Tesla vehicles have become increasingly popular in Canada for their style, performance and environmental friendliness. While electric vehicles are often more expensive than their gas-fueled counterparts, companies like Tesla seem to be closing the price gap. And with financing options available, you may be able to get your hands on your own Tesla with affordable payment options.
Let’s take a closer look at how you can finance the purchase of a Tesla in Canada.
Key Points
- Car loans can make purchasing a Tesla more accessible for many Canadians.
- Several Tesla financing options are available, including car loans through in-house dealerships, banks, and private lenders.
- Leasing is also an option, which allows you to drive a new Tesla every couple of years and pay lower monthly payments compared to financing.
Tesla Financing Options In Canada
If you’re not making an all-cash transaction and need some financial assistance to buy a Tesla, you have a few financing options available:
Finance Your Tesla Through A Tesla Dealership
Tesla offers financing programs through Tesla financiers. Loan terms range from 3 to 8 years, and the interest rate varies based on your financial and credit profile. With Tesla financing, you can even pay off your loan early with no prepayment penalties.
Car Loan Through A Bank Or Private Lender
If you prefer to use a lender outside of Tesla’s offerings, you can apply for bank financing or a car loan from a private lender.
- To qualify for bank financing, you’ll usually need excellent credit and a strong income. Bank financing is generally preferred as it offers the most competitive rates.
- On the other hand, you can get financing through a private lender. These lenders may be better suited for those with poor credit who are unable to get approved for funding through banks. However, private lenders tend to charge higher interest rates.
Whether you’re looking for financing from a bank or a private lender, you’ll usually have to apply with the dealership they’re partnered with.
| How Does A Car Loan Work? A car loan is designed specifically to finance a vehicle and is secured against the car you’re purchasing. The lender will distribute the funds directly to the dealership. Then, you’ll make regular installment payments to your lender to repay the funds over the loan term until the loan is fully repaid. Learn more: Car Loans |
Best Car Loans In Canada
Learn more: Best Car Loans In Canada
Types Of Tesla Cars You Can Finance
You can finance any Tesla model using a car loan or personal loan from a bank, credit union, private lender, or in-house financing. Some models include:
- Model S
- Model 3
- Cybertuck
- Model X
- Model Y
Tesla Financing Costs In Canada
Financing a Tesla – much like any other vehicle – involves several factors that directly impact the overall cost:
- Interest Rate: The biggest cost factor involved in a car loan is the interest rate, which is based on your credit score and income, and the lender.
- Loan Term: Longer terms tend to come with lower monthly payments, but more interest paid overall. Shorter terms, on the other hand, mean higher monthly payments, but less interest paid over the loan term.
- Down Payment: A bigger down payment means you’ll need to borrow less. In turn, this means lower monthly payments. It can also help increase your chances of loan approval with a lower rate.
- Fees: Dealerships and lenders may charge extra fees, such as loan origination fees, documentation fees, title registration fees, and delivery charges.
Learn more: How Much Does Financing A New Car Cost?
How Much Does A Tesla Cost To Finance?
To illustrate how much you could pay to finance a Tesla, let’s use an example:
- Interest Rate: 7.59%
- Loan Term: 5 years
- Down payment: $5,000
| Tesla Price | Monthly Payment | Total Interest | Total Cost | |
| Model S Sedan | $99,990 | $1,907.47 | $19,458.19 | $119,448.19 |
| Model 3 Sedan | $59,990 | $1,104.24 | $11,264.41 | $71,254.41 |
| Cybertruck | $139,900 | $2,708.89 | $27,633.54 | $167,533.54 |
| Model X SUV | $110,990 | $2,128.36 | $21,711.48 | $132,701.48 |
| Model Y Sedan | $64,990 | $1,204.64 | $12,288.63 | $77,278.63 |
What’s The Average Interest Rate On A Car Loan In Canada?
The average car loan rate for Canadians is currently around 7.59%. That said, the rate you will be charged could be higher or lower than this figure. For instance, you may be charged a lower rate if you have excellent credit and make a large down payment. On the other hand, your rate may be higher if you apply with a low credit score and make a small down payment.
Further, interest rates tend to be lower for new car financing compared to used car loans. This is because the lender assumes a higher risk when financing used vehicles due to the greater likelihood that the vehicle will experience mechanical problems. Plus, it’s harder for lenders to estimate the resale value of a used vehicle, particularly as it continues to decrease in value.
Sales Tax On Tesla Purchases
When buying a Tesla in Canada, sales tax is typically charged at the point of sale. The exact rate depends on the following:
- The province/territory where you buy the Tesla
- Whether the car is new or used
- Whether you’re buying from a car dealership or a private seller
You can choose to pay the sales tax at the point of sale or add it to your car loan. If you choose the latter, the loan amount and monthly payments will increase.
| Luxury Sales Tax: In Canada, a federal luxury tax applies to vehicles priced over $100,000. This tax rate is either 10% of the purchase price or 20% of the amount over $100,000, whichever is lower. Since some Tesla models cost more than $100,000, the luxury tax often applies, which is something to budget for when purchasing a Tesla. |
Learn more: Taxes On Cars In Canada: Dealership vs. Private Sale
Qualifying For Tesla Financing in Canada
To qualify for a loan to finance your Tesla purchase, you’ll typically need to meet the following criteria:
- Good Credit Score: Your creditworthiness determines your chances of loan approval. It also impacts the interest rate you’re charged, which affects the total loan cost.
- High Income: Lenders assess your earnings and employer information to make sure you’re able to afford the loan. Given the cost of certain Tesla models, a higher income is important.
- Residency: You’ll need to live in the province where you’re applying for a loan. Your lender will want proof of residency, which you can show with a utility bill or lease agreement.
- Photo ID: Your lender will also want to verify that you are who you say you are. So, you’ll need to provide government-issued ID, such as a driver’s license or passport.
Alternative Ways To Get A Tesla In Canada
Instead of a car loan, you can also get a Tesla by:
Taking Out A Personal Loan
Alternatively, you may choose to take out a personal loan to finance your Tesla purchase. While it works the same as a car loan, there is typically no collateral for the lender to claim if you default on the payments. As such, requirements for a personal loan may be higher and harder to qualify for than a car loan.
That said, a personal loan may be a great option if you plan to buy a used car, especially from a private seller. In this way, you can pay the seller in cash up front. Then, you can deal with loan payments with your lender until the loan amount, plus interest, is fully repaid.
Leasing Your Tesla Through A Tesla Dealership
For qualifying applicants, you can also choose to lease your Tesla instead of financing it. Leasing is available to car buyers in the following provinces:
- British Columbia
- Alberta
- Saskatchewan
- Manitoba
- Ontario
- Quebec
- Nova Scotia
If you so choose, you may have the option to either extend your lease, return the vehicle, or begin a new lease with an upgraded vehicle.
Final Thoughts
If you thought a Tesla was only something the wealthy drive, you may be surprised at some of the more affordable options available, particularly when you shop used. And when paired with financing that fits comfortably within your budget, you may be able to take your very own Tesla out on the road sooner than you think. Look into the various financing and lease options for a Tesla to find out what you can afford.
