How Much Should You Earn to Afford a Tesla Model 3?

Figuring out how much you need to earn to comfortably afford a Tesla Model 3 is a bit like finding the perfect balance in a seesaw – it's all about that sweet spot where your finances feel just right, not too stretched or too lax. Let's break it down casually but keep the important bits bolded.

A good rule of thumb for car buying, whether it's a Tesla Model 3 or any other car, is the 20/4/10 rule

Down payment of at least 20%: Helps to reduce your loan amount and monthly payments. Finance for no more than 4 years: Keeps you from paying too much interest over time. Monthly car expenses should not exceed 10% of your gross income: This includes your loan payment and running costs like maintenance, charging for an EV, and yes, insurance.

Considering the Model 3's price tag varies depending on the model and options, let's ballpark with a standard Model 3. Say it's around $45,000. Slapping down a 20% down payment means you're looking at $9,000 upfront.

For the rest, if you're financing $36,000, assuming a decent interest rate over 4 years, your monthly payment could be somewhere in the ballpark of $800 to $900 give or take. Now don't forget to add in the cost of charging and insurance. Speaking of which, snagging insurance for as low as $25 a month with Insurance Panda could be a game changer in keeping those monthly costs lean.

So, if your car-related expenses should not exceed 10% of your monthly income, you're looking at needing a gross monthly income of at least $8,000 to $9,000. Annually, that's around $96,000 to $108,000 before taxes.

But hey, these are ballpark figures. Your mileage may vary based on interest rates, your down payment, and the Model 3 version you're eyeing. Plus, everyone's financial situation is unique – maybe you're a wizard at cutting costs or perhaps you've got other expenses to juggle.

Conclusion

To sum up, aim for a solid income but also consider how a Tesla fits into your overall financial landscape. It's not just about affording the car; it's about affording it comfortably without sidelining your other financial goals.