The Expert Podcast

So can you get free money to buy a used car? Well, according to the new law that's being signed this week, there may be incentive money, rebate money for you to buy a used electric vehicle. The government has a rebate program kicking in $4,000 to buy a used EV. What are the terms, what are the conditions, what are the restrictions? There are a lot of restrictions on this; let's take a look at it. Also, some of the downsides to possibly buying a used electric vehicle. Now, keep in mind, as of the day of this video, the law has not been signed into law yet. Probably within the next day or two, it'll happen. And when it gets signed into law, you'll have to read through the details. There'll be a rebate form we'll post on our website for you to fill out. There'll be some restrictions, but in general, here's what it looks like.

The requirements: First, the vehicle will have to be $25,000 or less for the price of the used vehicle. And you, as an individual, can't make more than $75,000 a year. If you're a household, a family, you can make up to $212,500 or $150,000 for joint filers. So, there are some income limitations. The reason for that is because they don't want rich people using $4,000 rebates to buy used Teslas. They want it to be for middle-class people trying to buy vehicles for everyday use. So, make sure that the vehicle you're looking at is less than $25,000 and that your income requirements make you eligible for this used electric vehicle rebate.

Now, what about buying a used electric vehicle? Is it safe? Is the battery going to be any good? Well, electric vehicle batteries do degrade over time, like any car does. A gasoline vehicle needs brakes, tires, shocks. Even the engines wear out, transmissions wear out. But those can be repaired or replaced relatively easily. For example, if you have a transmission that needs repair, usually that happens well over 100,000 miles. Most modern-day vehicles will go close to 200,000 miles before needing a transmission. But if it does need a transmission, it can be expensive—$2,000, $3,000 for a rebuild. An engine that has a failure, needing new valves, pistons, a mechanical engine for a gasoline vehicle can be taken apart, a new part put in, put back together. That can cost several thousand, $5,000 or $6,000 in some cases.

However, on an electric vehicle, the one expensive part that can fail is the battery. The battery on electric vehicles is very expensive. You can't fix it; you have to replace the whole battery. You can't repair it; you can't upgrade it. You either have to take out the whole battery, put a new one in, or live with what you have. Now, batteries on electric vehicles very rarely fail completely; they very rarely go to zero. But sometimes they do. However, they will lose capacity. So, if you have a car that has a range of 250 miles, maybe it loses 20% or 30% of capacity, and now it only goes 180 miles. That's not a failure of the battery, but it's a reduction in usage. So, you want to test that before you buy a used electric vehicle. On our website, you'll see ways to test that battery.

More importantly, keep an eye on the warranties of batteries. Batteries on new electric vehicles are warranted for eight years, which sounds good, or 100,000 miles, which doesn't sound good. Many people drive their car 20,000 miles a year or more. So, if you drive your car 22,000 miles a year, you may only have four or five years before that warranty runs out on miles before it hits the limit on years. So, even though eight years seems like a long time, and you might say, "I'll never keep the car eight years," that's true. But you might drive the car 100,000 miles, especially if you're buying a used electric vehicle. And if you buy it already with 40,000 miles on it, which would be relatively low miles, you might have two or three years left before you run out of miles on that vehicle.

How much does the battery cost? Well, we've all seen the news articles where electric vehicle batteries can cost $10,000, $12,000, $15,000. That's almost like buying a whole new car. And remember, an electric vehicle battery can't be repaired. Part of the reason why batteries are so expensive is that the battery is not interchangeable from one car to another. Parts for an engine on a gasoline vehicle are used in more than one vehicle. Right, so a Toyota Corolla might have the same engine as a Toyota Tacoma, or some of the same parts, and you can shift them from one car to another, one year to another. Electric vehicle batteries are the floorpan, part of the body of the car the car is built around. That battery has to be made into the shape of the vehicle. That battery might only fit one vehicle. In fact, there are some cars that are only four or five years old that you can't even buy batteries for anymore because they don't make that style, that shape of the vehicle. So, there's no reason to make those batteries anymore.

So, make sure when you're buying a used electric vehicle that you perform very good due diligence. EVCheckout.com is a good place to do that. And make sure that you know what your remaining battery life is before you invest money because even with a $4,000 rebate, you're going to have tens of thousands of dollars invested in that car. And you want to make sure it's going to last you for as long as you need it to, so you don't have to dump a bunch more money into it.