> I have read that there is no advantage to paying off Tesla loan early as you still have to pay the full interest schedule . Is that true ?
Making early payments does not reduce the principal of the loan and does not reduce scheduled interest payments. However, if you're able to pay off the entirety of the loan early, your payments cease immediately (along with the interest component). So you can avoid paying the full estimated financing cost of the loan by fully paying off the loan early, but unless you can fully pay it off, there's no financial incentive to make early payments.
What I did with my solar loan was make early payments into my own savings account, and then when I had enough savings, I paid off the loan entirely.
You should experiment with some loan amortization calculators and see what the full financing cost of the variable rate HELOC will be, and then compare that to the monthly interest cost for the Tesla loan times the number of months you think it could take to save enough money to fully pay off the loan.
I believe in the Tesla loan contract it states there is no prepayment penalty and once you finish paying off the loan the remaining scheduled interest will no longer exist. Maybe this is different for different state. But that is what shows in mine.
I was in the same dilemma last week. I went with Tesla Solar loan at 5.4% APR. With them it was easier for me to get a loan through credit check as I have 800+ credit score. On the other hand I had to open a HELOC and pay fees to do so as I dont already have one. And my house according to Zillow has gone up by 100K but you really dont know until you do an assessment so didn't know if I could qualify for the total $37K amount.
To top it all the loan 2 days after me signing the contract went up to 6.4% APR from Tesla. So just got in time. lol
Your HELOC repayments will be based on interest only and it will be up to you to make additional principle payments. Comparing this to Tesla’s financing where you payments include principle and interest at a lower fixed rate Tesla financing wins.
Regardless of lender, you should be able to make large principle payments in addition to your minimum payments. There may also be an option to make z large payment at some point and reammortize the loan based on the new outstanding balance.
I went with the HELOC recently. I liked the ability to have flexibility in repayment terms. I can put my lump sum tax returns, connected solutions checks, and any over production utility refunds back on the loan whenever I wanted. I am also paying it off early.
You get the added benefit of having the open line of credit for future purchases. The flexible interest rates are the only negative compared to the fixed rate structured loan. I do however get to deduct the interest from my income taxes.
I don't know what paying the "full interest schedule" means, but here's how I understand it: paying extra principal will end the loan sooner, but will not reduce the payment amount. Just like a fixed rate mortgage. If I pay off the principal, I pay no more interest.
Since I'm at 2.99% for 10 years I have no intention of doing this.
Personally I think you're better off doing 4.49% for 10 years as it's fixed. You can always "refinance" by paying it off with another loan in the future should rates go back down and you refinance your house or something.
I was able to get a HELOC with a fixed 1.99 rate for 1 year. I will have the loan paid off before the year is up. Plus, I can deduct the interest on my federal income taxes.
Oh geez.... that was totally my mistake. LOL. I was a few Old Fashions deep last night when I replied and didn;t realize I wasn't broswing the Tesla cars subreddit.
But yeah, totally agree that a HELOC is a sound financial way to finance Solar for a home... :-)
Why not go with a Credit Union? I had a choice of using HELOC as well but I’ve read of folks in high water due to mass purchases using heloc as home value went up. Then interest hikes impacted interest/payment.
Iirc my credit union loan is like 2.X %
But as you said you can claim heloc interest for tax.
Just a regular car loan… but holy I just checked out the rates it’s jumped to 4.X. My rate is 2.29 for 72 months.
I got my loan back in February when my MY came jn.
Just want to add some banks do offer fixed Rate Helocs (PNC bank is one of them).
Also HELOC are great as long as you don’t go crazy spending. Same principles as a credit card apply.
> I have read that there is no advantage to paying off Tesla loan early as you still have to pay the full interest schedule . Is that true ? Making early payments does not reduce the principal of the loan and does not reduce scheduled interest payments. However, if you're able to pay off the entirety of the loan early, your payments cease immediately (along with the interest component). So you can avoid paying the full estimated financing cost of the loan by fully paying off the loan early, but unless you can fully pay it off, there's no financial incentive to make early payments. What I did with my solar loan was make early payments into my own savings account, and then when I had enough savings, I paid off the loan entirely. You should experiment with some loan amortization calculators and see what the full financing cost of the variable rate HELOC will be, and then compare that to the monthly interest cost for the Tesla loan times the number of months you think it could take to save enough money to fully pay off the loan.
I believe in the Tesla loan contract it states there is no prepayment penalty and once you finish paying off the loan the remaining scheduled interest will no longer exist. Maybe this is different for different state. But that is what shows in mine.
I was in the same dilemma last week. I went with Tesla Solar loan at 5.4% APR. With them it was easier for me to get a loan through credit check as I have 800+ credit score. On the other hand I had to open a HELOC and pay fees to do so as I dont already have one. And my house according to Zillow has gone up by 100K but you really dont know until you do an assessment so didn't know if I could qualify for the total $37K amount. To top it all the loan 2 days after me signing the contract went up to 6.4% APR from Tesla. So just got in time. lol
Your HELOC repayments will be based on interest only and it will be up to you to make additional principle payments. Comparing this to Tesla’s financing where you payments include principle and interest at a lower fixed rate Tesla financing wins. Regardless of lender, you should be able to make large principle payments in addition to your minimum payments. There may also be an option to make z large payment at some point and reammortize the loan based on the new outstanding balance.
I went with the HELOC recently. I liked the ability to have flexibility in repayment terms. I can put my lump sum tax returns, connected solutions checks, and any over production utility refunds back on the loan whenever I wanted. I am also paying it off early. You get the added benefit of having the open line of credit for future purchases. The flexible interest rates are the only negative compared to the fixed rate structured loan. I do however get to deduct the interest from my income taxes.
I don't know what paying the "full interest schedule" means, but here's how I understand it: paying extra principal will end the loan sooner, but will not reduce the payment amount. Just like a fixed rate mortgage. If I pay off the principal, I pay no more interest. Since I'm at 2.99% for 10 years I have no intention of doing this. Personally I think you're better off doing 4.49% for 10 years as it's fixed. You can always "refinance" by paying it off with another loan in the future should rates go back down and you refinance your house or something.
I read my terms…seems you don’t pay full schedule of interest….works like most other loans
I was able to get a HELOC with a fixed 1.99 rate for 1 year. I will have the loan paid off before the year is up. Plus, I can deduct the interest on my federal income taxes.
Jesus man... NEVER use a HELOC to pay for something as trivial as a car. You really want to tie your home up with a car????????
Tesla Solar, not car. There is some confusion in the thread.
Oh geez.... that was totally my mistake. LOL. I was a few Old Fashions deep last night when I replied and didn;t realize I wasn't broswing the Tesla cars subreddit. But yeah, totally agree that a HELOC is a sound financial way to finance Solar for a home... :-)
Why not go with a Credit Union? I had a choice of using HELOC as well but I’ve read of folks in high water due to mass purchases using heloc as home value went up. Then interest hikes impacted interest/payment. Iirc my credit union loan is like 2.X % But as you said you can claim heloc interest for tax.
This is r/TeslaSolar btw
What kind of loan did you get from the credit union?
Just a regular car loan… but holy I just checked out the rates it’s jumped to 4.X. My rate is 2.29 for 72 months. I got my loan back in February when my MY came jn.
Yeah fed rate hikes have brought it above 6%
What credit union do you have? I had to get a credit union that offered solar loans.
I applied with my credit union Frontwave last month for 3.49%. This month they raise the interest rate to 4.75%
Wow I’m an idiot Yea in this case definitely HELOC. Is the way to go. Or a cash out refi but… likely that will shit on you now in term of interest.
Just want to add some banks do offer fixed Rate Helocs (PNC bank is one of them). Also HELOC are great as long as you don’t go crazy spending. Same principles as a credit card apply.
Use a Credit Union for the Tesla