© Reuters Tesla (TSLA) offers 7-year vehicle loans to cut monthly payments
Tesla (NASDAQ:) opened new financing options on their website and is now offering EV customers 84-month term limits in an attempt to lower monthly costs amidst rising interest rates and market pressure. The previous maximum term offered was 72-months.
The change follows Elon Musk’s acknowledgment that the electric automaker must address the increasing pressure from interest rate hikes. Musk, a well-known critic of the Federal Reserve, has expressed his concerns about the rate increases, believing that they significantly raise the risk of a severe recession.
“When interest rates rise dramatically, we actually have to reduce the price of the car, because the interest payments increase the price of the car,” Musk stated during Tesla’s July 19 earnings call. He further emphasized that Tesla “had to do something about that.”
Tesla’s decision could potentially boost demand for the automaker’s vehicles, particularly among individuals who have an interest in their products but may currently be facing financial constraints. With the introduction of this new financing option, monthly car payments are expected to decrease, thereby facilitating easier affordability of the vehicles. Simultaneously, this move benefits Tesla by making their cars more accessible and appealing to a broader customer base.
Shares of TSLA are up 3.18% in afternoon trading on Monday.
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