The Expert Podcast

So we've come across a new company that appears to be offering financing on electric vehicles. The financing for a vehicle is pretty straightforward—you borrow money, pay it back, and there's an interest rate. This particular lender was featured in an article and some press releases about how it's offering loans that are more advantageous than other traditional car loans. The original article talks about how you can delay or defer up to 20% of the loan amount to the end of the term.

This method has been used in the automotive industry before as a balloon payment. It’s not a lease, even though leases operate somewhat similarly. With a balloon loan, you're only borrowing the amount minus the balloon payment. For example, if you have a $50,000 car and get a regular car loan, you're paying payments on the full $50,000 loan. But with a balloon payment loan, you might get a $40,000 loan, make payments on that, and then pay a $10,000 balloon payment at the end of the loan term.

In some cases, it's unclear whether the lender allows an option to walk away from the balloon payment. Some balloon loans have a feature where instead of paying the final amount, you can simply return the car. Whether that's a good financial decision is another matter. It's uncertain whether Tenet Finance offers this option. We've reached out to them a couple of times but haven't heard back. We called their number, which went to voicemail, and also emailed them.

As an example, they show a way to calculate monthly payments. If you have a $50,000 vehicle, you can use sliders on their platform to adjust the terms. A 72-month term (six years) with a $7,500 deferred payment results in a loan payment of $788 on a loan amount of $42,500. It also shows the interest rate and total interest cost. If the balloon payment is set to zero, the loan payment increases to $904. So, deferring $7,500 lowers the monthly payment but leaves a final lump sum to be paid later.

Deferred payments can be prepaid at any time without penalty. The company suggests that if you’re expecting a tax credit for an electric vehicle, you can use that towards the loan immediately to lower monthly payments. This is great if you are certain you’ll receive the tax credit. However, if it doesn’t come through, you’re still responsible for the $7,500. It’s also likely that interest accrues on the deferred amount even though you’re not making regular payments on it.

The company claims that its rates are lower because they receive funding from financial institutions focused on environmentally friendly investments (ESGs). Whether this actually reduces their cost of capital remains to be seen. However, their loan structure is different from traditional car loans. Many lenders offer balloon payments, but the real question is whether it’s a smart financial decision to commit to one. The deferred loan amount doesn’t disappear—you still owe it, just at a later date.

A creative aspect of this financing model is that the deferred payment can match your expected tax rebate. However, tax credits don’t always come as cash; sometimes, they are just deductions on your tax return, which isn’t the same as having the money in hand. The company also allows for higher deferred payments—for example, a $12,500 deferral lowers the monthly payment to $712. It’s unclear how they determine what each borrower qualifies for. They appear to work with lenders and dealers in multiple states but are not available nationwide.

Another important factor is whether electric vehicles retain enough resale value to support this deferred payment model. A Forbes article notes that EVs lose over $5,700 in value per year of ownership—totaling a $28,000 drop after five years—compared to $16,000 for traditional vehicles. This could be due to rapid advancements in EV technology, which may lead to higher depreciation rates in the short term.

On their website, Tenet also provides recommendations for extending electric vehicle battery life. They suggest minimizing exposure to high temperatures when parked, which might be difficult in places like Florida or Arizona. They also advise against charging the battery to 100% regularly, as it can degrade the battery life over time. Instead, keeping it within an optimal charge range is recommended.

Additionally, they discourage frequent use of fast charging. While fast charging is convenient for long trips, it can shorten battery lifespan. Instead, they suggest using Level 2 chargers, which take longer but are gentler on the battery. Lastly, they recommend managing battery charge during storage to prevent long-term degradation.

This financing model from Tenet is interesting. They also offer an app that tracks tire pressure, savings from using an EV compared to gas, and other vehicle performance metrics. Many EVs already have these features built-in, but Tenet provides an additional app for users.

If you have experience with this company—whether as a dealer or a consumer—let us know. We've reached out to the company for more details but haven’t received a response. If you know someone at the company, we’d love to hear more about how they structure their loans, calculate balloon payments, and determine interest on deferred amounts.