Here’s The Loophole That Lets You Get The $4000 Used EV Rebate Without Having To Buy From A Dealer

The federal used EV rebate is a great way of getting more people into electric cars, but even if you meet all the criteria, the qualifying EV has to be bought from a dealership. Obviously, this limits options, but one startup has found a way around this issue, and used EV buyers seem pretty happy with it.

First, some background. To spur the sales of second-hand electric vehicles, the federal government is offering a used EV rebate of 30 percent of the sale price up to a maximum of $4,000. Qualifying EVs priced at $13,334 or higher would qualify for the full $4,000 rebate, although as you’d likely expect for a government rebate, legislators and bureaucrats have tried their hardest to make this credit difficult to get. There’s a whole convoluted list of requirements, starting with personal requirements for the buyer. As per the Internal Revenue Service, a qualifying buyer must:

• Be an individual who bought the vehicle for use and not for resale
• Not be the original owner
• Not be claimed as a dependent on another person’s tax return
• Not have claimed another used clean vehicle credit in the 3 years before the purchase date

In addition, the federal used EV rebate is capped by income. According to the IRS, the income caps go as follows:

• $150,000 for married filing jointly or a surviving spouse
• $112,500 for heads of households
• $75,000 for all other filers

Finally, we get to the restrictions on cars that qualify. They must:

• Have a sale price of $25,000 or less. Sale price includes all dealer-imposed costs or fees not required by law. It doesn’t include costs or fees required by law, such as taxes or title and registration fees.
• Have a model year at least 2 years earlier than the calendar year when you buy it. For example, a vehicle purchased in 2023 would need a model year of 2021 or older.
• Not have already been transferred after August 16, 2022 to a qualified buyer.
• Have a gross vehicle weight rating of less than 14,000 pounds
• Be an eligible FCV or plug-in EV with a battery capacity of least 7 kilowatt hours
• Be for use primarily in the United States

Oh, and here’s the big one. This rebate can only be applied if you buy a car from a dealership. So how on earth are people buying EVs from private owners still getting a tax credit of up to $4,000? Well, it has to do with services more commonly used in the classic and collector car world. Escrow services and brokers are commonly used when dealing with high-end pre-owned stuff, but the right sort of middleman can do wonders for used EV buyers on a budget. For example, KeySavvy.

KeySavvy is already an official partner of Hemmings Auctions and is essentially a dealer with no inventory. Instead, KeySavvy acts as a middleman. A buyer and a private seller come to an agreement on a car, the parties then contact KeySavvy and pay the $198 service fee. From there, the seller sells the car to KeySavvy, which verifies if the title is clear of any liens, can pay off any liens on the vehicle, runs an NMVTIS report to ensure the vehicle isn’t stolen, and discloses any title brands. From there, the buyer sends an automated clearing house payment or wire transfer to KeySavvy, which then titles it in the buyer’s name and sells it to them.

Sounds easy enough, but blink, and you’ll miss it. Because KeySavvy holds the vehicle’s title in the midst of the transaction, that vehicle becomes one sold by a dealer, and so long as all other qualifying restrictions for the federal used EV rebate are met, that rebate of up to $4,000 can be applied right at the point of sale. That would explain why more and more EV buyers and sellers seem to be using it.

This user on the Chevrolet Bolt subreddit claims to have used it for a private party 2019 car, essentially paying $198 to save $4,000. Maybe it’s just me, but a net savings of $3,802 seems like a decent deal.

Similarly, commenters on the Chevrolet Volt subreddit also seem to like the service. I guess you don’t become a Hemmings partner simply out of nowhere, so these reviews seem to track. Anyway, if the used electric car you want would qualify for an EV rebate if it were sold at a dealership, but it’s being sold privately, it might be worth looking into a service like this. Maybe it’s just the bargain-hunter in me, but some money off seems better than no money off, right?

(Photo credits: Tesla, Chevrolet, KeySavvy, Reddit)

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