2024 Carvana Financing Review

Carvana auto loans at a glance

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Carvana is an online-only dealership that offers auto loans only for the cars sold on its site. You can shop from Carvana’s inventory of more than 25,000 vehicles, though you won’t be able to negotiate the car prices. The company:

• Offers prequalification: Carvana allows you to prequalify for a loan. This means you can check potential offers with no impact to your credit score.
• Has a seven-day return policy: If you’re unsure about your Carvana purchase, you’ll have an entire week to return the car. If you’ve driven over 400 miles in the car before returning it, you’ll be charged a dollar per mile over that 400-mile limit.
• Offers free limited warranty: Carvana offers a 100-day/4,189-mile warranty for every vehicle purchased on the site.
• Comes with certified inspections: All Carvana vehicles are given 150-point inspection and come with a free Carfax report.
• Is best for online used-car buyers: Carvana may be a good choice if you’re in the market for a used car and you want a completely online experience.

Carvana pros and cons

Carvana may be a good option for used-car shoppers, especially if you have bad credit. However, there are several downsides you’ll want to consider before purchasing through Carvana.

With no minimum credit score requirement, Carvana offers financing to a wide range of borrowers, including bad credit car loans. After you buy a vehicle from Carvana, your purchase comes with a seven-day return policy and a limited warranty for up to 100 days.

Keep in mind, however, that Carvana only offers financing for vehicles that are purchased through its site. Carvana customers do not have the option to negotiate car prices. The company has also landed in legal hot water, with some states charging steep fines and suspending its license in several cases.

A closer look at Carvana auto loans

Carvana’s online platform allows you to buy, sell and trade in cars. All vehicles sold on the site come with a free Carfax report and go through a 150-point inspection.

One unique feature of Carvana is that it has car vending machines located across the country. However, if you don’t live in an area near one, you may have to get your vehicle delivered to you which can come with high shipping fees.

Aside from offering used auto loans, Carvana also provides car lease buyouts. To use Carvana to buy out your lease, first check to make sure the company that currently holds your lease is permitted to work with Carvana. Carvana has a long list of leasing companies that won’t allow the company to buy out your lease. Once you’re certain that Carvana can buy out your lease, you’ll need to provide Carvana with the following information:

• Photo identification
• Current vehicle registration
• Photo of the odometer
• Account statement including the full lease account number and maturity date
• Account statement with next payment date
• Dealer’s Lease Payoff

How to apply for Carvana financing

While Carvana doesn’t have a minimum credit score requirement, you’ll need to meet its other criteria to qualify for an auto loan:

• Must be at least 18 years old
• No active bankruptcies
• Minimum annual income of $5,100
• Can’t live in Alaska or Hawaii

How to get a loan with Carvana

Prequalify for a loan

Once you choose which car you’d like to purchase from Carvana, you can prequalify for an auto loan and see if you’re eligible for any financing options. This won’t impact your credit score as Carvana performs a soft credit inquiry, but it will allow you to see potential rates, terms and borrowing amounts.

Once you’re approved for a loan, your offer is good for 30 days, starting on the approval date.

Verify your information

If you choose to move forward with a Carvana auto loan, you’ll need to verify the information you provided during your application process. You may need to provide documentation such as a copy of your ID and proof of income, like recent pay stubs and bank statements.

Close on your loan

At the end of the process, you’ll need to submit to a hard credit pull and sign your auto loan agreement. A hard credit pull can cause your credit score to dip by a few points, though its effects are temporary. Your auto loan agreement will outline all the terms of your Carvana contract so be sure to read it carefully.

During this part of the process, you’ll also schedule the delivery or pickup of your new car.

How Carvana auto loans compare

While Carvana may be a good fit for some used-car shoppers, you may find more competitive rates elsewhere, especially if you have good or excellent credit. Consider these other lenders as you shop around for an auto loan.

LightStream auto loans may be a good fit for you if you have good or excellent credit and are looking for long repayment terms. Capital One auto loans don’t have publicly disclosed APRs for used car loans, but APRs for its new loans begin at 6.49%. Capital One may be a good option if you’re looking to buy a car from a dealership.

Is a Carvana loan right for you?

If you’re looking for a completely online experience, and you find a vehicle that matches what you’re looking for on Carvana’s website, this lender may be a good option for you.

Carvana may be a good choice if you have bad credit and are having trouble qualifying for an auto loan with other lenders, since it doesn’t have a minimum credit score requirement. Keep in mind that if you have bad credit, you may receive high interest rates. However, you may have the option to refinance your auto loan rates once your credit score improves.