What Credit Score Do You Need to Get Financing For a Tesla?

Buying a Tesla is an exciting idea for anyone who likes electric cars. Tesla cars are the future of transportation because they use cutting-edge technology, have great performance specs, and look to the future. But with prices starting at around $46,000 and going up to over $100,000 for the best models, buying a Tesla is a big financial decision that most people need to carefully plan and budget for.

One of the key considerations is figuring out how you will pay for your new Tesla. With the high costs involved, financing is an attractive and commonly used option. This raises an important question – what credit score do you need to qualify for auto financing on a Tesla?

Even though Tesla doesn’t say what the minimum credit score is, experts in the field say you should have at least 670 to have a good chance of being approved. However, the higher your score, the better your chances are of getting good loan terms from Tesla Financing or other lenders.

Here is an overview of how credit scores impact Tesla financing options and what you can do to optimize your chances of success

How Credit Scores Influence Tesla Financing Terms

In general, the better your credit score, the better interest rate you can get on a car loan. Tesla’s own financing arm offers interest rates starting at 2. 49% for borrowers with excellent credit.

People with credit scores in the mid-600s have said they were approved for Tesla loans, but they had to put down big down payments of $10,000 or more, according to posts on the MyFico forums. They also received less favorable interest rates around 5-6%.

With a score below 650, it becomes very difficult to get approved for Tesla financing at any rate. Approval is also less likely from other third-party lenders on a vehicle loan of $40,000 or more.

Here is a general overview of the credit score ranges and loan terms they may yield:

• Excellent Credit (720+) – Preferred interest rates from 2.49% to 4.99%. Option to finance 75% to 90% of vehicle price.

• Good Credit (670 – 719) – Standard interest rates from 5% to 9%. May need higher down payment of 10% to 30%.

• Fair Credit (630 – 669) – Subprime loan interest rates 10%+. Higher down payment requirement up to 50% of vehicle price.

• Poor Credit (Below 630) – Loan approval very unlikely. Need to improve score or explore other options like buying used or leasing.

Checking Your Tesla Financing Eligibility

The best way to check if you may qualify for a Tesla loan is to get pre-approved using their online application before ordering your vehicle. You can apply directly through your Tesla account.

The pre-approval is a soft credit check that gives you an estimated rate without impacting your score. If you get pre-approved, Tesla will honor that rate as long as your credit profile remains the same until you take delivery.

Third-party lenders like banks, credit unions, and auto loan companies can also provide pre-approval. Comparing rates from multiple providers is wise to find the best deal.

Improving Your Credit Score for Better Tesla Financing

If your credit score falls short of ideal financing range for a Tesla, taking steps to improve it before applying can save you thousands on interest charges. Positive changes can take time, but some strategies include:

• Paying down balances on credit cards and other revolving debt
• Paying all current bills on time to establish positive payment history
• Limiting new credit inquiries by only applying for what you need
• Having inaccurate information on your credit reports corrected
• Becoming an authorized user on a friend/family member’s account in good standing

Also consider allowing more time to improve your credit before ordering your Tesla. You want your score in tip-top shape when you actually apply for financing.

Alternative Financing Options for Lower Credit Scores

If you have your heart set on buying a Tesla but your credit score needs more time to increase, you may need to get creative with financing alternatives such as:

• Asking a family member to co-sign the loan with you
• Working with a credit union that may offer more flexibility
• Exploring independent lenders specializing in financing for Tesla vehicles
• Leasing instead of financing to purchase – requirements are usually less strict
• Looking at used Tesla inventory which can be 20-40% cheaper

Saving up for a larger down payment can also offset credit challenges when applying for a Tesla loan. Putting down 20% or more gives lenders greater confidence in approving your application.

Know Your Score and Shop Smart

The takeaway is that buying and financing a Tesla is realistic even with imperfect credit, but your loan terms will be much better if you have excellent or good credit.

Before applying, always check your current FICO score through MyFICO or directly with credit bureaus. Scores can vary between agencies, so checking all three provides the full picture.

If your score is in the fair or poor range, take time to improve it before running applications. The short-term patience will pay off with much more favorable interest rates and loan approvals down the road.

Armed with knowledge of where your credit stands and having a strategy in place, you can shop smart and get the best Tesla financing whether through their own loans, banks, or credit unions. Driven by your goals, persistence, and a sound financial plan, the electric vehicle of your dreams can become a reality!

Frequently Asked Questions on Credit Scores for Tesla Financing

What credit bureaus does Tesla use to check my scores?

Tesla will submit your social security number to all three major credit bureaus – Experian, TransUnion, and Equifax. They will evaluate your credit reports and FICO scores from each agency before making a financing decision.

If I’m denied Tesla financing, can I take steps to improve my application and re-apply?

Yes, if you are denied you can work on boosting your credit score and/or debt-to-income ratio and then re-apply after about 3-6 months. Having another down payment ready can also strengthen your case for getting approved on a re-application.

How long is a Tesla financing approval good for?

A Tesla financing pre-approval is valid for 30 days. If you take delivery of your vehicle more than 30 days after the initial approval, you’ll have to go through the application process again and have your credit re-evaluated.

Can I trade-in my current vehicle when financing a Tesla?

Yes, you can include a trade-in as part of your Tesla purchase and financing application. The appraised value of your trade-in will be deducted from the total loan amount.

Does leasing a Tesla require as high of a credit score as financing?

No, approval requirements for leasing directly through Tesla are a bit less stringent than financing. Leasing usually requires a minimum score in the low 600s. The monthly payments are also lower compared to financing the entire vehicle purchase price.

Can I use a co-signer to help qualify for Tesla financing?

Yes, having a co-signer with good credit is permitted and can improve your chances of getting approved if your own score is marginal. The co-signer agrees to be equally responsible for making the loan payments if you can’t pay.

Conclusion

A Tesla may seem out of reach if your credit is less than ideal. However, with some diligent planning and preparation, you can get financing approved with even average credit scores in the mid 600s. Do your homework, check your scores, work on improving them if needed, explore all financing avenues, and realize your dream of owning this cutting-edge electric vehicle.