StockTalk(7.24): Tesla introduces 84-month car loans as interest rates rise - Will consumers benefit or face greater risk?
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$Tesla (TSLA.US)$ has started offering consumers 84-month car loans, a move that CEO Elon Musk said was necessary due to rising interest rates. The company now includes seven-year loans as an option on its US order pages. While longer loan terms can lower monthly payments, consumers tend to pay more interest and face a greater risk of owing more than their vehicle is worth.
The trend in 84-month car loans slowed early this year, according to credit-reporting company Experian.
Tesla delivered a record 466,140 vehicles during the three months ending in June but has sold fewer cars than it's produced in the last five quarters. The company's shares fell after Musk said that prices would have to be lowered further if interest rates continued to rise.
Do you think offering 84-month car loans is a smart move for Tesla?
Will this help the company sell more cars or expose consumers to too much risk?
Will this help the company sell more cars or expose consumers to too much risk?
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Moon fairy 大炮仙 ❤ : Ya it will help Tesla to improve more sale as it become more affordable compare to other competitors. Consumers risk is not Tesla fault as Tesla did not force them to buy, eg just like buying a house as they should know their limits.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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ZnWC : Do you think offering 84-month car loans is a smart move for Tesla?
7 years car loan is quite common in Singapore because car is expensive here due to Certificate of Entitlement (COE). COE is a government policy to control the number of car owners in Singapore by means of affordability. A car of the same brand and model can be more expensive here than US and without car loan, a salaries person doesn't have enough cash to buy a car.
Tesla's car loan is definitely a smart marketing strategy to promote car sales. Unless you have any particular reason, most people will not loan up to 7 years (or 84 months). Hence it's a win-win for Tesla and car buyers.
Will this help the company sell more cars or expose consumers to too much risk?
Tesla will be able to sell more cars by providing car loan with the extended repayment period. US residents will be able to use the car loan to buy EV and enjoy USD 7,500 tax incentive when buying Model Y or Model 3. As long as a person buy within their means, the risk is manageable. I think there's policy or guideline in place to manage the risk pose by all loans not only car loan.
Silverbat : Promote sales drastically
Kopikarp : Tesla's move to offer 84-month car loans could be a double-edged sword. On one hand, it might increase sales by making monthly payments more affordable. However, it could negatively impact consumers, who might end up paying more interest and risk owing more than their vehicle's worth. Moreover, the trend towards 84-month loans has been slowing down, suggesting consumers are wary of such long-term commitments. For Tesla, these longer loans could pose a risk, as defaults may increase in case of an economic downturn. Therefore, while this move may boost short-term sales, it introduces significant long-term risks for both Tesla and its customers.