From battery health to tax credits, there's a lot to consider when buying a used electric car. Here's how to shop smart.

• Used EVs are more affordable after a new tax credit kicked in this year.
• But keep in mind that electric cars lose driving range as their batteries wear down.
• Driving habits can also impact which type of used EV you should shop for.

If you're looking to get on the electric-car bandwagon on a budget, a used vehicle may be your best bet.

But shelling out thousands of dollars on an unfamiliar piece of technology (particularly one that's been around the block a few times) is daunting for some shoppers.

Aside from wondering which car to buy, used EV shoppers might be wondering if their (used) battery can die. Shoppers on a budget might also be looking for more ways to save money, especially after EV tax credit offerings broadened to used electric cars this year.

All of this research can be a lot to take on at once. We talked to car-buying experts to demystify the process from beginning to end.

Think about your driving habits

Shoppers should first consider how far they typically drive and what sort of climate they live in, Scott Case, cofounder and CEO of Recurrent, a startup that tracks battery health in EVs, told Insider. Both will impact how much advertised driving range to look for in a vehicle, as EVs perform best in temperate weather and can't drive quite as far in cold temperatures.

"Let's say you live in Florida and you drive 30-50 miles every day, you can pretty much buy anything," Case said. People who travel, say, 150 miles daily and live in the occasionally frigid Midwest, will need to shop around for a long-range vehicle.

Most older electric cars don't have the range of today's latest offerings. Perusing the web, one may find models carrying estimates of only 80-120 miles from the Environmental Protection Agency.

Your mileage may vary

Anyone who's owned a smartphone knows that lithium-ion batteries wear out over time. Pretty much the same goes for EVs. As the years go by, repeated cycles of charging and driving wear out an EV's battery pack, reducing driving range. According to vehicle data firm Geotab, EV batteries tend to lose around 2.3% of their capacity each year.

The good news is that an EV's battery is unlikely to fail completely or render the car useless.

But understanding how much life a particular vehicle has left isn't all that simple. Exposure to extreme temperatures, frequent trips to powerful DC fast chargers, and variations in battery chemistry mean some used cars may perform better than others, even with identical mileage, Case said.

The best question to ask about the battery's care prior to your purchase is how often the car was left below 20% and above 80% charge, said Jim Fish, vice president of Opus IVS, an automotive tech-focused collision repair company.

Leaving a battery too close to empty or on a full charge for too long impacts the battery's ability to hold a charge, Fish said.

"Of course, you might struggle to find out the truth to that question," Fish said.

Recurrent provides reports on EV battery health aimed at helping shoppers choose between cars.

The used EV tax credit is your friend

At the start of the year, a new used electric vehicle tax credit went into effect as part of a larger EV incentive program in the Inflation Reduction Act. This is a welcome change for EV shoppers on a budget, and opens the electric vehicle market to an entirely new group of shoppers, automotive retail analysts said.

But there are some rules to keep in mind if you want to qualify.

Most importantly, the vehicle purchase must be made at a dealership in order to qualify for the credit. This is because the dealer can report the required information at the time of sale to the IRS.

A buyer must be purchasing the used vehicle for personal use and not for resale, must not be the original owner of the vehicle, cannot be claimed as a dependent, and cannot have used any other clean vehicle credit in the previous three years, according to the IRS.

The IRS also lays out income caps for buyers looking to qualify, which range from $150,000 to $75,000 in annual income depending on your household.

Vehicles that qualify for the used EV tax credit must have a sale price of $25,000 or less and must be at least two model-years old.

More detailed information and required forms can be found at the IRS website.