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Carvana Auto Loan Review

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Carvana offers buyers an alternative to traditional car dealers, allowing them to shop, compare, finance, purchase and get vehicles delivered without leaving home.

Sites like Carvana offer some hope that technology has finally caught up to the auto industry.

A couple of decades ago, the web seemed poised to push traditional car dealers into obsolescence. But the online revolution has been slow to gain traction in the auto business, which is frustrating for many buyers but a relief to dealers, many of whom have come to embrace the web’s advantages.

The result is that today, even as phones, appliances and yes, cars, grow increasingly “smart,” the way people typically buy vehicles is largely stuck in the last century. It is a scattered process that includes gathering information about numerous makes and models from several sources, comparing prices and financing deals from sellers and lenders, and eventually going to showrooms to test-drive and negotiate.

Carvana seeks to re-centralize the buying process by encouraging customers to choose a vehicle from its expansive inventory, arrange financing and schedule a delivery through its virtual one-stop shop. The most notable feature of financing through Carvana compared with other lenders is that the customer never visits a dealership or speaks with a salesperson.

This review covers:

How Carvana works
Carvana financing: At a glance
How to apply for financing
How delivery works
The fine print
Pros and cons of financing through Carvana
The bottom line: Which buyers does Carvana serve best?

How Carvana works

Carvana is a used-car retailer with thousands of cars in its inventory. The company says it streamlines the buying process, saving time and slashing costs by cutting out dealerships. The result is lower prices, a better selection of vehicles, a more pleasant shopping experience and no unexpected fees.

Customers shop for cars on Carvana’s site much like they would on a dealer’s except that the buyer can find, finance and purchase online, and have the vehicle delivered. Carvana stores vehicles in its 60-plus local markets across the U.S.

Buyers can also opt to pick up their cars at facilities that Carvana calls “vending machines” – mini showrooms where one can pick up a car and drive it home.

If you live outside of a local market, you will have to have the vehicle delivered (for a fee) or travel to pick it up and drive it home.

Carvana financing: At a glance

Using outside financing. You do not have to use Carvana financing to purchase a car through the site, and we highly recommend getting quotes from other lenders first. Start with banks you currently do business with and your local credit union. LendingTree makes it easy to potentially compare several offers at once with the auto loan marketplace.

Here’s another reason you may want to look at outside lenders: you can’t use a cosigner if you choose to use Carvana financing. Other lenders may allow you to use a cosigner.

Carvana will accept outside financing. It will ask for the name of the customer’s bank or credit union, the amount of the loan and the loan officer’s name and contact information.

After you complete the purchase process and schedule a delivery, Carvana’s underwriting team will give you the necessary documents to send to your lender to complete the loan. You can take the delivery option only after the loan is funded and Carvana confirms the method of payment with your lender.

Financing with Carvana. Start by filling out the pre-qualification form for financing. Carvana allows people who are shopping for a vehicle to pre-qualify for financing using an online application process that does not affect their credit scores.

What it takes to qualify

  • 18 years of age
  • $10,000 in annual income, at a minimum
  • No active bankruptcies on your credit report
  • No specific credit requirement, as Carvana works with all types of credit

When you fill out the pre-qualification form, Carvana asks for the prospective buyer’s name, annual income, address, phone number and email address in order to pre-qualify and get preliminary financing terms.

Loan terms

  • As of Jan. 15, 2019, Carvana’s APR range topped out at 4.19% for someone in North Carolina with a perfect credit score of 850. A poor score of 550 would get an APR of 19.98%.
  • Estimating your payment. Shoppers can use the site’s payment calculator to get an idea of what their monthly payments would be, depending on the price of the vehicle, the down payment, loan term and their credit score.

Consider a car with a $30,000 sticker price. A buyer with a credit score of 680, which Carvana considers “good,” who makes a $1,000 down payment would pay $491 per month over a 72-month (six-year) loan term.

The calculator makes it easy to see how changes in vehicle price, down payment, length of the loan and credit score can affect the monthly payment.

How to apply for financing

Line up your own financing first.  When you’ve lined up your other financing, check your rate on Carvana. As we noted before, it only requires a soft pull to check your rate, which won’t ding your credit score. Once you officially apply for financing, it will result in a hard inquiry. Open an account on the site and then fill out the pre-qualification form by entering your name, address and basic income information. Then the shopping begins.

Choose your vehicle. The Carvana process will be familiar to anyone who has shopped for a car online, even just for fun. You can hone in on the car you want based on make and model, body style, model year, mileage or certain features like a sunroof or all-wheel drive. If the car has to be red, you narrow the search accordingly.

Get ready to buy. Once you are ready to buy, the site will ask a few more basic questions, like whether you have a trade-in and if you want to pick up your car or have it delivered. Carvana will also need your Social Security number and images of your driver’s license, which you can upload. You also have to agree to a credit application disclosure. The purchase will still require a traditional credit check that will affect your credit score — known as a hard pull.

Your down payment.  Carvana calculates your down payment based on vehicle cost, your income and your your credit history. If the payment is uncomfortably high, there are a few ways to lower it: If you have a vehicle to trade in, you can apply its trade credit to the down payment. Even our 20-year-old Subaru wagon was worth $539 according to Carvana’s online trade-in application.

Finding a vehicle with a lower price will cut your down payment.

Did you leave out any income? Because your annual income is a factor in setting the down payment, make sure you include all of your verifiable income on the financing application.

Shop around for a better deal. Carvana accepts auto loans from most third-party lenders, so if you find better terms with a bank or credit union, you can use it to buy from Carvana.

How delivery works

The process is quick and you could realistically have your car within 24 hours. Customers in one of Carvana’s local markets (there are more than 60 markets across the U.S. and the number is increasing) can make their down payment when the vehicle is delivered or at pickup. People outside the local delivery zones have to pay once the purchase is verified but before Carvana ships the vehicle.

If you opt for delivery, the vehicle arrives at your home on a flatbed truck. You get to inspect it before signing off on the deal. And if you find you cannot stand the way it rides or handles, or if for some other reason it isn’t the right car for you, you can arrange to exchange it within seven days.

The fine print

Shipping fees. Carvana typically ships vehicles to customers free of charge, which has been a sort of retail fantasy for many drivers since the early days of online shopping. However, customers should check carefully to see if they are located within one of the company’s local markets. If not, there will probably be a shipping fee.

There may also be a fee if the car you want has to be shipped over a long distance. In our vehicle searches, shipping was usually free but a few cars carried fees of $199 or $299 – far less than typical dealer freight fees but a fee nonetheless.

Pros and cons of financing through Carvana

The decision to buy a vehicle should always involve shopping around to compare prices and services. The same goes for loans. There are many lenders competing for your business so it makes sense to spend time researching offers and special deals that may be available from banks, credit unions and dealerships.


Carvana stands out for a few reasons:

  • It saves customers the hassle and anxiety of going to a dealership.
  • You can typically buy the car and have it delivered quickly.
  • You have seven days after delivery to decide whether the car is right for you or if you wish to exchange it. This is essentially a test-drive to make sure you can live with the car.
  • Shoppers can get pre-qualify and consider specific financing terms without affecting their credit score. However, completing a purchase still requires a “hard pull” credit check that affects your score.


  • Carvana sells used cars only, which excludes a broad swath of potential buyers who might otherwise embrace the company’s non-dealership approach.
  • While Carvana has thousands of vehicles in its inventory, it may be more difficult to find the model with the features you want in a color you like, compared with shopping in the broader used-car market.
  • Even with the money-back guarantee, the idea of buying a car without seeing it first may also still be shocking to traditional buyers. Such people may not like visiting dealers, but still want to “kick the tires” before deciding on a vehicle.
  • And while Carvana’s network of local markets is growing, there are still areas from which customers would have to travel long distances to pick up their cars or pay shipping fees to have them delivered.
  • By changing the traditional pre-buy test-drive into a post-purchase activity, Carvana could increase anxiety for drivers who might feel rushed by the seven-day test period. Also, watch out for the fine print here: During that 7-day period, you can only drive the vehicle up to 400 miles; for every additional mile after the 400-mile limit, Carvana will charge you a fee of $1.00 per mile.
  • You can’t use a cosigner if you choose to use Carvana financing. Other lenders may allow you to use a cosigner, so you may be able to find another Carvana-approved lender to finance your  vehicle.
  • Can’t use Carvana financing for any other sites/dealership.

The bottom line: Which buyers does Carvana serve best?

Clearly, Carvana is best for drivers who prefer used cars as a way to avoid the classic “depreciation hit” one suffers as new vehicles rapidly lose value. It is also well-suited to people who believe buying a car is too complicated with too many obstacles. Why should acquiring your dream ride involve spending a day or two haggling with a squad of salespeople in a dealership?

People who truly enjoy shopping online — and not everybody does — are likely to find Carvana’s system intuitive and transparent. It’s true that you cannot haggle over the price, but it is also easy to compare Carvana’s prices and rates with other sellers and lenders.

Finally, it helps to be open-minded and willing to consider a few different vehicles. If you are cross-shopping Honda Accords, Toyota Camrys and Nissan Altimas, you’ll find a wide range in Carvana’s inventory. Trying to decide between a Mercedes-Benz C-Class and a BMW 3-Series? You are probably a good fit for Carvana. However, if you are absolutely set on an Audi Allroad wagon in metallic brown, you might not find one.


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