Car Loan vs AGL Cars Subscription

Platinumtelecom on 09/08/2022 - 19:26
Last edited 09/08/2022 - 21:34 by 1 other user

I have recently received my Tesla M3 from AGL Subscription. I currently pay $390 per week. This include 55,000kms (that’s how much I drive per year) and obviously includes everything else like insurance etc….

I had pre-ordered in March the Tesla M3 Long range at $85,000 (same configuration is now $91,000). I was planning on getting a loan of $70,000 (5.99%).

My dilemma now is to decide if I go ahead with the loan or just stay with the AGL subscription.

We are wanting to get a home loan at the end of the year and I am worried the car loan will have a negative impact on borrowing power. In comparison, the bank will look at the AGL subscription as an expense rather than a liability.

Based on all my calculation, purchasing the car will cost about $5000 less over 3 years.

Would love if you could share your thoughts, and more importantly, if there is any home loan broker here, would love to hear your feedback on the above.

Calculations: https://ibb.co/kQG6WDy

PS: for anyone wondering why I want to stay with an electric car, I get free charging at work, so it’s a petrol saving of about $10,000 per year. (Based on the ford ranger I was driving previously)

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  Flying Ace on 09/08/2022 - 21:17

  With a car loan you own the car at the end of it - with the subscription you're paying $390/week to just borrow it? So at the end of 12 months you're $20,000 down and nothing to show for it?

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    Platinumtelecom on 09/08/2022 - 21:31

    +1

    Yep, but at 55,000kms per year it’s roughly what it would cost owning an $80k vehicle, based on resell value of about $45k. Once you add interest, rego, insurance, servicing, parts etc… but it’s more obvious once you put down on paper and compare.

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    Platinumtelecom on 09/08/2022 - 21:34

    +2

    https://ibb.co/kQG6WDy

    • 

      Flying Ace on 09/08/2022 - 21:42

      Nice, thanks for showing that - I didn't think of it this way!

    • 

      pao2x on 09/08/2022 - 22:24

      So it is $5000 cheaper and a higher model M3? I’ll take that option

      • 

        Platinumtelecom on 09/08/2022 - 22:29

        I would definitely do that, but my concern is about borrowing power for the home loan.

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          pao2x on 10/08/2022 - 10:52

          @Platinumtelecom: You can literally walk in a bank or mortgage specialist to see the effect on the spot. My guess it won’t be much. Also if such a small difference become a factor you’re looking at going neck deep in a mortgage. Not a good sign especially in this environment

          • 

            brendanm on 10/08/2022 - 12:50

            @pao2x:

            My guess it won’t be much

            Really? Op has almost $400 a week that is allocated solely to a car payment.

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              pao2x on 11/08/2022 - 20:49

              @brendanm: As opposed to a liability you can hide as an expense to maximise loan amount? In a rising interest rate environment?

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                brendanm on 11/08/2022 - 20:53

                @pao2x: That doesn't make sense in regard to my reply. $400 car payment a week will very much affect a home loan application.

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                  pao2x on 11/08/2022 - 22:51

                  @brendanm: Its car loan vs car subscription. Both will affect the maximum loan. The difference is a car subscription expense can be buried as opposed to a car loan. But otherwise there should be little difference between the two. If there is a big difference is it wise to go for the bigger maximum loanable amount? In a quickly rising interest environment common sense would say no.

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                    brendanm on 11/08/2022 - 23:02

                    @pao2x:

                    If there is a big difference is it wise to go for the bigger maximum loanable amount?

                    Not wise at all, though judging from some posts on here, relatively common. I'd also argue that spending $400 a week on a car loan/rental is a bad choice.

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  chickenchipsgravy on 09/08/2022 - 21:19

  How much of the 55000kms are business/tax deductible? For $1500/year additional, I’d keep subscription purely for the flexibility of handing it back without hassle

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    Platinumtelecom on 09/08/2022 - 21:31

    I only deduct 5000kms for work

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  paddyo on 09/08/2022 - 22:11

  Why have you added your yearly deposit to your lump sum? Surely the deposit is off set by your payments, usually a deposit is part payment.

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    Platinumtelecom on 09/08/2022 - 22:18

    +1

    I should really call it a fee because that’s what it is. It’s not a payment towards the weekly fee

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  Euphemistic on 10/08/2022 - 05:50

  Sounds like you need to move closer to work. Or do some more WFH

  When I did 60000km per year it was only a 15k drive to work. Vast majority was work related.

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  downhillar on 11/08/2022 - 12:12

  Is the $45k resale value after 3 years realistic? It seems low, I would have thought you'd get more for it, but I am not familiar with the 2nd hand Tesla market.