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If you're in the market for a used car, Carvana allows you to shop through its nationwide inventory and finance the exact vehicle you want. However, its financing offers can only be used on its own vehicles, so if you're looking to buy a vehicle from a franchise dealer or private party, you'll have to find another lender.?
- Pros and Cons
- Key Takeaways
- Company Overview
Complete car purchase online
Borrowers with bad credit accepted
Added coverage available
Unclear rates and fees
Doesn't disclose loan term options
Loans can only be used at Carvana
- Carvana has an inventory of 25,000 vehicles.
- You can use Carvana’s pre-qualification tool to view loan options without harming your credit.?
- Co-signers are only permitted in some states.?
- Vehicles are backed by a seven-day money-back guarantee and a 100-day/4,189-mile limited warranty.?
- Carvana is not available in Hawaii or Alaska.
Carvana is an e-commerce platform that allows customers to shop for a used vehicle and apply for financing completely through its website. Customers can select a vehicle, get financing, purchase the vehicle, and have it delivered quickly and easily.
Since the company's launch in 2013, it has purchased, reconditioned, and sold 1.4 million cars through its website, generating $39.3 billion in revenue. It works with a variety of lenders to provide financing.
Carvana operates in most of the country, but it doesn't service residents of Alaska, Hawaii, or any U.S. territory.
- Loan Types Offered Used
- States Available All states and D.C. except AK, HI
- Used APR Range Not disclosed
- Used Loan Amounts Not disclosed
- Used Loan Terms 36–72 months
- Min. Time to Receive Loan 1 day
- Recommended Min. Credit Score 500
- Max. Accepted Mileage 140,000 miles
- Max. Accepted Age Varies
- Max. Accepted Loan-to-Value Ratio Not disclosed
- Complete car purchase online: With Carvana, you can search through a vast vehicle inventory, select a car, secure financing, and arrange pickup or delivery entirely online.
- Borrowers with bad credit accepted: Although Carvana doesn't disclose its minimum credit score, its website states that it accepts borrowers with bad credit (as long as you make at least $4,000 per year and have no active bankruptcies). For car sellers, customers are "nonprime" or "subprime" if their score is 660 or below.
- Added coverage available: When you buy a vehicle through Carvana you can add additional coverage to your purchase. Options include a maintenance plan, car insurance, and even guaranteed asset protection (GAP) coverage.
- Unclear rates and fees: Carvana isn't clear about its rates or fees. On its website, it doesn't make any mention of what annual percentage rates (APRs) customers can expect, and it doesn't disclose whether it charges origination fees. The only way to find that information is to create an account and submit your personal information.
- Doesn't disclose loan term options: When you search for vehicles through Carvana, it will show you a payment range. However, it doesn't list what the loan term is for those payments unless you create an account and pre-qualify for a loan.
- Loans can only be used at Carvana: Carvana only finances vehicles sold through its own platform. If you want to buy a car from a dealership or private party, you need to work with another lender.
Although Carvana’s loans can only be used to buy Carvana vehicles, you can get a loan on your own from any lender and use it to purchase a Carvana vehicle.
Types of Auto Loans Offered by Carvana
Carvana only sells and finances used vehicles through its website. New car purchase loans and auto loan refinancing aren't available. Prices vary based on the vehicle you're purchasing, but we found cars on its site that cost as little as $9,990 or as much as $103,000 (in August 2023).
Used Auto Loans
- APR: Not disclosed
- Loan amounts: Based on vehicle price
- Loan terms: Not disclosed
According to the company, all of the cars on sale through Carvana passed a 150-point inspection and have no reported accidents, fire, flood, or frame damage on their CARFAX or AutoChex reports.
Time to Receive Funds
Because you can shop for and finance a car online through the same platform, it takes just a few minutes to complete your purchase. According to Carvana, the entire purchase can be finished in just 10 minutes.
- Minimum recommended credit score: Not disclosed (but applicants with bad credit may be accepted)
- State availability: Not available in Hawaii or Alaska
- Membership requirements: No membership requirements
Borrowers must be 18 or older (19 in Alabama and Georgia), earn at least $4,000 per year, and have no active bankruptcies.
- Maximum accepted mileage: 140,000
- Maximum loan-to-value ratio: Not disclosed
- Vehicle restrictions: Only vehicles sold through Carvana are eligible for financing.
Carvana Auto Loan Features
- Origination fee: Carvana doesn't disclose if it charges origination fees.?
- Prepayment fee: It does not charge a prepayment penalty.?
- Discounts: You can qualify for an interest rate reduction by signing up for automatic payments.?
- Rebates: Carvana does not disclose any rebates.?
- Can change due date: You can change your payment due date.?
- Partner dealerships: Carvana does not partner with any other dealership.?
- First-time car buyer program: Carvana does not have a first-time car buyer program.?
- Mobile app: You can buy and finance a car through Carvana's mobile app, and then you can use it to manage your loan and make payments.
Co-Signers and Co-Applicants
Carvana permits co-signers, so those with poor credit or insufficient income can improve their odds of qualifying for a loan by adding a relative or friend to their application (if the co-signer has good credit, that is). The co-signer is responsible for the loan's repayment if the primary borrower falls behind on their payments, but the co-signer is not included on the vehicle title.
However, only residents of certain states can add co-signers; residents of New York and Illinois cannot add co-signers to their applications.
Carvana has a few customer support channels you can use to get help with finding a car, financing, vehicle delivery, and vehicle problems. There are a variety of email addresses to use for different purposes, but Carvana also provides a live chat to speak with a company representative in real-time. Or, you can submit your phone number to request text message support.
Carvana was not ranked in the J.D. Power U.S. Consumer Auto Financing or U.S. Dealer Satisfaction Studies. But on Trustpilot, a public review website, customers generally report positive experiences with the company. Carvana has a 4.2 rating out of 5 based on over 8,000 reviews, which gives it a "Great" distinction.
However, Carvana has faced increased scrutiny from regulators. Several states, including Arizona, Florida, Illinois, Maryland, Michigan, North Carolina, Pennsylvania, and Texas, have filed regulatory actions against Carvana or charged fines over delayed registration and title paperwork. In fact, several states have suspended Carvana's dealer license.
In June 2023,? a law firm filed a class action lawsuit against Carvana on behalf of investors. According to the firm's news release, news articles related to alleged paperwork delays caused the stock price to drop, and the law firm alleges that Carvana failed to disclose material adverse facts.
How to Apply for a Carvana Auto Loan
Financing a vehicle through Carvana is typically quick and simple, and it takes just a few minutes to complete online. As you fill out the required forms, you will need your driver's license, income, and employment details. You will also need your bank account details for your down payment.
Once you have that information together, you can apply for a car loan by following these steps:
- Fill out the pre-qualification form: The form asks for your name, address, and income. It will also ask if you'd like to add a co-signer. Based on your answers, it will tell you what rate and loan term you're eligible for without impacting your credit.?
- Choose a vehicle: Search through Carvana's inventory to select a vehicle. You can buy any car in the country; Carvana will ship it to either a Carvana location near you or directly to your door.?
- Adjust your loan terms: When you find the car you want, Carvana will hold the car for about 30 minutes so you can complete the financing application; after that, Carvana releases the car and other customers can buy it. You can adjust the loan terms, choosing a term that works for your budget, and how much of a down payment you want to put down.?
- Choose a delivery and options: Once you have finalized the loan terms, choose a delivery option and add any additional coverages, such as GAP insurance.?
- Make your down payment: Carvana will prompt you to submit a copy of your driver's license and bank information to process your down payment. You must use a checking or savings account; Carvana does not accept credit cards.?
- Finalize your purchase: Review your purchase and loan terms one more time, then finalize the purchase and consent to a hard credit inquiry.?
- Wait for approval: Carvana will review your application and, if you're approved, you'll receive your new car at home or pick it up from a Carvana location—usually within a few days.
Alternatives to Carvana
|Loan Types Offered||Used||Used||New, used, refinance, cash-out refinance, lease buyout|
|States Available||All states and D.C. except AK, HI||All states and D.C. except AK, AR, HI, MT, SD, ND, WV, WY, VT||Not disclosed|
|Used APR Range||Not disclosed||Not disclosed||6.24% and up|
|Used Loan Amounts||Not disclosed||$5,000–$100,000||$5,000–$100,000|
|Used Loan Terms||36–72 months||36–72 months||12–84 months|
|Min. Time to Receive Loan||1 day||Same day||1 day|
|Recommended Min. Credit Score||500||500||Not disclosed|
|Max. Accepted Mileage||140,000||Not disclosed||100,000|
|Max. Accepted Age||Varies||Not disclosed||8 years|
|Max. Accepted Loan-to-Value Ratio||Not disclosed||Not disclosed||Not disclosed|
For those who want to avoid visiting a dealership in person, Carvana can be a useful alternative. You can choose a car from its inventory of vehicles and finance it through the website in a matter of minutes, and Carvana will ship the selected vehicle to you.?
However, Carvana doesn't disclose its rates, fees, or terms, so comparison shopping may be difficult, and you can only use Carvana's auto loans to purchase a car through its site, so it may not be the right fit for every buyer. If you want to buy a car from a dealership or private party, check out our list of the best auto loan rates. And remember, you can always get a loan on your own and use it to purchase a Carvana vehicle.
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