Why You Should Avoid Financing the New Tesla Model Y Rear Wheel Drive

Why You Should Avoid Financing the New Tesla Model Y Rear Wheel Drive

Hey everyone, DennisCW here! Today, I’m diving into the buzz surrounding the newly released Tesla Model Y Rear Wheel Drive (RWD). It’s marketed as a cheaper, more affordable option with an impressive range. At first glance, it seems tempting with a price tag of $37,490 and a range of 357 miles. However, I’m here to tell you why this “deal” might not be as great as it appears—especially if you’re planning to finance it. Let’s break down the numbers, pros, cons, and alternatives to help you make an informed decision.

The Pros of the Tesla Model Y RWD

Let’s start with the positives. The Model Y RWD offers some appealing features:

• Affordable Price: At $37,490, it’s the cheapest Model Y option available.
• Impressive Range: With 357 miles of range, it outperforms even some of the pricier models.
• Great for Mild Climates: Since it’s rear-wheel drive, it’s suitable for areas without harsh weather conditions.

If you’re paying cash, this might seem like a no-brainer. But even then, there could be better ways to invest that money. And if you’re financing or leasing, this is where things get murky.

Why Financing the Model Y RWD Is a Bad Idea

Here’s the crux of the issue: financing the Model Y RWD doesn’t make financial sense right now. Tesla seems to be structuring the deal to push buyers toward the All-Wheel Drive (AWD) version. Let me explain why with some hard numbers.

Interest Rates and Monthly Payments

When you compare the financing options on Tesla’s website, the monthly payments for the RWD and Long Range AWD are almost identical—$571 for the RWD and $574 for the AWD. However, the interest rates tell a different story:

• RWD Interest Rate: 5.49%
• AWD Interest Rate: 1.99% (up to 60 months with a qualifying down payment)

This huge disparity in interest rates means you’ll pay significantly more in total interest with the RWD over the life of the loan. Let’s look at the numbers over a 60-month term:

• Model Y RWD (5.49% interest, $37,490 purchase price, $0 down): Total interest = $5,465, Total cost = $48,500
• Model Y AWD (1.99% interest, $41,490 purchase price, $10,000 down): Total interest = $1,618, Total cost = $49,000

Despite the lower upfront cost of the RWD, the total cost after interest is nearly the same as the AWD—within $1,000 to $1,500. So why settle for the RWD when you’re paying almost the same amount in the long run? Plus, the AWD likely offers better resale value and performance benefits.

Tesla’s Strategy

It feels like Tesla is using the RWD model as a bait-and-switch to nudge buyers toward the AWD. With such similar monthly payments but drastically different interest costs, the AWD becomes the smarter financial choice for most buyers who finance.

What If You’re Set on the Model Y RWD?

If your heart is set on the RWD for its range or price, there are ways to mitigate the high interest cost:

1. Pay Off the Loan Quickly: The longer you stretch out the loan, the more interest you pay. If you can pay it down faster (easier said than done, I know), you’ll save significantly on interest.
2. Explore Better Financing Options: Don’t settle for Tesla’s 5.49% rate. In my Ultimate Tesla Buying Guide (available through my Patreon, link below), I list various credit unions with better rates. Recently, we helped someone secure a 4.74% rate instead of 5.49%—every bit helps!

Other Considerations

If you’re paying cash, the RWD’s price and range might still be attractive, and you can skip the financing pitfalls altogether. Leasing is another story—we’ll dive into lease rates in a future post once more data is available.

Also, keep in mind that while the RWD offers great value on paper (same speakers, comfort features, etc.), it sacrifices in areas like acceleration, supercharging speed, and all-wheel drive capability. If you don’t need AWD or speed and prioritize range, it might still be worth considering—just not with Tesla’s current financing terms.

Bonus: Model Y Customization and Security Tips

On a lighter note, I recently came across a Model Y with satin black painted rims, and it looks incredible! If you’re not ready to upgrade to performance rims like those from Unplugged Performance (check the link below for their trade-in program and UP-05 rims), painting your stock rims for a couple hundred bucks is a fantastic option.

And a quick reminder before you finance any Tesla—protect your credit! With recent data breaches like the one at Bank of America (where they waited a month to notify customers), your personal info could be at risk without you knowing. I use Aura to monitor the dark web for my data, reduce spam calls, and remove my info from sketchy broker sites. They also offer $5 million in identity theft insurance. Try it free for 14 days at aura.com/denniscw (link below). Don’t wait until it’s too late to secure your identity!

Final Thoughts

The Tesla Model Y Rear Wheel Drive sounds like a fantastic deal with its low price and high range, but the numbers don’t add up if you’re financing. You’re better off going for the AWD version with its lower interest rate and similar total cost. If you’re stuck on the RWD, explore alternative financing or pay off the loan as quickly as possible.

What do you think? Have you ordered the new Model Y RWD, or are you holding off after seeing the math? Drop your thoughts and any workarounds you’ve found in the comments below—I’d love to hear from you! And if you’re considering a Tesla purchase, don’t forget to use my referral code for 3 months of Full Self-Driving (link below).

Thanks for reading, and I’ll catch you in the next post!

-DennisCW

Links & Resources:

• Tesla Referral Code for 3 Months of Full Self-Driving (in description)
• Ultimate Tesla Buying Guide (Patreon link in description)
• Unplugged Performance Rims & Trade-In Program (link in description)
• Protect Your Credit with Aura: aura.com/denniscw