A dialogue sparked on TikTok about a woman’s extremely long car loan for the Tesla Model Y, a 2019 SUV in the company’s fleet.
In a video with over 510,000 views, TikTok user @larubyacevedo told her audience how she financed a $44,000 Tesla car with a 3.99% annual percentage rate (APR) and an 84-month auto loan with her husband.
“We did zero-down, and that is what made sense for us,” she said while advising other users on car purchases.
Users immediately noticed that her car loan would take seven years to pay off, sparking a debate on whether or not long car loans are worth years of paying bills. Despite mentioning that she received $7,500 in electric vehicle tax credit, a nonrefundable credit for those who purchase electric vehicles, many people had doubts about her financial strategy.
What is Tesla’s Model Y?
Tesla’s 2019 Model Y is one of the fastest-selling vehicles in the United States due to its safety options and luxurious features. The high-tech car has intuitive design mechanics, such as lane assist and speed assist, and is also fully electric, like other Tesla products.
Tesla sold over a million Model Ys in 2023, making it the highest-selling vehicle in the country that year. The company offers various APR and term options, including 0% APR.
Why is a seven-year loan controversial?
@larubyacevedo’s purchase of the Model Y proved controversial, with floods of TikTok comments discussing the semantics of an extended car loan.
TikTok user Msshark61 commented, “84 months is crazy work for a car loan. You’ll still be upside down after 5 years of payments.”
Another user, @jeulzwrld, said “If you can’t afford it to be paid off in 4 years you can’t afford the car.”
Commenters questioned the purchase, especially considering the $602 monthly payment, which will take years to complete. Other users disagreed, saying the seven-year loan was a wise purchase.
User @sohodiablo added, “84 months is irrelevant. They can pay it off tomorrow if they want, meanwhile they keep monthly payment low.”
Is a seven-year loan worth considering?
An 84-month car loan may be worth it, especially if the car has an extended warranty, but most warranties don’t last seven years.
Kelley Blue Book says the average auto warranty coverage lasts three years or 36,000 miles. Tesla offers a variety of warranty agreements for different parts of its vehicles. For instance, its basic vehicle warranty covers Tesla cars for 4 years or 50,000 miles. The battery and drive warranty, which only covers the battery and drive unit in the vehicle, offers coverage for 8 years or 120,000 miles. Tesla vehicles also have extended warranty agreements lasting up to two years or 25,000 miles. With only certain parts of the car under full warranty for the loan, it may not be easy to justify purchasing a Model Y.
@larubyacevedo TESLA MONTHLY PAYMENT… Part 7 #teslaorder #tesla #teslafinancing #teslapayment #teslacost ♬ original sound – Larubyacevedo
However, Tesla cars have less variable costs for gas and oil changes. According to Bankrate, the average gas price for an American is $1,837 per year, which changes depending on vehicle make and model. SUVs are less fuel-efficient overall, making them higher gas guzzlers. One benefit of owning a fully electric car is not filling up its gas tank.
The Daily Dot contacted @larubyacevedo for comment via TikTok direct message and Tesla Inc. via email.
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