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What is Carvana, and How Does it Work?

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What is Carvana, and How Does it Work?

There’s a way to buy or sell a car that doesn’t involve negotiating with people who earn a living based on their extraordinary ability to sell things that go “vroom.” 

Carvana lets you research automobiles online, have your trade-in appraised, apply for financing and buy used cars without stepping foot on a dealership’s lot. You can even have Carvana deliver your new car to your home or come pick up a car you’re selling. You can also use one of their vehicle vending machines.

Annoying sales tactics aside, what are the advantages of buying a car totally online? Well, turns out there are plenty.

What Is Carvana?

Carvana is an online car dealership, though its multi-story car vending machines and hubs give the company a physical presence in dozens of metro areas around the U.S. 

It sells used cars from trade-ins, private sellers and dealers it has partnered with. All of its vehicles pass a 150-point inspection, have never been in a reported accident, and include a free CARFAX report, so you can buy with full confidence. 

Buying a Car Online with Carvana

There’s a bit more to it than inserting a token into a car vending machine, watching your chosen car as it’s dispensed and then signing a contract to finalize your Carvana purchase. 

That’s the fun part, but Carvana has worked to make the rest of the process painless — from researching vehicles and applying for financing to arranging trade-ins and finalizing transactions.

Vehicle Research

Carvana has two primary ways to research vehicles online. You can explore its search engine to search cars and apply filters like make, model, year, mileage and so on. Or, you can get recommendations from Carvana by answering a few simple questions about what you’re after.

The site’s Car Finder tool starts by asking you to rank what’s important to you: fuel economy, performance, features, space, comfort, safety, hauling or value. After selecting a few more preferences, it’ll show you your matches.

You can inspect the interior and exterior of each car in 3D in a browser window, sort of like Street View on Google Maps. And you can pore over high-resolution images of different shots of a car’s exterior or interior, up close and from a distance.

You really get the showroom experience online. And yes, you can spot any blemishes a car may have — in fact, Carvana will highlight them for full transparency.

Carvana conducts a full 150-point inspection on each vehicle it sells. And each vehicle listing shows the results of the inspection, along with specifications and feature highlights. 

You can buy online with as much confidence as you would in person. 

Financing Options

It takes just two minutes to get prequalified for a vehicle from Carvana, and that’s the route 80% of its customers take, according to the online dealership.

Pre-qualifying will give you a good idea of what your down payment will be and what interest rate you’ll pay. Pre-qualifying won’t impact your credit score, and your financing offer is good for up to 45 days. 

In addition to securing financing through Carvana itself, you can also buy your new car with cold hard cash or with a loan from a third party. 

Approvals are generous through Carvana, though there may be significantly fewer options and higher down payments for people with a rocky credit history.

You have to be at least 18 years old with an annual income of more than $10,000 and no bankruptcies within the last seven years. 

Pickup, Drop-off and Delivery

If you’re not into the whole vending machine thing, Carvana will come to you. 

Tell them when and where to pick up or park your car, and they’ll meet you there.

Any lingering details from the sale or purchase can be settled at a vending machine, a hub or a location of your choice. And yes, they’re still following their touchless COVID-19 protocols. 

Trading or Selling Cars

Give Carvana an honest assessment of your used car, and they’ll make you an offer that’s good for a full week. 

If you like the offer, you can receive it via a check or ACH credit to your bank account. You could also apply your offer toward the purchase of a car in Carvana’s inventory to lower or eliminate your down payment. 

The process takes mere minutes. Just give them your vehicle’s VIN number and complete a brief questionnaire about your car’s condition. 

Of course, Carvana will have to verify the condition of your car before any money changes hands. But if you did a good job describing the mileage, wear and tear, service history and accident history of your car, you can expect your offer to hold true.

Using a Vehicle Vending Machine

It really is a car vending machine, and it’s as straightforward as it sounds. 

After verifying your identity with a driver’s license, you insert a coin into the vending machine and it delivers the vehicle you choose. 

Of course, there’s more to the process of using one of Carvana’s vending machines than that. But the rest of the process of buying, selling or trading a vehicle through the national auto retailer is just about as streamlined as the vending machine process itself.

Carvana Competitors: Carvana vs. Carmax vs. Vroom 

Those strategically placed vending machines are definitely a competitive edge, but Carvana still has plenty of competition from major dealership chains like Carmax and Vroom.

Here’s a look at how Carvana stacks up against its rivals in the digital dealership space, each of which specializes in used car sales with no reported accidents:

Features

Carvana

Vroom

Carmax

Local Delivery Fee

$0

$0 to $1,399

$0

Money-Back Guarantees

7 days or 400 miles

7 Days or 250 miles

30 Days or 1,500 miles

Limited Warranty

100 days or 4,189 miles

90 days or 6,000 miles

90 days or 4,000 miles

Qualifiers for Financing

At least $10,000 annual income; no active bankruptcies; no minimum credit score

At least $21,600 annual income, no active bankruptcies, no minimum credit score

Unpublished. Carmax accommodates “most credit profiles.”

Down-Payment Options

Cash, debit or e-check

Cash, debit, money order or up to $500 on a credit card

Cash, debit, e-check

Extended Warranty Available

Yes

Yes

Yes

Free CARFAX report and Inspection Reports

CARFAX, in addition to 150-point inspection

CARFAX and multi-point inspection

CARFAX and 125-point inspection

Frequently Asked Questions 

Here’s a brief roundup of some of the most frequently asked questions about Carvana from around the web.

Carvana is a digital-first dealership that stocks used cars at hubs and car towers in metros areas around the U.S. The car-buying experience is done almost completely online.

How does Carvana acquire its cars?

The online used-car retailer gets its cars from dealer partners, trade-ins and private sellers. Each car added to its inventory undergoes a 150-point inspection before it goes up for sale.
Buyers can read the full inspection report on the Carvana website to inform their purchase or a used car.

Can you test drive a car from Carvana before completing a car purchase?

Not in the traditional sense. Carvana gives you seven days to test out your car after buying it. During this period, you can return your vehicle hassle-free if you’re unhappy with it.

What are the downsides to Carvana?

If you’re the type of person who prefers spending a day test driving various cars at the car lot, Carvana’s lack of a conventional test-drive arrangement may be a bit of a sticking point.
Carvana contends that its seven-day trial period for vehicle purchases gives buyers a much better idea of what they’re getting than a 20- to 30-minute test drive at a traditional dealership.

Can you finance a car through Carvana?

Yes, Carvana offers in-house financing for vehicle sales. You can also finance through a third-party company or pay cash.
Car shoppers can apply for pre-approved financing in as little as two minutes, with no impact to your credit score. And your offer is good for 45 days, unless your finances change during that period.

How does pickup, dropoff and delivery work?

You can find Carvana’s iconic vending machines and vehicle hubs in dozens of metro areas around the country. You can pick up or drop off a vehicle at your local hub or vending machine, but you can also have a Carvana rep come to you.
Carvana offers touchless delivery and pickup services. Just tell them when and where, and they’ll meet you (within reason).

How will I get my registration and license plates after I buy a car?

In most states, Carvana will complete the registration process for you. A rep will handle the paperwork and submit it to the DMV on your behalf.
Their cars come with temporary license plates. After your registration is complete, Carvana arranges to have your plates shipped to you.

Final Word

Gone are the days when you’d have to make a day of driving and inspecting cars at a local dealership as part of the car-buying process. 

Most people start their car search online these days. The Carvana experience enhances that process with detailed inspection reports, high-quality images of features and blemishes, 3D tours of each vehicle in its inventory and strong guarantees that empower you to buy with confidence.

The competition is fierce among online dealerships, but Carvana does plenty to stand out and add value to the car buying process. 


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