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  1. Everyday Money
  2. Auto Loan Lenders

Carvana Review: Used Car Auto Loan Options

Published: Oct 01, 2019 8 min read

Today, any purchase, whether food, clothes, homes, or cars, is all about convenience. COVID-19 has made the online buying process even more important. After studying other online car dealerships like Carmax, Carvana revolutionized buying a used car. You can view their inventory and purchase a car online, never setting foot in a car dealership or dealing with the hassle of haggling.

The Carvana website, http://www.Carvana.com, is ideal for those who hate shopping for cars.

Table of contents:

  • About Carvana
  • How it works
  • Carvana qualifications
  • Perks of Carvana
  • Pros and cons
  • Interest rates and how much you could borrow
  • Fees
  • FAQs

About Carvana

In 2012, DriveTime founded the wholly owned subsidiary, Carvana. In 2014, Carvana branched out independently, but the auto lender Bridgecrest, an affiliate of DriveTime, still financed its auto loans. In 2017, Carvana appeared on the New York Stock Exchange.

How it works

You can choose the car you want from the large inventory on the Carvana website. Carvana has about 25,000 cars in stock, including Honda, Toyota and Chevy, and can ship to the lower 48 states. All of Carvana's used, low-mileage vehicles go through a 150-point inspection and come with a free CarFax report.

Carvana's prices are fixed, so there is no stressful haggling, and the prices of its vehicles are similar to the Kelley Blue Book. Occasionally, Carvana accepts trade-ins and even offers a "DMV-free" registration process. Carvana records all information, including the VIN and driver's license information, completes the DMV registration and then gives you a temporary license plate. After registration, you'll receive your permanent license plate in the mail.

Carvana qualifications

To qualify, your income should be over $4,000 yearly, but there is no minimum credit score. Carvana is great for people with all credit profiles, especially those who have difficulty getting approved by traditional auto lenders. You don't need a hard credit check to gain pre-qualification, and they’ll give you a decision within minutes.

There are no application fees or prepayment penalties to worry about, but compare Carvana's loan offer with your bank to make sure you find the best deal.

Perks of Carvana

  • Seven-day money-back guarantee: There is a seven-day money-back guarantee on all purchases.
  • Next-day delivery or pickup: You can arrange delivery for the day after purchase in some locations. You can also pick up the vehicle at one of Carvana's vehicle vending machines, located throughout the country, including Atlanta, Georgia, and Tempe, Arizona.
  • 100-day limited warranty: Each car comes with a 100-day or 4,189 miles limited warranty from SilverRock, and if you want longer coverage, Carvana offers its extended warranty, Carvana Care.

Carvana pros and cons

Consider the following before deciding to purchase a car from Carvana. Remember, you won't drive your car for the first time until after delivery.

Advantages

  • Convenient: The entire purchasing process is online, so you never have to leave the house, visit different dealerships or haggle.
  • Fixed prices: Carvana vehicle prices are similar to those in the Kelley Blue Book, so you don't have to haggle to get a good deal.
  • 150-point inspections: All Carvana cars go through a 150-point inspection, giving you peace of mind. That's more than you can say for buying a used car privately.
  • Fast pre-qualification: Pre-qualification takes minutes online, and you can start shopping for your car immediately. Keep your phone or computer close in case Carvana needs to contact you.
  • No hard credit check until purchase: No hard credit check is required until you are ready to purchase.
  • Seven-day return policy: If you decide you don't like your car within seven days, return it and have your down payment refunded.
  • No application fee: There is no application fee for a loan from Carvana.
  • Trade-ins: Carvana accepts trade-ins, even if you don't purchase a car from them.
  • No prepayment fee: You can pay off your loan early without being penalized.
  • No minimum credit score: If you have a poor credit score, you can still qualify for a loan with Carvana.
  • Delivery: Carvana offers free delivery in many cities but charges for some locations. You can also pick up your car from a vehicle vending machine, and if you have to fly to collect your car, Carvana will subsidize part of your airfare and collect you from the airport.

Disadvantages

  • Buying without a test drive: The process is so convenient that you may forget you're buying a car without driving it first. You can view pictures and details online, and Carvana offers a seven-day return policy, but you never quite know if you like a car until you drive it.
  • Only delivers to 48 states: Carvana currently only delivers to the lower 48 states. You must fly elsewhere to collect your car if you live in Alaska or Hawaii.
  • Only finances Carvana cars: Carvana only finances the cars it sells.
  • Only used cars: Carvana only sells used cars, so if you would like a new car, Carvana is not an option.
  • A yearly income of at least $10,000: To qualify for finance, your yearly income must be at least $10,000.
  • The delivery fee is non-refundable: If you decide to return the car, you won't get a refund of the delivery fee.
  • Reviews: Carvana is not accredited by the BBB and is rated NR; it has received 4,605 complaints in the last three years since accreditation. Its customer satisfaction rating is 1.94 out of 5 stars, with many comments stating it's a scam.

Interest rates and how much you could borrow

The amount you could borrow depends on your credit score and income. Although Carvana doesn't state an upper limit, it only sells its own cars, so your maximum possible loan would depend on its stock.

Interest rates vary depending on your credit score. If you have an excellent credit score, your rate could be as low as3.90% with Carvana. However, rates could be up to 27.9% if your credit score is poor.

Fees

Carvana sometimes charges a delivery fee that varies with the delivery location. They also charge fees for late payments but not application or prepayment fees.

FAQs

How much does Carvana charge for delivery?

Carvana sometimes charges a delivery fee that varies with the delivery location.

Does Carvana sell new cars?

All Carvana vehicles are used, low-mileage vehicles. They offer a 150-point inspection and a free CarFax report with every car.

Are prices negotiable?

Carvana's prices are non-negotiable, so no need to haggle. Prices are similar to those in the Kelley Blue Book.

Is Carvana Auto Loans the best choice for you?

Carvana is an excellent choice for people with poor credit scores who can't get finance from a traditional lender. If you don’t like to haggle and find a car in its inventory that you like, Carvana may be the right choice for you, as the entire experience is convenient and easy.

Update: This article has been updated to reflect Carvana’s current BBB ratings and complaints, as well as updating current finance rates and information.

Disclaimer: This story was originally published on October 1, 2019, on BetterCreditBlog.org. To find the most relevant information concerning Carvana Auto Loans, please visit their website: https://www.carvana.com/learn-financing