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Thanks to Carvana, you don’t have to buy a car in person anymore. But should you?
You can do almost anything online these days. Work remotely. Sell crafts. Take classes.
And even buy a used car.
Buying a car from a dealership can be a hassle. Of course, there’s the inconvenience of driving from lot to lot to find the right car. But there’s also the stressful process of haggling with the sales staff. With Carvana, you can do everything from your couch. (So long as you have WiFi.)
But that comes with its own set of hurdles. To help determine if you should buy a car from Carvana, we’ve outlined everything you need to know.
What Is Carvana?
Carvana is a digital used car dealership. It’s the “digital” aspect that separates Carvana from traditional car lots. (And even similar services like CarMax.) As its moniker implies, Carvana strives for a blissful car buying and trade-in experience.
Carvana’s platform nixes the middlemen and makes buying a car more convenient. Customers can browse, preview, and purchase a used car all from the Carvana website. No debates with sales staff. No waiting on a manager’s approval. Carvana will even deliver the car to your driveway upon purchase.
Like standard dealers, Carvana still has physical locations. But not in the way you’d think.
As of today, Carvana possesses 24 “Car Vending Machines.” These towers are spread across the country in major auto markets. However, they’re only for customers who elect to pick up their vehicles in person. Upon arrival, soon-to-be car owners receive a giant coin that activates the machine, which then retrieves and delivers the vehicle.
How Does Carvana Make Money?
Those vending machines don’t fill themselves. Carvana’s inventory comes from retail trade-ins and auction purchases, which it then sells to other buyers at a profit. This is Carvana’s primary source of revenue.
If you measure success by vehicle sales, Carvana has come a long way over the last decade. In 2014, Carvana sold 2,105 vehicles to retail customers and another 137 wholesale at auction. In 2020, Carvana reported 244,111 used car sales and 55,204 wholesale transactions.
How to Buy a Used Car on Carvana
Carvana’s primary advantage over standard dealerships is convenience. You can do everything through Carvana’s website: carvana.com. From Carvana’s homepage, you can navigate to the site’s vehicle inventory and browse based on your preferences. Once you narrow your search, you can select individual cars for further review.
Each vehicle’s page contains a 360-degree view of the body. The display includes alerts about external and internal issues (e.g., dents, scratches). Below the 3D visual, you’ll find vehicle specs, warranty information, price details, and Carvana’s 150-point inspection.
At this point, car shoppers can “call dibs” on a vehicle of interest. This reserves it for 30 minutes and initiates the purchase process. Here’s a high-level overview:
- You’ll start by inputting personal information (e.g., name, address).
- Carvana will then ask if you’d like to proceed with trading in your old car. If you do, you’ll share information about your vehicle. That includes your vehicle’s license plate number or VIN, mileage, condition, features, and accident history. Once completed, Carvana provides an offer price.
- Next, you’ll choose between Carvana’s financing program and separate financing (e.g., all cash or a loan through another lender). If you choose the former, Carvana will ask you for your annual income and Social Security Number to verify your personal information.
- You’ll then decide between a touchless delivery and an in-person pickup. If you live in an out-of-market area, your delivery could take 5-15 business days. In that case, you’d likely owe a delivery fee. However, if you live near a Carvana location, your delivery could be as soon as the next day. (And free.)
- Carvana will then prompt you about their warranty program, which has three tiers: essential, plus, and premier. Note that this protection is not mandatory.
- After you upload your driver’s license, you’ll reach the payment screen before reviewing your order.
Once you receive your vehicle, Carvana offers a seven-day money back guarantee. In other words, you’ll have a week to determine if it’s a good fit. If you find faults or simply decide that it’s not your style, you can either return the car to Carvana or trade it back in for another model. You can swap it out up to three times.
With the process in mind, let’s walk through the pros and cons of using Carvana to buy a car.
The Pros of Using Carvana to Buy a Used Car
The general process of buying a car through Carvana is akin to going through a normal dealer. You browse models to find the right fit based on your preferences. Then you fill out “paperwork,” such as financing terms and trade-in info.
However, there’s a major difference: The entire process is online. As a result, the Carvana experience has several unique advantages.
Easy car shopping with a vast inventory
Carvana’s bread and butter is the convenience of its shopping experience. Instead of lot hopping, car buyers can browse Carvana’s clean and intuitive website. It’s easy to filter by preferences and compare various vehicles.
Once you select a car, the purchase process is fairly straightforward. Plus, there’s the added benefit of having your new vehicle delivered to your door within a relatively reasonable amount of time. This doubles as a time-saver and a contactless method, which is a plus during the pandemic.
Lastly, Carvana’s inventory has swelled over the last five years. In 2016, it offered about 7,300 different models. As of June, Carvana boasts a website inventory of more than 45,000 vehicles. This outmatches any individual dealership — or even a street full of car lots.
No middlemen or hidden fees
For many car buyers, going from dealer to dealer (and sales rep to sales rep) is less than desirable. Haggling can be an awkward process — a pain point that Carvana targets with its ads. Plus, it’s not uncommon to uncover a variety of dealer fees, which can add up quickly.
When you shop with Carvana, you browse solo. No salesperson hovering in your shadow. In a way, this alleviates some of the typical frictions of car buying. But not all of them, which we’ll explore more below.
On top of that, Carvana’s all-in price does not bake in any hidden fees. You’re responsible for the listed price, taxes, title transfer, vehicle registration, and any extras. Nothing more.
Each Carvana vehicle must pass a 150-point inspection to be deemed available for sale. This includes a road test and car history assessment via CARFAX.
The inspection partially offsets the uncertainty of buying a vehicle online. However, consider taking your vehicle to an independent mechanic during your seven-day trial period. This helps ensure everything checks out.
Carvana claims that its vehicles “have clean titles, no reported accidents, and no reported fire, frame, or flood damage.” To back that claim, Carvana shoppers receive a limited warranty with their vehicle purchase. That’s the case even if you forgo Carvana’s extended coverage. The warranty is valid for 100 days or 4,189 miles, whichever happens first.
The Cons of Using Carvana to Buy a Used Car
As with any product or service, the customer experience is subjective. One person could be overjoyed with their purchase, while another could be frustrated and totally put off.
Despite its name, Carvana still has drawbacks. Let’s explore them.
No negotiating power
Debating the fair price of a vehicle might sound like a headache. But there is a benefit to buying a car in person: You have negotiating power.
Carvana has a no-haggle policy. So, there is no negotiation table — the price you see is what you get. In that sense, shopping with Carvana can actually wind up being more expensive than the conventional approach.
Limited test drives
One of the obvious downsides to buying a car online is that you can’t see the car in person. To test drive a Carvana vehicle, you have to proceed with the purchase process.
For instance, let’s assume you find a car and choose a touchless delivery. So long as you have a valid driver’s license and insurance, you can test drive the new vehicle before completing any paperwork. While that’s better than nothing, it’s still a commitment considering you have to set up the delivery and tee up documentation first.
Test drives are an essential step when buying any car, especially used vehicles. Of course, they help you determine if the car is a good fit. But that’s not the only bonus. Test driving also sheds light on potential mechanical issues and aesthetic damage. For instance, it’s much easier to assess the size of a dent in person than online.
Contrary to popular belief, not all sales reps try to nickel and dime you. It can actually be helpful to have an assigned point of contact assist you through the car buying process.
RateGenius Editorial Director, Cristy Lynch, recently purchased a vehicle through Carvana and had difficulties in this area. When explaining her Carvana experience, she expressed, “My personal frustration with Carvana was that I wasn’t assigned a go-to person. I had a lot of issues come up throughout the process. So, I found myself having to explain to them over and over again what the issue was.”
No in-person browsing
Dealership hopping can be time-consuming. That said, it does allow for a physical review of a potential car. Unlike your local dealerships, Carvana doesn’t allow you to use the eye test to evaluate its inventory. It’s an obvious tradeoff for a mainly digital company, but a significant one. That’s especially true for models that have dents and dings.
Carvana customers have a seven-day trial period before they have to decide whether to keep their new car or return it. In that sense, some customers have reported difficulty returning their vehicle to Carvana.
One reviewer mentions a frustrating multi-day ordeal. They had to work with several Carvana reps just to receive their original cashier’s check. That’s an understandably stressful process, considering vehicle purchases are not cheap.
Should I Buy a Car From Carvana?
We can outline the nuances of Carvana all day — but you’re likely here to determine if Carvana is right for you. In addition to the above pros and cons, here are two approaches to try before you buy.
Shop around for the best car loan
Per Carvana’s website, roughly 80% of customers choose Carvana’s financing program. However, just because that’s the popular option doesn’t mean it’s the right one for you.
Although Carvana is an unconventional dealership, it’s still a dealership. So, it’s worth being mindful of dealership financing versus more traditional financing options. If you plan to finance your car purchase, consider comparing Carvana’s in-house car loan offer with other lenders — such as banks and credit unions.
That way you can increase your odds of getting the best interest rate and lowest monthly payment. For instance, Cristy took this approach with her Carvana purchase. Carvana offered her a car loan with a 4.95% rate, while her credit union came in much lower at 1.95%.
Shop around for the best car
There’s nothing wrong with taking a hybrid approach to finding your next car. You can leverage Carvana’s site to compare models and car prices. This allows you to test drive various cars while remaining price-conscious.
There’s also nothing stopping you from using Carvana and CarMax. You could even try both sites to gauge the best value for a trade-in.
How Much Personal Contact Do You Want?
At the end of the day, using Carvana boils down to one question: How much in-person contact do you want or need?
Carvana does not have the same physical presence as CarMax or a normal dealer. Although its Car Vending Machines are flashy and unique, they aren’t as beneficial as a car lot.
Do you want to test your negotiation skills? Would you prefer to have a sales rep guide you through the process? In either case, Carvana might not be the best solution.
Do you prefer a contactless experience? Are you okay with seeing a car after starting the purchase process? Then Carvana could be a good option.
Featured photo credit: Carvana