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The average monthly car payment reached $733, a new record, in the second quarter of the year, according to auto site Edmunds.
While 78% of middle-income households earning between $47,000 and $142,000 rely on a vehicle to get to work, 74% are willing to make tradeoffs to maintain access to cars, another survey found.

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Access to personal cars remains important to Americans despite the growing monthly cost of ownership. 
The average monthly auto payment reached $733, a new record, in the second quarter of the year, according to a report by auto site Edmunds.

Seventy-eight percent of middle-income households earning between $47,000 to $142,000 rely on a vehicle to get to work, Santander Bank found in a new survey, and 74% are willing to make financial tradeoffs to maintain access to cars. For instance, 61% would give up dining out, while 48% would pass on vacations and 48%, entertainment. 
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Almost half, or 48%, of the 2,213 survey respondents say they prioritize cost over practicality, comfort and performance when shopping for a new car, up from 37% who said so in pre-pandemic years. Factors like maintenance and fuel costs are also being taken into account.
Despite high vehicle costs — pushed upward by record-high interest rates and inventory issues — Americans are finding ways to navigate the cost of buying. 

Interest rates, inventory issues add to costs

The overall cost of purchasing a car is increasing in part due to interest rates, said Tom McParland, contributing writer for automotive website Jalopnik and operator of vehicle-buying service Automatch Consulting.

The average rate on a new car loan is at 7.2%, according to Edmunds. That’s the highest it’s been since the fourth quarter of 2007, right at the cusp of the Great Recession.
Back then, however, the auto industry didn’t have the same inventory problems. 

“There were discounts in 2007 and 2008 because cars [were] just sitting on the lot and now we don’t have cars on the lot,” said Joseph Yoon, a consumer insight analyst for Edmunds. “That’s really contributing to overall really high costs for consumers.”
While some car manufacturers are improving their supply deliveries, inventory wrinkles are still far from being ironed out, experts say.
“When you start drilling down the vehicles that are in demand, that’s where [you] start to see a different texture,” said McParland.

How some drivers are trimming monthly payments

As interest rates and inventory spur price hikes, some car shoppers are either lengthening their loans or — if they have the money and means to do so — making a more generous down payment.
The average duration of car loans is stretching ever longer — before the pandemic, the average length was 5 years, Yoon said. Consumers are now more apt to sign 72 to 84 month loans, equating to 6 or 7 years in repayment. 
“If you have to have a car and your budget is limited, what people are doing is just pushing out the loan terms,” which reduces the monthly payment, he said.Yet, a longer loan is not always ideal. A longer repayment term means you’re paying more for the car overall. Additionally, cars depreciate in value, so there’s a chance you will owe more than the car is worth. It’s important to keep this in mind, especially if you get into an accident that totals the vehicle, or can’t keep up with payments.

‘The math on leases isn’t good’

For some drivers, leases were once considered a smart way to score a new vehicle for less because you would pay for the depreciation of the vehicle only for that period. However, for a lease to be ideal, you need three elements in your favor: The residual value of the vehicle after the lease expires needs to be high, you need solid discounts and interest rates have to be low, said Yoon.
Three to four years ago, a customer could walk into a lot and lease a luxury sedan for $300 a month, but these days dealers are rarely offering discounts and interest rates are astronomical, he added. 

You are going to have a larger chunk of people with loan payments in the four figures.

Tom McParland
operator of Automatch Consulting

However, a large portion of customers who would have leased luxury cars are now buying them and agreeing to pay about $1,000 a month instead, “because the math on the leases isn’t good,” said McParland.”If you have a large chunk of the consumer pool who would normally lease a luxury car that retails for $60,000 or more now deciding to finance that car instead, you are going to have a larger chunk of people with loan payments in the four figures,” added McParland.The share of car buyers who financed a vehicle with a monthly payment of $1,000 or more climbed to a new record high of 17.1% in the second quarter, found Edmunds.”Consumers who are paying large amounts of finance charges could be in jeopardy of falling into a negative equity trap,” wrote Ivan Drury, Edmunds’ director of insights, in a statement.

Some would-be buyers are simply waiting it out

Even though demand for vehicles persists, some customers are waiting for the prices to cool down.
While 24% of survey respondents delayed purchasing a vehicle over the past year, 41% say they will put off a vehicle purchase in the upcoming year, as well, if prices remain elevated, found Santander. 
Between the pricing and inventory issues, people who have the luxury or the patience to wait it out are “definitely” doing so, said Yoon.
There is also an uptick in the age of trade-in vehicles, a sign that people are holding onto their cars for longer and waiting for availability and better deals, he added. However, this represents a return to pre-pandemic norms, stabilizing from the drop in average trade-in ages observed the last two years.

Back in 2019, the average age of a trade-in vehicle was 6.24 years; last year, it dipped to 4.9 years. Now, the average is coming back up, currently at 5.3 years, said Yoon. 
“We’re still about a year off from the [pre-Covid] trading age, kind of bouncing back to full normal,” he said. “People are still playing the waiting game.”
The market could begin to cool later this year, but it all comes down to supply and demand, said McParland.
However, if dealers begin to see 2023 vehicles sitting around the lot while 2024 models are coming off the truck in a couple of months, they may have more motivation to clear out that old inventory, he added. More

As interest rates reach a more than two-decade high, Treasury bill yields remain well above 5%, as of July 27.
However, there are a few things to know before purchasing, financial experts say.

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As interest rates reach a more than two-decade high, Treasury bill yields remain well above 5%, as of July 27, providing a competitive option for cash.
With terms ranging from one month to one year, Treasury bills, known as T-bills, are still paying more than long-term Treasurys amid Fed policy uncertainty.

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T-bill yields have soared after a series of interest rate hikes from the Federal Reserve, competing with choices like Series I bonds, high-yield savings, certificates of deposit and money market funds.
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But there is not a direct rate comparison with other products because T-bills are typically sold at a discount, with the full value received at maturity, explained Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.
For example, let’s say you purchase $1,000 worth of 1-year T-bills at a 4% discount, with a $960 purchase price. To calculate your coupon rate (4.16%), you take your $1,000 maturity and subtract the $960 purchase price before dividing the difference by $960.   

U.S. Treasurys

Fortunately, you’ll see the “true yield” or “bank equivalent yield” when buying T-bills through TreasuryDirect, a website managed by the U.S. Department of the Treasury, or your brokerage account, Keil said.

How to buy T-bills via TreasuryDirect

If you already have a TreasuryDirect account — say, because you’ve purchased Series I bonds — it’s relatively easy to buy T-bills, according to Keil, who detailed the process on his website.
After logging into your account, you can pick T-bills based on term and auction date, which determines the discount rate for each issue.
“You don’t really know truly what the rate is going to be until the auction hits,” Keil said. The process involves institutions bidding against one another, with no action required from everyday investors. 

How to buy T-bills through TreasuryDirect
1. Log in to your TreasuryDirect account.
2. Click “BuyDirect” in top navigation bar.
3. Choose “Bills” under “Marketable Securities.”
4. Pick your term, auction date, purchase amount and reinvestment (optional).

After the auction, “you get the exact same rate as the Goldman Sachs of the world,” with TreasuryDirect issuing T-bills a few days later, he said.
There is one downside, however. If you want to sell T-bills before maturity, you must hold the asset in TreasuryDirect for at least 45 days before transferring it to your brokerage account. There are more details about that process here.

The benefit of brokerage accounts

One way to avoid liquidity issues is by purchasing T-bills through your brokerage account, rather than using TreasuryDirect.
Keil said the “biggest benefit” of using a brokerage account is instant access to T-bills and immediately knowing your yield to maturity. The trade-off is you’ll probably give up around 0.1% yield or lower, he said.

George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, also suggests buying T-bills outside of TreasuryDirect to avoid liquidity issues.
For example, there are low-fee exchange-traded funds — available through brokerage accounts — that allow investors to buy and sell T-bills before the term ends, he said.
“The fees pose a small drag on the interest,” Gagliardi said, but the ease of purchase and ability to sell before maturity “may override the small penalty in interest rates” for many investors. More

Borrowers disappointed by the failure of student loan forgiveness at the Supreme Court should check if they qualify for existing relief measures, experts say.
“There are many other opportunities for loan forgiveness that often go unknown because there is no global database of all student loan forgiveness options,” said higher education expert Mark Kantrowitz.

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1. Income-driven repayment plans

After 20 to 25 years of payments, borrowers enrolled in so called income-driven repayment plans get any remainder of their debt canceled by the federal government. The Biden administration recently wiped out debt for more than 800,000 people in such plans, delivering them $39 billion in relief.
“Income-driven repayment plans are also student loan forgiveness plans,” Kantrowitz said.

While they’re making payments, borrowers’ monthly bills are capped at a share of their discretionary income, and some payments wind up being as little as $0.

(The Biden administration is currently planning to make available a new income-driven repayment plan under which many borrowers will get to pay just 5% of their discretionary monthly income to their student debt. That option will be called SAVE, or the Saving on a Valuable Education plan.)
The debt forgiveness at the end of the repayment term under these plans used to trigger a tax bill, but a recent law ended that policy until at least 2025, and experts anticipate it to become permanent.

2. Public Service Loan Forgiveness

Signed into law by then-President George W. Bush in 2007, the Public Service Loan Forgiveness program allows certain nonprofit and government employees to have their federal student loans canceled after 10 years, or 120 payments.
Although the program has had its fair share of problems, the Biden administration recently made a number of improvements to it.

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There are typically three primary requirements to qualify for the program, although the recent changes provide some more wiggle room in certain cases:

Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service.
Your loans must be federal Direct loans.
To reach forgiveness, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

The best way to find out if your job qualifies as public service is to fill out an employer certification form.
In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.

3. Forgiveness options for teachers, nurses and others

In addition to those two main programs, there are several other forgiveness opportunities that many borrowers miss out on because they don’t know about them, experts say.
Full-time teachers who work for five consecutive years in a low-income school may be eligible for up to $17,500 in loan forgiveness under the Teacher Loan Forgiveness Program.
The Nurse Corps Loan Repayment Program allows certain nurses to get up to 85% of their student debt canceled.

There are many other opportunities for loan forgiveness that often go unknown.

Mark Kantrowitz
higher education expert

Federal agencies also offer student loan repayment assistance programs, Kantrowitz said. Agencies can make payments to a federal employee of up to $10,000 a year, for a total of $60,000, according to the U.S. Office of Personnel Management.
Meanwhile, there are numerous state-level student loan forgiveness programs.

The Get On Your Feet Loan Forgiveness Program, rolled out in 2015, is meant to “invest in recent college graduates with student loan debt who opted to invest their futures in New York,” said Angela Liotta, public information officer and director of communications at the New York State Higher Education Services Corp.
Under the program, certain residents of the state may be eligible for student loan forgiveness on up to 24 months of payments.
“Student loan forgiveness is based on the borrower’s occupation, in most cases,” Kantrowitz said. “So they should look for forgiveness based on their job, especially for their state.” More

Helping your child build credit is one of the most important things you can do to set them up for financial success.
Here are some of the ways to get started.

It can be hard for young people to build credit, but some parents seem to think they have it figured out.
They often start by adding their teenager as an authorized user on their credit card. That can help children practice healthy credit habits when they’re young.

However, what’s considered a wise strategy is fraught with pitfalls, according to Erik Beguin, CEO of Austin Capital Bank and former member of the Consumer Financial Protection Community Bank Advisory Council.
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Children “piggy-backing” on a parent’s credit history forgoes the opportunity for children to build their own credit profile, Beguin said. Because authorized users are not responsible for paying the credit card bill, those payments won’t show up on their credit report and contribute to their own payment history in the eyes of the credit bureaus.
Beguin recommends adding your child as a “co-signer” instead. That way, they take on the risk — and reward — that comes with being responsible for the bill.
Co-signing on credit cards can help your children build healthy credit while they’re young to ensure they won’t need to lean on you in the future, Derek Miser, a financial advisor and president of Miser Wealth Partners in Knoxville, Tennessee, also said.

However, in this case, you may be responsible for their debt if your child cannot pay it back.

Either way, “it’s important to use this as a stepping stone to establish credit in your own name,” said Ted Rossman, a senior industry analyst at CreditCards.com.
Rossman advises young adults to establish their own credit within six months or a year after piggy-backing on their parent’s card, while they are still living at home but starting to be more independent. “It’s good to start early.”
A secured credit card is also designed to do just that. Often, secured cards require a cash deposit that then serves as the credit line, which can be a good fit for those without a proven payment history. 

Why having good credit is so important

Young adults often don’t have a credit score, unless they already have a credit account.
Credit scores represent your credit risk and impact whether you can get a loan, as well as the interest you’ll pay. Generally, the higher your credit score, the better off you are.
FICO scores, the most popular scoring model, range from 300 to 850. A “good” score generally is above 670, a “very good” score is over 740 and anything above 800 is considered “exceptional.”
Once you reach that 800 threshold, you’re highly likely to be approved for a loan and can qualify for the lowest interest rate, according to Matt Schulz, LendingTree’s chief credit analyst. 

Start with a conversation at home

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Before families decide which credit card is best, “what’s really important is the conversation about how to manage your credit and responsible use of debt,” Beguin said. That largely boils down to paying your bills on time and keeping your credit-card balance low.
While there is an important role for schools to play, a financial education should begin at home.
Those conversations could start well before the teenage years, most experts say. Too frequently, talking about finances is considered taboo, and that’s another mistake.
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Target date funds have become the most popular investments in workplace retirement plans like a 401(k).
TDFs become more conservative as investors approach retirement.
However, fund managers differ in how they allocate between stocks and bonds. A fund may be too risky or conservative for certain investors.

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Target-date funds are meant as a one-stop shop for your retirement savings. But a key difference between fund brands means they may not be well-suited to all 401(k) investors — especially those close to retirement, financial experts said.
Asset managers tweak the share of stocks, bonds, cash and other TDF holdings, according to an investor’s envisioned retirement year.

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The funds — which have become the most popular funds in 401(k) plans and are generally available in five-year increments — grow more conservative over time. They dial back on stocks and increase bond and cash holdings as an investor approaches retirement.
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However, fund managers differ in how they allocate money between those asset classes.
That means funds — even those with the same target year — may have stock and bond holdings that aren’t well aligned with an investor’s financial plan. In other words, they might be too risky or too conservative.
“It could be way off,” said David Blanchett, managing director and head of retirement research at PGIM, the investment management arm of Prudential Financial. “The idea that everyone in a five-year age cohort should have the same asset allocation, it’s just not correct.”

TDF holdings generally vary more near retirement age

As an illustration, consider a Morningstar analysis of “prominent or distinctive” TDF series with a 2055 retirement year:
Last year, the BlackRock LifePath Index and Dimensional Target Date Retirement Income 2055 funds had 98% and 94% allocated to stocks, respectively, on average. Meanwhile, the John Hancock Preservation Blend and American Funds Target Date Retirement 2055 funds had lower average allocations — 80% and 84%, respectively, Morningstar said.
The dynamic is more pronounced for investors closer to retirement.

Take these examples of 2025 funds: The T. Rowe Price Retirement and Vanguard Target Retirement funds had 56% and 54% in stocks, respectively; the John Hancock and Dimensional series had lower respective stock allocations, of 20% and 31%, according to Morningstar.
“When you’re getting closer to retirement, that’s where [TDFs] can kind of deviate a little bit more,” Megan Pacholok, senior manager research analyst at Morningstar, said of asset allocations.
About 82% of 401(k) plans offered TDFs in 2021, according to most recent data from the Plan Sponsor Council of America, a trade group that represents employers. An average 28% of the 401(k) savings in these plans was held in TDFs — a greater share than any other type of investment fund available, according to PSCA data.

The idea that everyone in a five-year age cohort should have the same asset allocation, it’s just not correct.

David Blanchett
managing director and head of retirement research at PGIM

Of course, TDFs can vary in many ways aside from asset allocation. For example, some are known as “through” funds, which continue to get more conservative throughout retirement; others are “to” funds, whose stock-bond proportions stay steady in retirement.
Further, TDFs may differ in the types of stocks (U.S. versus international) and bonds (“junk” versus Treasurys) that they hold, experts said.
“Even though funds with identical target dates may look the same, they may have very different investment strategies and asset allocations that can affect how risky they are and what they are worth at any given point in time, including when and after you retire,” according to the Financial Industry Regulatory Authority, which regulates brokerage firms.

Why asset allocation is more important for retirees

Paying attention to asset allocation is particularly important for investors in or near retirement, Pacholok said. That’s because they generally have larger accounts (relative to young investors) and may not have much, if any, time to recover from investment losses, she said.

That said, TDFs are “a great way to go” for investors who want an “easy button” for retirement savings, Blanchett said. The largest and best-known TDF managers “tend to be relatively similar” in their fund allocations, he said.
Since TDFs are built for the average investor, investors who skew significantly from a typical saver may want to consider building their own portfolios instead of using a target fund, Pacholok said.
“You have to think about how different your circumstance is from the average investor, and whether your deviation is worth the additional time and cost you’d be spending if you weren’t invested in a TDF,” she said. More

Americans with disabilities are twice as likely to live in poverty, and face significant obstacles when it comes to building emergency savings.
A new proposal on Capitol Hill aims to help lower-income disabled individuals save by providing a federal match in their ABLE accounts.

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The Americans with Disabilities Act was signed into law 33 years ago to protect people with disabilities from discrimination.
But disabled people still face major hurdles when it comes to building wealth.

To help make it easier for disabled individuals with lower incomes to save, Sen. Bob Casey, D-Pa., who serves as chairman of the Senate Special Committee on Aging, is introducing a new proposal, called the ABLE MATCH Act. The legislation would create a federal dollar-for-dollar match for new and existing ABLE accounts for individuals who earn $28,000 or less per year.
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ABLE accounts, which were established with federal legislation in 2014, allow qualifying individuals to set money aside for disability-related expenses without losing eligibility for federal programs such as Medicaid or Supplemental Security Income. The tax-advantaged accounts allow for tax-free withdrawals for qualifying expenses, while investment gains may grow on a tax-deferred basis.
The ABLE program has been a “lifeline for thousands of people with disabilities across the nation,” Casey said in a statement.
“However, there are still too many people whose lives would be made easier by the program, but don’t have sufficient funds to open an account,” Casey added.

Proposal would add a 100% federal match

The ABLE MATCH Act would create a federal dollar-for-dollar match for individuals who make $28,000 or less, which would taper off for each dollar earned over that threshold.
That threshold would be adjusted for inflation and for heads of household and married couples.
The bill’s goal is to help boost enrollment in ABLE accounts for people with lower incomes who have disabilities.
The introduction of the proposal is a “really exciting development,” said Thomas Foley, executive director at the National Disability Institute.

There are still too many people whose lives would be made easier by the program, but don’t have sufficient funds to open an account.

Sen. Bob Casey
Democratic senator from Pennsylvania

“This is providing an incentive to a group of people who haven’t been incentivized, and in fact have been dis-incentivized to save for decades,” Foley said.
People with disabilities are twice as likely to live in poverty compared with people without disabilities, Foley said.
The National Disability Institute’s research has found that people with disabilities need to spend about $28,000 more per year to live lifestyles equivalent to those of people without disabilities, he said.
Those extra costs come from needs such as accessible transportation, living closer to work, or the maintenance of a service dog, for example.

Disabled individuals, particularly those who are younger, may find it difficult to save in an ABLE account due to a lack of disposable income, Foley said.
New legislation passed last year raised the age limit from 26 to 46 for the onset of a disability in order to participate in an ABLE account starting in 2026.
With that change, as many as 14 million people may be eligible to participate in ABLE accounts, Foley said. More

Millions of Americans are experiencing long-term symptoms after coming down with Covid-19.
The symptoms often interfere with the ability to work, leading to financial hardships.
Experts say expanding the social safety net, providing universal paid leave and making workplaces more flexible can help.

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For millions of Americans, a Covid-19 infection has turned into a long, drawn-out health condition with no expiration date.
Those physical symptoms are often accompanied by increased financial uncertainty, according to recent research from the Urban Institute.

Approximately 1 in 5 adults with so-called long Covid symptoms have had problems paying their rent or mortgage, according to the nonprofit research organization. Meanwhile, 1 in 4 had difficulties paying their utility bills, with nearly 10% having had a utility shut off.
More than 4 in 10 adults with long Covid have reported food insecurity, with 1 in 4 reporting very low food security, according to the Urban Institute.
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Those new findings come on top of previous research that shows long Covid patients typically experience income and employment disruptions.
Covid reduced the number of people in the labor force by 500,000, according to 2022 research from economists Gopi Shah Goda and Evan J. Soltas, published in the National Bureau of Economic Research, prompting average lost earnings of $9,000.

A rough estimate pegs the size of the population affected by long Covid symptoms at between 7.7 million to 23 million people in the country, according to the U.S. Department of Health and Human Services. That is based on the idea that up to 30% of those infected with Covid-19 will experience longer lasting symptoms.
Symptoms associated with long Covid include chest pains, cough, cognitive impairment, memory loss, fatigue, shortness of breath and muscle and joint pain.

The vague set of symptoms can leave patients subjected to doubts from the medical community, Meghan O’Rourke, author of the book “The Invisible Kingdom: Reimaging Chronic Illness,” said during a Tuesday panel hosted by the Urban Institute.
O’Rourke herself suffers from long Covid symptoms.
“When tests don’t show clear answers, we’re suddenly turned into unreliable narrators,” O’Rourke said.
The barriers to proper medical care are exacerbated by a lack of support to enable patients to continue to live their lives, put food on the table and try to work, she said.
“We absolutely have to commit to social support, disability aid, for people living with long Covid” and other chronic illnesses, O’Rourke said.
The Urban Institute’s research, and feedback from experts, points to three changes that may help bolster social supports for long Covid sufferers.

1. Expand safety net and increase benefits

Long Covid patients in need of assistance may turn to a host of programs for help: Social Security disability insurance, or SSDI; Supplemental Security Income, or SSI; Supplemental Nutrition Assistance Program or SNAP; Temporary Assistance for Needy Families, or TANF; Medicaid; and rental and utility assistance programs.
But accessing those benefits is not always easy. Applicants for Social Security disability benefits face long waits, while applicants for housing assistance may also be put on lengthy waiting lists.
“When people can’t afford to meet their basic needs, they have much greater difficulty recovering from illness and are at much greater risk of poor health,” said Michael Karpman, principal research associate at the Urban Institute.

Even if you get on those benefits, it is very difficult to meet your basic needs.

Lisa McCorkell
co-founder of Patient Led Research Collaborative

Steps may be taken to broaden eligibility for these programs, the Urban Institute’s research suggests — by streamlining application processes; expanding eligibility to non-citizens and reducing policies such as asset limits and work requirements; and expanding the professionals who can provide medical documentation.
Additionally, many people may not know they may be eligible for benefits, which may be remedied by more funding for community-based organizations to provide additional outreach and enrollment assistance.
Further, the size of benefits like Supplemental Security Income may be increased so beneficiaries may live better quality lives.
“Even if you get on those benefits, it is very difficult to meet your basic needs with that level of income,” said Lisa McCorkell, co-founder of Patient Led Research Collaborative. “It is really just not enough money in order to survive.”

2. Make paid leave accessible

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The U.S. is one of the few developed countries without paid sick or family and medical leave policies.
Efforts to put a federal plan in place have thus far stalled on Capitol Hill.
Having access to universal paid leave would help ensure people infected with Covid-19 do not spread it and can rest while recovering, Urban Institute’s research found. Moreover, people who develop long Covid may have a longer amount of time before they have to return to work.
Such a policy may help people with lower incomes, who often do not have access to paid sick days, the most, according to the research.

3. Add flexibility to workplaces

Employers offering reasonable accommodations such as flexible schedules, frequent breaks or the ability to work from home may help people with long Covid stay employed, according to the Urban Institute.
More than a year after contracting Covid, about 18% of those with long Covid still hadn’t returned to work, recent study by the New York State Insurance Fund found.
Meanwhile, 40% returned to work within 60 days, the research found. But they still required medical attention, prompting the need for accommodations like reduced hours.

Altogether, the changes may help patients who are suffering from other conditions, in addition to long Covid, the experts noted during Tuesday’s panel.
There should be more medical centers that deal with autoimmune diseases and infection associated chronic illnesses, just as we have cancer centers, O’Rourke suggested.
“Many of the policy changes we need are not unique to long Covid,” McCorkell said. “We need a more robust social safety net in place for all disabled people.” More

Prices for used electric vehicles fell by almost 30% since June 2022. At the same time, new EV prices also fell nearly 20% from their peak of $66,390.
However, prices are still relatively high. “It’s not a consumer-friendly market right now,” said Joseph Yoon, a consumer insight analyst for car shopping guide Edmunds.

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Prices for both used and new electric vehicles have dropped substantially from a year ago. But don’t rush to buy: Costs are still relatively high.
“It’s not a consumer-friendly market right now,” said Joseph Yoon, a consumer insight analyst for car shopping guide Edmunds.

Prices for used electric vehicles fell by almost 30% in June, according to a recent study by iSeeCars, which analyzed more than 1.8 million cars from June 2022 to June 2023 to identify which models have the largest price drops. New EV prices also fell nearly 20% from their peak of $66,390 in June of last year due to inventory growth, found a study by Kelly Blue Book.

But those big drops represent a return to normal. A year ago, demand for electric vehicles due to high gas prices from the war in Ukraine sent prices on an upward swing. Now, more sector competition, higher inventory and incentives are pushing prices back down.
Yet, there are reasons for interested car shoppers to be cautious. Costs of new EVs are still high, experts say, and there can be risks buying a used EV.

What’s behind falling prices on new EVs

About 300,000 electric vehicles were sold in the second quarter of this year — a record — as new models were introduced with a wider price range, said Michelle Krebs, an executive analyst at Cox Automotive. 
Tesla has been cutting its prices to stay competitive, especially with its high inventory of unsold vehicles, she said. Its price cuts helped lower the average cost to $53,438 last June, she added.

However, other manufacturers’ models, like the GM Motors Chevrolet Bolt EV – which sells for about $30,000 – also factored into the decline of the average price, given the sticker price is unusually cheap for the sector. Additionally, companies like Hyundai and Kia lowered the prices of some models to qualify for the EV $7,500 tax credit from the Inflation Reduction Act.
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Ford Motor also slashed the price for its F-150 Lightning EV pickup truck by $10,000, lowering the starting price of its cheapest version to $50,000.
The manufacturer and dealer incentives for EVs are also far higher than incentives for regular gas cars, said Krebs. 
“There’s a lot of ways to incentivize, it’s not just purely getting the price down at the dealership,” she said. 
Yet these cars are still expensive, and they’re not the car for everybody, said Yoon. While smaller models like Chevrolet Bolt EV cost less and qualify for the $7,500 tax credit, many car shoppers are looking for SUVs, either compact or with three rows.

“EVs of that size are still very expensive,” Yoon added. “We’re not quite there yet in terms of having options across the board for everybody.” 
It’s hard to know what these lower prices on new EVs will mean in the long run, especially as more used ones become available, said Krebs.”We’ve never had a used EV market; it’s only beginning to develop,” said Krebs. “It may end up expanding the EV market by making EVs accessible and more affordable to people.
“We just don’t know; this is all new territory.”

How to shop for a used EV

There is a tax credit for used electric vehicles worth up to $25,000, but only a handful of used EVs have depreciated to cost under the ceiling price. Those cars are now 5 to 7 years old and considered a completely different generation. 
To that point, car shoppers looking into used electric vehicles should be cautious about their battery life and utility, experts say. For instance, while the latest EV models are doing 250 to 400 miles a charge, used EVs may only go up to 150 miles per charge.

“That’s a huge kind of inconvenience that you also have to consider,” said Yoon, especially considering it can take 45 minutes to recharge.
There’s no determined way to tell the value or the longevity of a used EV battery like gas engines and experts are unaware of what the long-term running costs may be. While it’s hard to gauge battery life, make sure you take a test drive and get a professional inspection.

Plug-in hybrids, leased EVs may be smart options

As new and used electric vehicle prices still seem high, here are two alternatives shoppers should look into if they want to switch to electric transportation.
“Considering plug-in hybrid vehicles is a great place to start,” said Yoon. 
You snag all the benefits of an electric vehicle without the entire financial splurge. Leasing an EV is also another option to consider, he added. 

Considering plug-in hybrid vehicles is a great place to start.

Joseph Yoon
consumer insight analyst for Edmunds

“The best thing to do right now is leasing an EV if you have the money and the means to do it,” he said. 
This is considered a loophole where buyers can bypass requirements you would have otherwise needed to meet in order to qualify for the $7,500 tax incentive. 
A lease is considered a commercial transaction because the automaker’s financing company is letting you borrow the vehicle. Therefore, the transaction qualifies for the full $7,500 benefit and you may get it as a discount to your negotiating price, said Yoon. 
“The only caveat there is that [dealers] don’t have to give you that $7,500,” he added. Make sure the dealer either will give you the benefit or specifically look into dealers advertising the offer. More