Tesla vehicles are magnificent-looking masterpieces bound to turn heads anywhere. You’re not alone in desiring one, but can you afford it?
You can afford a Tesla if you make a six-figure annual salary. Some average earners can afford the base model of the Tesla Model 3 (which is the cheapest variant they have) but with financing.
The rest of the article will look at all the important questions around affording a Tesla.
The yearly salary you need to be able to afford a Tesla is at least $60,000. The exact income depends on the model you’re looking at and whether you intend to pay cash or take a loan.
You’ll need to make at least double the cost of the Tesla model you’re looking at (if you’re thinking of paying cash) to still have enough money for your yearly expenses. So, for a Model 3, which sells for $43,990 (base model), you need to make at least $80,000 a year if you intend to pay cash.
If you choose to go with a loan, you can expect to pay around $8,652 a year, assuming a monthly payment of $721 and a loan term of six years. In this scenario, you need to make at least $60,000 a year to comfortably accommodate the yearly payments alongside your other expenses.
The salary estimate for the loan is based on the recommendation that your car repayment should only cost around 10-15% of your income.
Below is a table showing the cost of various Tesla models, recommended yearly income to afford one in cash, the yearly income to afford a six-year loan, and the expected monthly payments over the loan period.
| Model | Cost for Base Model | Recommended Yearly Income For Cash Payment | Recommended Yearly Income for a Six-Year Loan | Expected Monthly Payments for a Six-Year Loan |
| Model 3 | $43,990 | $90,000 | $60,000 | $721 |
| Model S | $94,990 | $200,000 | $110,000 | $1,327 |
| Model X | $104,990 | $210,000 | $120,000 | $1,477 |
| Model Y | $56,990 | $115,000 | $70,000 | $833 |
Like most big-money purchases, you have to budget for a Tesla if you’re an average income earner. Here’s how you can do that:
The first step to budgeting for a Tesla is to have a model in mind. They’re all wonderful cars, so it’s not always easy to choose. However, looking at the table above, you can quickly eliminate models that aren’t realistic for your income level and focus on those you’re most likely to afford.
Pay attention to any extras you’d like to add to come up with a defined budget. At this stage, you should also decide if you’d like to pay in full or go with a car loan. Your budget and timeline will vary based on which side of the divide you choose to lean towards.
When you’ve chosen a model and all the whistles and bells you’d like to add to it, you can go to the Tesla website to get a definitive cost for everything. As you add any extras, you can see the model’s price reflects any changes in real-time.
Once you’ve concluded the purchase-related calculations and arrived at a number, you’ll need to calculate ongoing costs like car insurance, registration, maintenance fees, the interest rate on the loan, etc. Don’t forget to include the down payment in your calculations if you’re going for a loan.
When budgeting and saving for your Tesla, you can either make more money or reduce your expenses and put the saved money away towards your goal. If you’re saving money, look for vehicles that can at least keep pace with inflation.
You should also watch out for options that can grow your money without exposing you to excessive risk.
If you’re looking for how to save money, you can use apps and online tools that can help you plug wastage and those that will help you find cheaper alternatives to things you usually pay for.
Here’s a YouTube video that goes into more detail on how you can save money towards your Tesla budget.
The cheapest Tesla model is the Tesla Model 3. The base variant costs $43,990 currently for outright purchase. On loan, the monthly repayment over a six-year term works out at $721 per month.
However, the Tesla Model 3 can cost up to $60,000 if you choose to change the base design.
For example, adding full self-driving functionality to the vehicle can increase the price by $10,000.
Tesla doesn’t require a minimum credit score for people looking to buy a model with a loan. However, if you have a good to excellent credit score (minimum 720), you can qualify for a lower-APR loan.
Tesla’s financing rates begin at 2.49% APR for a 3-6 years loan term. The exact loan conditions are determined by your credit rating, the model you’ve chosen, and the financing term. You can check your credit score on the USA.gov website.
When looking for financing for your Tesla, don’t forget to check offers from your credit union, bank, and other online lenders. They may have more flexible rates than Tesla. In fact, they may also be your only option if you live in states where Tesla financing and leasing have been prohibited.
You can’t afford a Tesla Model 3 if you make $12.00 per hour unless you already have sizable savings, a car to trade in, and little ongoing monthly expenses.
If you make $12 per hour and work 40 hours a week for 50 weeks a year, you’ll make around $24,000. That sum will fall by around 8% after taxes are deducted to leave you with $22,000 or less.
The remaining sum will fund your lifestyle, paying your rent, food, transport, insurance, etc.
With that in mind, it’s difficult to come up with the $44,000 you need to pay for the Model 3 base variant, which is the cheapest Tesla—unless you already have tens of thousands saved up somewhere.
If you don’t have any savings and a decent car to trade in, you’ll have to subscribe to a loan. Assuming a 6-year loan term, you’ll still need to pay $721 per month based on our table above—a sum that only works if you qualify for Tesla’s 2.49% APR. If you don’t qualify, you could end up paying higher sums.
Now, your $22,000 works out at around $1,833 per month. If you add insurance and the cost of charging to the monthly loan repayment, you’ll be spending $921 on your car every month, which is a massive 50% of your income.
Every qualified financial advisor will promptly tell you that spending 50% of your income on a car is wrong. As we briefly mentioned above, most recommend spending under 10% so that maintenance costs and fees will bump the car expenses to a maximum of 15% of your income.
Again, can you live on $912 per month after spending $921 on your car? So, while it’s not impossible to find someone on $12 per hour driving a Tesla Model 3, it’s serious financial irresponsibility unless you have other sources of income beyond the hourly salary. In that scenario, you’re different from the average $12/hour earner.
It’s smart to buy a used Tesla if you can get a good price on lower mileage options that are still within their warranty period. High mileage Tesla vehicles may present with problems that’ll end up costing more money than you’d spend on a brand new model.
People choose to buy used Tesla vehicles because it can help them avoid the wait times between pre-order and delivery. You may look at potential savings on the cost of a new car as a valid reason, but that isn’t always the case.
Pro Tip:
If you take delivery of your Tesla for the first time, you might find that some features like “Cabin Overheat Protection”, “Dashcam Save Footage Button” and “Honk to Save Footage” are not working. The most likely case is that your new Tesla will not have been flagged as delivered on Tesla’s backend database. Ask your Tesla rep to contact your local delivery center to repush the delivered status of your car on both the old- and new system. This will sort out your issue and you’ll be greeted with a welcome screen when you get back into your car again.
Some used Tesla owners put their cars on the market at almost the same price as a new one or slightly higher.
However, if you find a good deal, it’s worth exploring. Some benefits of buying a used Tesla include the following:
Still, as with all other vehicles, buying a used Tesla isn’t without its risks. First, you need to find one with a reasonable price and ensure that its battery degradation is less than 5%.
It’s not always easy to find that combination. When you do find it, you may have to live with upgrades or modifications the original owner has made, which are irrelevant to you and may cost you more money on maintenance. You also have to trust that the owner has been honest about their use of the vehicle.
So, while it makes sense to explore the used Tesla market, you need to be careful to ensure you’re not going to end up spending more money than you’d have spent if you waited a few months for a new car to arrive.
The average person can afford a Tesla if they don’t have any significant debts and only have to worry about rent or mortgage and other minor living expenses.
However, to qualify as an average person, you need to earn at least $53,000 a year, which is the annual mean wage of a U.S. salary worker according to the U.S. Bureau of Labor Statistics (BLS).
Even when you fall into this bracket, you’re very likely to only afford a Tesla with a loan or lease agreement.
Owning a Tesla as a teenager is not easy. Not many teenagers can come up with $44,000 for a car. So what should you do if you want to live the dream?
If you still live with your parents, you likely don’t have to worry about any overheads. You won’t have any mortgage or other such bills to pay. It’s the perfect environment to just work and save money for your dream car.
If you start working $10 per hour jobs for 20 hours a week, you’ll have $10,000 in savings per year. Work for 3-4 years, and you could have enough to pick up your dream Tesla. Of course, you can look for higher-paying jobs or work more hours if you can afford to (your academics shouldn’t suffer, for example).
If you have a skill, think about improving on it and charging industry-standard fees. You’re likely to save enough for a Tesla faster if you have a highly marketable skill that can pay you more than minimum wage earnings.
If you look around, you’re sure to find teenagers making a lot of money from high-risk investment fields like cryptocurrency, options, or forex trading.
You should consider dabbling into any of these if you’re capable of learning how to succeed with it quickly. Remember, it’s a high-risk field with a high failure rate, so don’t invest too much money and time on it if you don’t know what you’re doing.
If you have rich parents, you can simply ask them to help fund your Tesla. Granted, many responsible parents will balk at the thoughts of giving a $44,000+ car to a teenager, but you can increase the chances of landing their support by saving up some money first to show them your seriousness.
If you have saved up the down payment for the car, they may support you by either paying for the car or facilitating a loan.
You can afford a Tesla in Canada as you would everywhere else—either by saving money and paying cash or securing financing.
In Canada, banks and lenders will charge financing rates similar to what you’d get in the U.S. but don’t forget to shop around for the best rates.
Tesla remains the market leader in the electric vehicle niche.
You should also remember to look at the used vehicle market for potential bargains.
