A Model Y owner is $13,000 upside down (owing more on the loan than Carvana’s valuation).
With Tesla offering 0% APR on a new Model Y, if Tesla matches Carvana’s trade-in value and absorbs the negative equity into monthly payments, the $7,500 federal rebate on a new one could help offset some of the loss. Additionally, a higher trade-in value might eliminate sales tax on the new car.
From a financial perspective, this seems appealing on paper, but does it make practical sense?
And will Tesla match carvana + $13k offset?
If the $7500 available on a new one is used to pay off the old vehicle, it makes the new one cost $7500 more. Youre not getting rid of any negative equity, you’re just giving it a new home.
Current payments are at 4.5% financing.
New payment would be at 0% for 60 months.
Absorbing full negative equity, the new payment would be “current + $100 extra” per month,
making the “extra cost” to be $100 * 60 months = $6000 negative equity vs the original $13k
And the new model Y will be a little more at the end of 60 months than the current model y.
Highly doubt that TESLA will roll $13K into your new loan… and to get that 0% you will need to put 20% as a down payment, anything less than that gets you 0.99% still not bad-but the part $13K is probably not good, plus the sales tax/destination fees is probably half of that $7500 incentive so you’re actually only getting $3750
Your math is not adding up as well, $13000/60=$216/mo, how did you figure $100???
I don’t understand why the Model Y owner cares about being $13K underwater on a loan. How many payments left on the note? At some point there will be positive equity on the loan. It does not sound like they need to get out of the current vehicle, rather just don’t like the idea of seeing negative equity on their loan.
Answering some of the details requested:
1.Yes for a friend.
2.No financial distress, just thought of an opportunity to get out of NE due to Teslas zero Apr and 7500 federal rebate possibility
3. Approximations for payments,
Current one $800 x 62 left
New one $900 x 60
4. For New one Sales tax will zero due to bumped up trade in value in the same transaction.
As others have stated, why does your friend want to get out of their existing loan? Is there something wrong with their car? Does it have a clean carfax? This whole thing does not make sense to me.
EDIT: I would recommend that your friend create an account on this site. Maybe there is additional info they would like to share with us. I am sure your friend is aware that most new cars have some form of negative equity once they roll off the dealer’s lot.
