2023 Carvana Financing Review
Sarah Brady is a personal finance consultant who loves helping people improve their financial wellness. Her writing is inspired by her work as a credit and housing counselor, where she’s coached hundreds of people to build budgets, improve their credit and buy affordable housing. When Sarah isn’t writing she’s teaching workshops all over the San Francisco Bay Area.
- Expertise: Personal finance, financial planning, credit scores, savings, auto loans, education
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Katie Lowery is a deputy editor at LendingTree, where she oversees personal finance, debt and auto loans content. She is passionate about educating and empowering consumers to make informed financial decisions.
Before joining LendingTree, Katie spent more than a decade as a developmental and copy editor, where she edited content in a variety of fields, including finance, business, economics, science and education. She was the sole editor on multiple award-winning books.
Katie earned a bachelor’s degree in education from the University of Texas at Austin. She still lives in the Austin area with her family and enjoys collecting record albums and knitting.
- Expertise: Copy editing, personal finance
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Xiomara Martinez-White is a copy editor at LendingTree and its associated companies, where she edits multiple personal finance verticals.
Previously, she was a copy editor at BDG Media and its flagship publication, Bustle, and first honed her copy editing craft as a fashion assistant with the International Herald Tribune, working in Paris under famed fashion editor Suzy Menkes. She has also held internships at publications such as Marie Claire, People.com and the Metro.
Martinez-White earned a B.A. in English Language & Literature at Smith College and an M.A. at the City University of New York Graduate School of Journalism, concentrating in Arts and Cultural Journalism. She also attended the University of Cape Town and CELSA Paris as a visiting student.
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.
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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:
- Visit the vehicle search page and review the available cars.
- Select the car you want to purchase.
- 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
- Upload the requested documents.
- 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
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.
| Pros | Cons |
|---|---|
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:
- Provide information about your car, including the vehicle identification number (VIN) or license plate number.
- View an offer from Carvana, which is good for seven days.
- Upload documents to verify ownership.
- Select your preferred payment method and schedule an appointment.
- 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.