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2023 Carvana Financing Review

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If you dread visiting car dealerships and haggling over vehicle prices, Carvana might be right up your alley.

It’s quick and easy to buy a used car through Carvana’s website, and you can even use Carvana financing to seal the deal. Plus, you can have the car delivered to your door or to a local pick up center that resembles a giant, glass vending machine.

But proceed with a measure of caution when using Carvana: The dealership might charge a hefty delivery fee, and Carvana has had legal issues on more than one occasion. Still, Carvana reviews on LendingTree are overwhelmingly positive, with 86% of users recommending the lender.

How does Carvana work?

Carvana is an online car dealership that’s been selling used cars since 2013.

You can visit their website to preview 360-degree images of 25,000 cars, and once you choose yours, you can have it delivered to you. As an alternative (and much more exciting) option, you can pick the car up from one of Carvana’s 34 “car vending machines” — they’re basically tall, glass towers that dispense vehicles on demand.

Here’s what the car-buying process looks like with Carvana:

  1. Visit the vehicle search page and review the available cars.
  2. Select the car you want to purchase.
  3. Choose your method of payment. Options include:
    • Vehicle trade-in as a down payment
    • Link your bank account with Plaid
    • ACH withdrawal from a checking or savings account
    • Cashier’s check
    • Third-party financing
  4. Upload the requested documents.
  5. Choose how you’d like to receive your vehicle (delivery or pick up).

Shipping fees will depend on your location and the car’s location, and they can range from $0 all the way up to $1490.

Once you get the car, you’ll have a trial period of seven days, during which you can swap the car out for another vehicle up to 3 times.

Carvana financing at a glance

Used auto loans
Starting rates6.85%
Loan terms36 to 72 months
Loan amountsUp to $85,000
See auto loan rates

You can get auto financing through Carvana, even if you have bad credit. According to the company website, you may be able to qualify for a Carvana auto loan as long as you’re at least 18 years old and have an annual income of at least $4,000, as well as no active bankruptcies.

However, if you can get a car loan through your bank or credit union, you’ll likely get better terms there: Dealer-backed financing is often the most expensive way to borrow. If you intend to seek outside financing, make sure that you get your loan from one of the lenders Carvana works with.

Here are some other Carvana financing features to be aware of:

  • Prequalification is available
  • No minimum credit score requirement
  • Cosigners are allowed, but not in all states

How to apply for Carvana financing

Loan prequalification is available through Carvana’s website. It only takes a couple of minutes to get a rate quote, which won’t impact your credit scores. You can use your quote to shop for a car on Carvana for up to 45 days.

Beyond that, the process is a little unclear. After you select a car, you’ll need to choose how you want to pay, which presumably includes the option to select Carvana’s in-house financing. If a down payment is required, you can pay when the car is delivered.

CarvanaCare

One of the big drawbacks of buying used versus new is that used vehicles aren’t typically covered by a warranty. With Carvana, however, every car comes with a limited 100-day, 4,189-mile warranty. Carvana also offers guaranteed auto protection (GAP) coverage and an extended warranty as optional add-ons.

Each Carvana vehicle has been inspected and reconditioned by a technician, and the cars the company sells have no reported fire, frame or flood damage (according to their CARFAX and AutoCheck reports).

Carvana pros and cons

Carvana makes the car buying and financing process simple, but delivery fees and restrictions could be a deterrent for some consumers.

ProsCons

  Choose from 25,000 cars

  Every car comes with a limited warranty

  7-day, 400-mile money back guarantee

  Loans available for consumers with bad credit

  Limited physical locations

  Not available in Alaska, Hawaii and U.S. territories

  Past legal issues have affected some customers

  Delivery fee up to $1,490

  Prices aren’t negotiable

Carvana takes the awkwardness of working with a salesperson out of the equation. The website gives you thousands of cars to choose from, and if you decide you don’t like the car within the first week, you can get your money back.

On the other hand, Carvana delivery can be expensive, and the company has a checkered legal past.

Carvana had a court settlement in 2021 after it delivered cars in several California counties where it didn’t have proper business licenses. The company also failed to provide the required inspection reports to some of its customers, a requirement in the state.

Carvana also had a pending lawsuit as of late 2022, which was brought by customers who didn’t receive proper vehicle registration and, as a result, couldn’t legally drive their cars.

Selling a car to Carvana

In addition to buying cars through Carvana, you can also trade in or sell your car to the online dealer. It only takes a few minutes to receive an offer. The process goes like this:

  1. Provide information about your car, including the vehicle identification number (VIN) or license plate number.
  2. View an offer from Carvana, which is good for seven days.
  3. Upload documents to verify ownership.
  4. Select your preferred payment method and schedule an appointment.
  5. Carvana comes to you to pick up the car, get your signature and pay you by check or direct deposit.
Before accepting an offer from Carvana, make sure to compare their offer with value estimates from other websites. You can get free estimates of your car’s value by visiting sites like Kelley Blue Book (KBB) and Edmunds.

Alternatives to Carvana

There are lots of ways to buy a car, but if you prefer buying a used car online, Carvana won’t be your only option.

Carmax, for example, also sells used cars online. They offer auto financing and give buyers a 30-day window to return their vehicle for a refund. Shift also offers online buying and financing, but like Carvana, Shift only provides a 7-day money-back guarantee.

Frequently asked questions

Despite its recent legal issues, Carvana is a legitimate business. Carvana is not accredited through the Better Business Bureau (BBB), but it is listed on the New York Stock Exchange (NYSE).

No, Carvana doesn’t negotiate car prices or trade-in offers. This can be a selling feature for consumers who don’t want to haggle over auto prices. For car buyers who don’t mind a little haggling to get a lower price, read our tips for negotiating a car price.

Yes, you can take a Carvana car for a test drive before signing your paperwork. Carvana also offers a 7-day money back guarantee if you’re not pleased with the vehicle you purchase.

You can use Carvana financing to buy a car through the online lender, or use a loan from your own bank or credit union. However, some lenders are restricted. See the full list of restricted lenders here.

 
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