How Does Buying a Tesla Work?
Before we get into credit cards, let’s go over how buying a Tesla actually works. Tesla doesn’t sell cars as other companies do. Tesla has total control over all of its “showrooms” and doesn’t sell through third-party dealerships.
In some states, Tesla isn’t allowed to sell directly to consumers. As a result, the company instituted a delivery scheme that allows customers to process their purchase in a different state then take delivery of their car off-site.
If you’re buying a Tesla in a state that doesn’t allow direct-to-consumer sales, you won’t have a chance to sit down in the finance office like you would at a dealership. Instead, you’ll have to have the balance paid to Tesla before taking delivery.
Do I Have to Pay Off My Tesla Right Away?
Thankfully, Tesla does not require you to pay off your loan immediately. Instead, Tesla must be paid the full balance by the bank prior to delivering your car. So how is this different from a traditional car dealership?
A traditional dealership usually has a built-in finance department, or instead of local banks that pretty much always guarantee their loans. As a result, customers can leave with a car on the same day or on days when the bank is closed. This is because the dealership is reasonably confident that the loan will go through, even if it hasn’t been officially approved yet.
Tesla is a much larger corporation than a traditional car dealership. As of result, they don’t have the resources necessary to be lenient every once in a while with customers. Thus, regardless of how you pay for it, somebody has to cough up the full price of the car before you can take it home.
In some cases, especially when buying from out of state, this can cause minor delays. Additionally, you may have to check with the bank to make sure the loan has cleared or pester the local credit union banker to send the money as soon as possible.
Can You Buy a Car With a Credit Card?
Now, we will cover if it’s even possible to purchase a car with a credit card. Surprisingly, buying a car with a credit card is more common than most people expect. Individuals often purchase used cars with credit cards, and the transactions usually go through if the individual contacts the credit company ahead of time to inform them of the upcoming purchase.
Traditional car dealerships accept most major credit cards on the vast majority of purchases, including down payments. This is especially true if you’re working with a dealership that has a manufacturer-specific financing company, such as Nissan Finance.
Given that the majority of people finance cars separately, some dealers may give you a strange look if you try to pay for a brand new automobile with a credit card. This is usually because prime and super-prime interest rates on auto loans can be much lower than the average credit card rate, though this isn’t always the case.
Does Tesla Accept Credit Cards?
So, now we’ve covered that many dealerships will accept credit cards for car purchases. But what about Tesla? We all know that Tesla financing works differently than traditional car dealerships, so it should come as no surprise that their credit card policy differs.
Tesla does not directly accept credit cards for whole car purchases. However, several third-party lenders that work with Tesla happily accept credit card payments. Additionally, Tesla accepts credit cards for some products and services that they offer.
Credit Card-Friendly Tesla Purchases
What can you buy from Tesla with a credit card? The vast majority of Tesla products can be purchased with a credit card, just not an entire car. For example, many of Tesla’s paid upgrades can be purchased directly through the website with any major credit card.
Additionally, virtually all Tesla accessories can be purchased with a card through the website. Here’s a short list of items that you can buy from Tesla without going through a third-party service.
- Charging Cables
- Charging Adapters
- Interior Accessories
- Home “Wall Charger” Units
- Replacement Parts
- Accessory Kits
Tesla will take partial payment for your car with a credit card. For example, all Tesla pre-orders can be processed with any major credit card directly through the website. Additionally, you can make your deposit payment directly with a card of your choice.
How to Purchase a Tesla With a Credit Card
Benefits and drawbacks aside, if you want to purchase a Tesla entirely with a credit card, you can with the help of a third-party service. These companies essentially just move the money from your card to the auto company, and they may charge a comparatively substantial fee for the service.
Tech Times recently covered a case of a 29-year-old who put the entire balance of a Tesla Model 3 on his credit card using a company called Plastiq. The company transferred the balance of the Tesla onto his card and collected a 2.5% fee for their services.
Let’s crunch the numbers here. Assuming you purchased a new Tesla Model 3 for $44,990, the 2.5% third-party fee would add roughly $1,125 to the purchase price of the car. Additionally, you’ll have to pay recurring interest charges on the card balance.
For some people, this may be worth it. $1,125 is roughly the same cost as the destination charge that every new Tesla buyer pays anyway (on top of the MSRP), and the added convenience of consolidating all of your recurring payments onto one card can be appealing.
What Credit Cards Can I Use to Buy a Tesla?
So far, we’ve only covered whether or not the company that sells the car will let you use a credit card to buy it. However, we must also consider whether or not the credit card itself can accept such a purchase.
In many cases, a $40,000 or $50,000 credit card purchase won’t go through immediately. Credit card companies have systems in place to prevent theft and fraud, and large purchases are a dead giveaway that something nefarious may be occurring.
If you want to purchase a vehicle with a credit card, you’ll probably have to notify the credit company in advance with the expected amount and purchase date. Also, you’ll have to make sure that your credit card has a high enough limit to allow for such a purchase.
Credit Card Limits for Car Purchases
Given the generally high price of Tesla vehicles, along with the added fees that come with any car purchase, it’s safe to say that you’ll need a credit card with a limit of at least $40,000 to $50,000 to be safe. Additionally, you’ll need to make sure that your card agreement allows you to make a single large purchase that takes up most of the balance.
There are very few credit cards that start with a limit of 40 or $50,000. However, there are many credit cards that can be used for high-dollar purchases. Given the high price, you’ll likely have to combine more than one credit card to cover the whole cost of the car. But there are some exceptions, and you can talk to your credit card company to find out what they offer.
Here are a few examples of high-limit credit cards that give you a good chance of covering part of a Tesla purchase with.
- Chase Sapphire Reserve Card
- Capital One Venture Card
- Chase Sapphire Preferred Card
These cards offer additional benefits, such as points and rewards that may make a car purchase a worthwhile expense. However, credit limits vary between persons, and most high-limit credit cards require a long credit history and a high credit score. Many people who would qualify for a $50,000 car loan may not qualify for a card that would cover the same amount.
Can You Buy a Tesla With a Debit Card?
But what about a debit card? Surely if you have enough cash in your bank account, it should be simple to transfer it using a card that’s connected directly to the balance. However, Tesla‘s card policy extends to both credit and debit cards.
If you intend to pay off the whole balance at once, you can send the entire purchase price via a wire transfer to Tesla.
About The Author
I've spent many years selling cars, working with auto detailers, mechanics, dealership service teams, quoting and researching car insurance, modding my own cars, and much more.Read More About Charles Redding