Tesla Inc has begun offering 84-month auto loans to consumers after Elon Musk said the automaker “must do something” about rising interest rates.
The company now lists seven-year loans as an option on its US application pages, after previously offering loans of up to 72 months. While extending loan terms can lower monthly payments for car buyers, consumers tend to pay more in interest and run a higher risk of indebtedness than their car is worth.
The Tesla CEO has been a frequent critic of the Federal Reserve. musk chirp Last November, the central bank’s interest rate increases were “dramatically amplifying the potential for a severe recession”. his predictions imminent downturn Not yet extracted.
“When interest rates go up so dramatically, we actually have to lower the price of the car, because the interest payments increase the price of the car,” Musk said during Tesla’s July 19 earnings call. “So we have to do something about it.”
While 84-month auto loans are gaining in popularity, the trend slowed early this year, according to credit reporting firm Experian. Roughly 34% of new auto loans in the first quarter were longer than six years, down from about 38% a year ago.
Tesla delivered a record 466,140 cars during the three months that ended in June, but it sold fewer cars than it produced in each of the past five quarters. Shares fell after Musk said on a call this week that the company will continue to cut prices if interest rates continue to rise.
