneling huge money into the chargers — nothing has stopped there. Just less money — about half as much. I’m seeing this reflected with that supercharger status site. They’re still being built out, just maybe 50% slower. (And more of the money is supposedly going to maintenance than before to improve uptime.)
Mr Sarcastic
54 minutes ago
Reply to Citrus
Yes but now with partners he can rely on them to pick up some slack and build charging stations. Also as a prior article stated he might spin off or sell the charging portion of the company for hundreds of millions. You don’t invest in parts of the company you may not own much longer. Say what you want about Elon but he has no desire to be in charge of a bunch of gas stations, yeah electric stations you know what I meant.
Reply to Mr Sarcastic
Agreed – I’d have to think the engineering on these is mature, and with every automaker moving to the Tesla standard charging port, there will be enough demand for others to enter the market. Investing in the charging stations made sense when it was a competitive advantage; as you say, moving forward, it’s basically managing gas stations.
Mr Sarcastic
45 minutes ago
Reply to Joe L
But you didn’t give me a smiley face? I feel sad.
Reply to Mr Sarcastic
I never remember to do that. There you go.
Mr Sarcastic
28 minutes ago
Reply to Joe L
And one for you as well. I am no longer sad.
Steve_the_Nomad
19 minutes ago
Reply to Mr Sarcastic
I gave you both smiley faces for having a civil discussion, not so common these days.
Mr Sarcastic
15 minutes ago
Reply to Steve_the_Nomad
Thanks to be honest I have been guilty of the not so nice discussions in the past. It’s this site both writers and community that slowly convinced me that here is different and I’m trying to be better.
Reply to Harmanx
That’s the definition of being unsustainable. It was “bad growth” – not some public works project or wartime call to action, but treating ostensibly permanent employees as contractors to keep a meme stock price in the stratosphere.
Musk’s doubling down in this case *is* irrational because he just eviscerated the likeliest candidate for sustained income and prospective growth within Tesla, and keeps blurting nonsense from down inside that deep deep k-hole in which he lives. How is AI going to charge my electric car?
Reply to Citrus
Tesla has to cut costs somewhere. Where do you think the money for his $56 billion pay package is going to come from.
Cheap Bastard
3 hours ago
“I’m completely upside down on this car,” a Kia EV6 owner told me yesterday as we chatted about the Tesla Cybertruck I was driving. “How do we get out of these?” BMW i3 owners keep saying in a Facebook group that I frequent, in reference to their cars’ plummeting values.
The value of my all ICE mid naughts Honda Accord is about 1/4 to 1/5th its purchase price! I want a bailout too!
Reply to Cheap Bastard
+1, my thoughts can be summarized as “tough kitties.”
If you’re not happy with the price you originally agreed to pay (and the terms have not changed out from under you – I’m looking at you, bullshit software subscriptions) – that’s your own fault and problem. If you are happy with the price you paid but are unhappy with how much it’s worth now compared to that price, you’re not happy with the price you paid.
Not everything is or should be a vehicle for investment; not everything can or should give you your money or back after you use it. You’re definitely not owed that money at any rate.
Mr. Canoehead
2 hours ago
Reply to Cheap Bastard
“I’m completely upside down” is not the same as “I want a bailout”.
It’s legitimate to be angry that you wasted money, so long as you accept it was your mistake.