Teslas do not come cheap, and in some regions they can cost as much as a small house. However, a larger investment in the short run might make for sizable savings in the long run. Knowing this, you may wonder if you can ultimately afford a Tesla.
4 questions to ask yourself on if you can afford a Tesla are:
- What are my current expenses?
- What can I cut out of my expenses?
- Do I think a Tesla is the right car for me?
- Do I think the benefits outweigh the costs?
Below, we will outline just how many questions you need to ask before you conclude whether you can afford a Tesla. We will also reveal average monthly payments, the overall risk and reward factor, plus opportunity costs that you must factor in before you buy a Tesla.
4 Questions To Ask Yourself To See If You Can Afford A Tesla
1. What Are My Current Expenses?
Teslas do not come cheap, so you will want to ask yourself if you can realistically afford a Tesla with your current monthly expenses. This question is easy to answer. Just take your monthly income and subtract your expenses from it.
We’ll go over the monthly payments for owning a Tesla soon, but just know that they can range from $700 to about $2,000 depending on the model you choose and the length of your loan. But even if you have savings set aside to buy your Tesla outright (which may or may not be a smart choice for you), there are still going to be expenses to consider.
You’ll need to factor in any infrastructural costs, including the installation of chargers at your home, for example. You’ll also need to pay for electricity to charge the car, much like you need to pay for gas once you buy a regular, petrol consuming vehicle. But for the sake of these next questions, we’ll assume you’re financing the Tesla via monthly payments.
These are considerable, so you will need to be thorough in your analysis of your current expenses to see if you can truly afford to spend at least $700 per month on your car. You also need to factor in the initial down payment, which is typically $4,500 to $7,500 depending on the model.
2. What Can I Cut Out Of My Expenses?
If you can’t afford the monthly payments based on your current expenses, you need to think about what you can cut out that might help you afford a Tesla. This usually means looking to unnecessary purchases, rather than cutting down on the essentials. For example, if you’ve got a family to feed, you shouldn’t be looking at your grocery bill as the first place to cut costs!
There may be specific foods and drinks you can cut down on, such as fast food and alcohol purchases, but usually the places to look to cut expenses are luxury purchases that you value less than what their combined value could contribute to your Tesla’s monthly payments.
For example, if you go out for dinner a lot, and pay subscriptions for services you rarely use, the total could easily add up into the hundreds of dollars per month. Are they hundreds of dollars that you could instead happily put towards owning a Tesla? If so, consider cutting them down, or removing them from your expenses column completely.
Owning a Tesla should never take precedence over the expenses you need to survive – food, water, shelter, warmth etc. If you need to cut expenses in order to be able to afford a Tesla, and you can’t avoid cutting these kinds of expenses to do so, you probably can’t afford one!
3. Do I Think A Tesla Is The Right Car For Me?
People value Teslas for a variety of different reasons. Teslas are among the most well-known electric cars on the market today, so you may value the brand name. You may also find value because, despite heftier upfront costs, it will save you from filling up a fuel tank every week or so.
You might want to drive a Tesla because you want to drive a car that does not run on fossil fuels and you may like them better than other potential brand names that make electric vehicles. If environmental reasoning is something you value, then it will likely be easier for you to find a way to afford one.
But you also have to consider the practical value of the car too. Will you save enough money by using electricity versus buying gas to justify the purchase? Will you use the car enough to justify the monthly payments? Is the car practical for what you want to use it for? If the answer to any of these is no, you likely can’t afford a Tesla.
4. Do I Think The Benefits Outweigh The Costs?
Teslas cost more than most showroom vehicles. Their batteries are also expensive, and considering which paint scheme you prefer, you could end up spending a few thousand dollars more for a Tesla if you go with a red scheme instead of white. Insurance costs can be high. Electricity still costs to use. The list goes on.
Long-Term Financial Benefits
Despite initial expenses, you may save money with a Tesla since you aren’t pumping gas every week. It often costs between $10 and $11 to charge a Tesla Model 3, and between $17 and $18 to charge a Model S. Compare that to how much people in gas-powered cars pay at the pump for the same range, and you may realize that you will save hundreds if not thousands of dollars per year.
Weighing up the pros and cons of owning a Tesla is very much a personal thing. You may find the look of the car alone to be worth the cost, while other people may need to be sure they’re going to save money if they buy one versus using their current car. Only by weighing the pros and cons up for yourself will you be able to decide if you should buy a Tesla.
Do You Have To Be Rich To Afford A Tesla?
You don’t have to be rich to afford a Tesla, but you do either need to have a lot of money set aside for one or be able to afford the high monthly payments that can be as much as $2,000 for the higher end models. Affording a Tesla is all about being financially healthy, not necessarily rich.
There are many activities and commodities that society views as luxuries. Owning a big house, buying personal training at a private health club, joining a country club, and owning certain types of cars are all examples of luxuries. Owning a Tesla is slowly making its way up the ladder, given their looks, unique paint schemes, and overall costs.
You may be pleased to hear that you do not need to be rich to afford a Tesla. However, you will need to have enough money put back to afford one, or be earning enough each month to comfortably afford the sky-high monthly payments.
Make Sure You Can Afford A Tesla
If you are serious about buying a Tesla and you are just making ends meet, you need to take a hard look at your monthly expenses. How much money do you have left over after you pay off all of your expenses? If the answer is roughly the costs of Tesla monthly payments, you probably can’t afford one.
You need to have leeway after including your current monthly expenses plus your expected Tesla repayment costs to account for emergencies, savings, and other one-off purchases. The exact amount you should leave aside will vary depending on your unique situation, but having $100 to spare each month after paying off all your expenses and your Tesla is not sustainable.
How Much Do You Have To Make To Afford A Tesla?
How much money you have to make to afford a Tesla depends on the model of Tesla you plan to buy and your other monthly expenses. You need to factor these in alongside keeping money left aside each month to account for emergencies and one-off purchases.
No Right Or Wrong Answer
You may have met people from most income brackets driving in Teslas. Some in lower brackets may drive them because they looked at initial costs to long-term benefits and believed it was in their best financial interest to buy a Tesla. Perhaps they finished paying off their house and have no children of their own, giving them extra money to spare.
If someone is in a higher income bracket with seven children of different age groups, and they are putting their first two kids through college alongside paying for an expensive house payment, they may be less likely to purchase a Tesla, even though they bring in more each month. It all depends on your specific circumstances.
Average Monthly Payment For A Tesla
|Monthly Payment (72 month loan)
|Total Cost (excl. taxes and other fees)
|Model 3 Base
|Model 3 Performance
|Model Y Long Range
|Model Y Performance
|Model S Base
|Model S Plaid
|Model X Base
|Model X Plaid
These average monthly payments are based on a 72-month loan, and were correct at the time of writing. Based on the loan length you choose, your monthly cost will vary. Typically, these loans range between 36 and 72 months. Your credit rating and interest rate will affect the average monthly payment cost, as will the amount you pay upfront.
KEY POINTS• Teslas are very expensive to buy
• Whether you can afford one largely depends on your specific circumstances
• Monthly payments can range from $700 to more than $2,000
Should You Buy A Used Tesla?
The prevailing factor that will ultimately decide whether you buy a used Tesla is risk. Purchasing a Tesla, just like everything else you purchase, is an investment. And each investment will come with risk, regardless of how big or small. One big risk that has been a common theme throughout this article deals with cost and benefits.
We established that Teslas are pricier than most average gas-powered vehicles, but they may come with long term benefits, like saving money on gas. The key word here is may, because there are no guarantees that you will see those benefits come into fruition, which is no different than if you were to invest in the stock market or in a new business or company.
Perhaps you may want to mitigate that risk by buying a used Tesla, and you can save thousands on them. A used 2018 Long Range Model 3 could cost between $46,000 and $50,000 instead of the $62,990 for a new one. It seems like a good deal, but there is one huge potential caveat that carries plenty of risk itself.
The Cost Of Replacing A Tesla Battery
Just as different Tesla models have different prices, so do their batteries. If you are looking for a basic battery replacement for a Model 3, expect to pay somewhere in the range of $13,000 and $14,000. However, if you drive a Model S, you can end up paying up to $20,000 to replace the battery.
The good news is that Teslas can go a long way before they require a battery replacement, even running at 90% capacity after 200,000 miles (321,869 km) in the Model S and Model X. And for each Tesla model, the batteries can typically operate at high performance between 300,000 miles (482,803 km) and 500,000 miles (804,672 km).
However, even minor voltage disturbances can cause disruptions and perhaps full replacement of a battery. If it drops below 70% capacity, you will need to get it replaced. The good news is that Tesla is willing to fork the bill on battery repairs if it remains within the warranty period. If not, you could be forking out a larger sum of money than you may have otherwise anticipated.
Ask The Right Questions
The four questions outlined above are what you should ask yourself regardless of whether you are buying a new or used Tesla. If you opt to buy a used Tesla, make sure you know the current mileage, if the battery is operating at a reasonable capacity, and if the car has had any battery issues in the past.
Inquire about where it has previously been owned, if it was involved in any road accidents in the past, and if it has had any important parts, like the battery, replaced in the past. The more you know about a used Tesla before you buy it, the less likely you will be to run into an unforeseen incident like a damaged battery that will cost you thousands to repair.
Overall, there are a lot of factors to consider when you are asking whether you can afford a Tesla. You don’t need to be rich or even make a lot of money to afford one if you find that you have the means to make consistent monthly payments through sound money management. You may also opt to consider buying a used Tesla, but there are additional risks to consider if you do.