Tesla is offering 10 year loans in Norway and I think this will spread to other areas.
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Tesla - 10 Year Loans in Norway (and Germany)
Tesla has begun offering 10 year auto loans in Norway. This is something that Alexandra Merz said Tesla should do, and I think it's a good idea to make a Tesla more affordable. A 10-year loan is a LONG time, however, for someone who doesn't have the income for a high monthly payment, this puts them in a position to afford one.
Tesla offering a 10-year loan is good in many ways. First, it makes a Tesla more affordable. Tesla can do this instead of continuing to cut prices. I have to be honest, I didn't think of Tesla offering loans greater than 6 years, so this idea by Alexandra Merz is a fantastic one.
Second, a 10-year loan allows Tesla to do the financing and lock in payments instead of having a bank do it. This allows Tesla to earn interest instead of a bank. This assumes that the loan is going through Tesla and not some other bank.
The interest rate on these loans appears to be about 2%, which is great. You can see from the below Tweet that Tesla is also offering a 1.99% annual interest rate on 60-month loans in Germany for the Model Y RWD and Long Range. The offer expires on June 30, 2023 - or the end of Q2, 2023.
Some are saying that this is better than share buybacks for Tesla investors.
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10 Year Loans In Other Locations
With Tesla offering 10-year loans in Norway and Germany now, will Tesla expand this to other locations?
I think Tesla will expand to other locations, but it is going to gather data first and see how the 10-year loan program works first. If many people are defaulting, and it is proving not to be a good financial setup, then Tesla may not expand this program.
If, however, most people are making their payments and Tesla is making money doing this, and it is increasing demand, then I definitely see Tesla expanding this program to China and the U.S.
This will allow more people to afford a Tesla. 10 years is a long time and is approaching the 15-year loan time-frame for a house, but this may be what it takes to get to the next level of customer deliveries for Tesla until the economy starts to turn around, and interest rates go back down.
What do you think about 10-year loans for Tesla - is this a good idea?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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