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Updated on Wednesday, January 2, 2019
A new kid on the car lot, Carvana features light-up vehicle vending machines instead of acres of autos with balloons. And that’s what attracts customers who want to complete the entire car-buying process online. Carvana offers auto loans as well as autos to qualified customers. In order for you to decide if a Carvana auto loan is right for you, we did the research, so keep reading.
Carvana offers used cars and loans on those cars. You do not have to get a Carvana auto loan in order to buy one of its cars. Carvana accepts cash and works with most third-party lenders, so it’s OK if you want to get a loan from your credit union or bank for a Carvana car. But Carvana will only finance its own cars, not cars from competitors.
You can check out the six best auto loans for buying a used car if you’d like to compare Carvana with other possible lenders.
Carvana financing: At a glance
Here is an overview of what Carvana auto loans are like.
- Loan terms range from 36 to 72 months
- Minimum loan amount is $7,600
- Maximum loan amount is $85,700
- Trade-ins are accepted
Though Carvana declined to share its APR range, a company spokeswoman said Carvana extends credit to customers with a broad range of credit profiles. “You can get a feel for various APR ranges for each individual vehicle by utilizing the Build My Deal tool on each vehicle’s description page,” Amy O’Hara, associate director of communications told MagnifyMoney. You could also use Carvana’s auto loan comparison calculator to get an idea of the APR you may receive.
Carvana loan rate example
We used the Build My Deal tool to compare APRs for a 2016 Toyota RAV4 LE Sport Utility 4D. The Carvana price is $18,700, which is slightly above Kelley Blue Book’s Fair Listing Price for ZIP code 28270 in Charlotte, N.C.
|Credit score||APR||Monthly payment|
|780 - Excellent||5.5%||$313|
|680 - Good||9.70%||$351|
|630 - Average||13.37%||$387|
|588 - Below average||19.02%||$447|
APR and monthly payment are for a 72-month loan with a $300 down payment, taxes and title costs included. Rates vary by location.
A closer look at Carvana auto loans
Every lender has pros and cons; here are the ones we found looking at Carvana auto loans. You can compare them with the strengths and weakness of other lenders.
Highlights of Carvana auto loans
- You may not need excellent credit to qualify since Carvana considers a range of credit profiles.
- No prepayment penalty
- “Soft” credit check for Carvana to preapprove your down payment and monthly car payment.
Lowlights of Carvana auto loans
- Carvana does not accept credit cards; you can’t give your down payment or make your car payment with a credit card
- You can only finance a Carvana car with a Carvana loan.
You may be required to give a down payment for the Carvana auto loan. If the down payment requirement is too high, a trade-in might help, or a vehicle with a lower price or you go back over your application to see if you forgot to include any other verifiable income.
How to apply for a Carvana auto loan
To apply, you’ll need to go to Carvana’s website. Pick out the car you want before you officially apply for a Carvana auto loan. But you could get prequalified for a Carvana loan first, to better know your budget if you’d like.
To prequalify, you’ll have to input your name, ZIP code, date of birth, address and annual income. Then you can shop around for the vehicle you want. On each vehicle description page, you can play around with the Build My Deal tool to see the estimated total cost, including taxes and shipping, APR, down payment, loan term and monthly payment. Once you find the car you’d like, click on the “get started” button and follow through with the application. You can go here to see a full list of the documents you may need to have ready.
The fine print
You must be at least 18 years old, make at least $10,000 a year and have no active bankruptcies in order to qualify for Carvana financing. A loan offer from Carvana is good for 45 days. If you don’t choose a car within that time period and decide you do want to finance with Carvana later on, you’ll need to do another application. One more note: Before selecting any add-ons from Carvana, such as an extended warranty, do your homework to determine what a fair price is.
Who is Carvana financing best for?
Despite offering loans to a broad range of credit profiles, Carvana financing might be best for those with at least fair credit. Carvana’s online calculator doesn’t offer a credit score option below 550.
It’s terribly convenient to do your car shopping and your financing in one sweep — online. And if you can get a better APR with Carvana than with another lender, go with Carvana. The only way to know that you are getting the best deal, however, is apply to a few lenders. It does not hurt your credit to apply to multiple lenders any more than it does to apply to one lender if you do all applications within a 14-day window.