Tesla Credit at 0.99%: Why Paying Cash is a Mistake?

Tesla offers, this August 2025, an auto loan at just 0.99% for the purchase of its Model Y and Model 3. Here’s everything you need to know.

After climbing to over 7% in 2024, the Tesla loan rate has plummeted dramatically in recent months. Is this coincidental with the slump in global sales? Obviously.

Regardless, Tesla is currently offering an auto loan at just 0.99% for the purchase of some of its models, including the popular Model Y. This is an attractive offer, especially in a context where consumer loan interest rates struggle to decline.

But if you have the necessary funds, is it more advantageous to pay in cash or to take advantage of this ultra-low financing? Here’s what you need to know to make the right choice.

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An exceptionally low loan

A rate of 0.99% is almost unheard of since the return of post-Covid inflation and the war in Ukraine. To give you an idea, typical auto loans today are much closer to 4% to 6%, and mortgage loans hover around 3.5% to 4%. This Tesla offer is therefore clearly subsidized: the manufacturer is trying to encourage sales by making purchases more accessible through financing.

For the buyer, this means that the total cost of the loan is very low. On a loan of €45,000 over 4 years (48 months), for example, this represents about €900 in total interest, or just €19 per month. At this level, the question seriously arises: why withdraw such a large sum all at once when borrowing costs so little?

Keep your money… to use it better

One of the main advantages of credit is that it allows you to preserve your savings. By keeping €45,000 in a secure life insurance policy (about 3% net), you can grow that amount over several years. In our example, that €45,000 would yield about €2,800 over 4 years. This amount is significantly higher than the €900 in loan interest.

And if you are willing to take a bit more risk with investments in stocks or real estate, this gain can be even greater.

Paying in cash still has some advantages. It’s simple, direct, and means you won’t have to manage monthly payments. Some appreciate this peace of mind, especially if they don’t like the idea of having a loan, even a small one. It is also an interesting solution if your savings are already substantial and you have no short- or mid-term projects to finance.

Inflation, an unexpected ally

We also must not forget the effect of inflation. Today, it remains around 2% to 3% per year. This means that the money you repay each month loses some of its value over time. In other words, you are repaying money that is “worth” less than what you borrowed. When borrowing at a fixed rate in an inflationary context, the borrower always wins.

Moreover, it’s essential to recognize that the money invested in a car generates no return. Worse, the car will depreciate over time. Unlike a home or an investment, a vehicle loses its value as soon as it leaves the garage. Therefore, tying up €45,000 or €50,000 in an asset that depreciates is not, from a financial standpoint, a well-informed decision.

If you can borrow at 0.99%, have a well-established emergency fund, and want to optimize your budget, the loan offered by Tesla is clearly more advantageous than paying in cash. It allows you to keep your liquidity, face unexpected expenses if needed, and even generate income with the money you would otherwise have spent.