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Carvana Used Car Loans Review
Carvana bills itself as the The New Way to Buy a Car™ and the claim has merit — buyers can choose from more than 16,000 used vehicles that have been thoroughly tested, have these cars delivered or pick them up from vehicle vending machines and enjoy a seven-day test-own. In addition, Carvana financing all happens in-house, meaning you won’t need to complicate the process with a third-party lender.
Comparing used car loan providers is easy using our SimpleScore methodology. Using key data including used car rates, new car rates, loan size, customer satisfaction and fees, we can help you find the best fit for your vehicle financing. Here’s how Carvana cars stack up.
Carvana car loans at a glance
|Minimum income||$4,000 / year|
|Financial requirements||No recent bankruptcies|
|Financing quote valid for||45 days|
|Limited warranty||100 days|
|Standout Feature||Seven-day test-drive available|
|Best for||People with average or bad credit who want to buy a used car|
|Not for||Borrowers with recent bankruptcies, borrowers with excellent credit or people looking to buy a new car|
What we like about Carvana car loans
Seven-day “Test Own” on all purchases
Carvana used cars come with a week-long “Test Own” period that gives new owners time to make sure their purchase best fits their needs. So long as the vehicle isn’t modified or damaged, Carvana will refund your money or exchange the car for another.
All financing happens in-house
Carvana handles its own financing in-house and also works with most U.S. banks to make buying your vehicle as simple as possible. After creating a Carvana account, you can get a financing quote (good for 45 days) in just a few minutes.
High quality, thoroughly tested vehicles
All of Carvana’s used car inventory must pass a 150-point inspection. In addition, these vehicles have clean titles and no reported accidents. New Carvana car owners also enjoy a 100-day, 4,189-mile limited warranty.
Things to consider
No co-sign options
Carvana doesn’t allow cosigners, which means that if you don’t meet the minimum requirements — over 18, earning more than $4,000 per year and no recent bankruptcies — you won’t be able to secure financing with the auto lender.
[ Read: The Best Bad Credit Car Loans for 2020 ]
Can’t use Carvana financing anywhere else
While Carvana credit checks are “soft” — meaning they won’t hurt your credit score — and for Carvana, bad credit isn’t a reason to deny your application. However you can’t apply Carvana financing to any other used car buying site. If you finance with Carvana, you’re buying a car from Carvana.
Carvana car loans vs. the competition
LightStream offers similar APR and maximum loan amounts to Carvana but will also beat any competitor’s rate by 0.10%. In addition, you can save 0.50% on your rate if you choose to set up autopay. LightStream is a division of SunTrust Bank (now Truist), making it easy to access customer service for loan questions or financing issues if they arise. But be aware of eligibility requirements. While LightStream is a top online lender, it takes a great credit score to get the best rates. Check out our full LightStream review.
[ More: Best Auto Loans of 2020 ]
OneMain opts for old-school operations: You’ll need to go in person, and you can expect your APR to be higher than that of Carvana. The benefit? It has generous lending policies if you’ve got bad credit, and you can have someone else cosign on your car loan to boost your chances of getting approved. Don’t let the not-so-great SimpleScore fool you — if your credit isn’t what it should be but you need a used car, OneMain may be your best choice. Read our complete OneMain review.
Bank of America
Bank of America is all about low interest rates, especially if you’re already a customer and you get a discount if you have a Bank of America account. Terms are 12 to 75 months long, and you can secure an auto loan of up to $100,000. You can purchase your car through participating dealerships, used car lots or private sellers with a Bank of America auto loan. However, its customer reviews are average — Bank of America scored a 3 out of 5 with J.D. Power’s auto loan origination satisfaction survey. Dive into our Bank of America auto loans review.
How much does a Carvana car loan cost?
After a successful Carvana credit score check, you’ll be offered financing terms that are good for 45 days. Rates vary significantly based on creditworthiness. There are also other costs to consider including local taxes, title and registration fees along with delivery fees for some areas.
You can also choose to add CarvanaCare protection, which includes roadside assistance and covers both basic and powertrain components. Most vehicle repairs covered under CarvanaCare come with a $50 deductible.
[ Read: Best Providers of Pre-Approved Car Loans ]
Cheaper alternatives to Carvana car loans
While Carvana reviews make it clear that the company is largely succeeding in its mission to change the car buying experience, it’s not always the cheapest option. Lenders such as CarsDirect and PenFed offer lower APRs for qualified buyers making them great options if you’ve got the credit score to qualify. Both of these companies also offer used car refinancing at similar rates.
[ Read: Why You Should Worship Your Paid-Off Car ]
Carvana in the news
- At the beginning of August 2020, Carvana opened its 25th car vending machine in the nation and the first one in Louisville, Kentucky. This was quickly followed by the 26th car vending machine in Detroit, Michigan.
- According to Forbes, Carvana saw significant stock growth over August 2020 as customers concerned about potential pandemic problems switched to buying online.
- Yahoo! Finance reports that Carvana’s stock growth is up 160% since its launch on the market. “The scale in the business is really showing up in that incredibly rapid leverage,” said Carvana founder and CEO Ernie Garcia.