Fill up your gas tank, pay off your car loan
Upstart automaker Elio Motors has designed a three-wheeled vehicle that has a sticker price of only $6,800. But even at this low price, the Detroit-based company wants to get rid of the monthly car payment altogether.
The company plans to offer a special credit card to pay off your car note and fill up with gas at the same time, according company founder Paul Elio.
“You get a brand new vehicle and a credit card with a $300 limit on it, and we let you walk back out the door,” Elio says.
His company is partnering with a bank to bundle a car loan with a gas credit card. When you fill up, you’ll be charged three times the amount of your gas purchase. The extra money pays down the car loan. He thinks this deal will attract low-income drivers and get gas guzzlers off the road.
“I think there are a lot of folks who are struggling, driving unreliable cars, and they can’t get off that treadmill,” Elio says.
Elio couldn’t afford a car payment in college, he says, so this deal would’ve helped him. Plus, he says, his prototype will get at least 80 miles per gallon.
The cars will be manufactured in Shreveport, La. I asked a group of business majors at Centenary College in Shreveport whether they’d buy a car this way. Carson Rush brought a gas guzzler to college. He thinks this vehicle would be more affordable. “I drive a Tahoe. Whenever I fill up it can be upwards of $80 or $90. This would be more fuel efficient for me,” Rush says.
Student Donovan Williams pays his credit card off each month. He thinks this financing might be convenient, depending on what strings are attached. “The whole credit card thing is convenient. People charge things to their credit card and pay it off at the end of the month all the time as it is,” Williams says.
But Alexis James is holding out on judgment. She wants to know how much it will cost to finance the vehicle. “It really makes you raise the question as to what is the interest rate? Because when you have a credit card, there’s always interest that you have to pay,” James says.
As for the interest rate, Elio says there’s still a lot of details to sort through. But the bank will base the rate on a car buyer’s credit rating. Now, you’d think there’d be a huge market for a car under $7,000. But compared to the leases on other two-passenger cars, Elio’s is not much of a steal, according to Lara Koslow, a partner at Boston Consulting Group who works in the automotive division.
“There are cars on the market now that actually are $100 a month for a lease. There’s competition out there, even at that price point,” she says.
This financing arrangement might boost sales, Koslow says, but drivers still must want to be behind the wheel.
“You can’t give away something people don’t want. I think the question is: Is it a want? Is it a vehicle breakthrough or bust? Is it a Toyota Camry or a Ford Edsel?” Koslow says.
The Edsel was Ford’s experimental blunder from the 1950s. Elio hopes his car catches on. He plans to ramp up production on the three-wheeler late next year.