Carvana financing review: Used-car loans, with restrictions

Man using a laptop on a kitchen counterImage: Man using a laptop on a kitchen counter

In a Nutshell

If you’re in the market for a used car, want to check your estimated rate before submitting a formal loan application, and are comfortable with an entirely online car-shopping and car-buying experience, Carvana financing might be a good fit for you. But Carvana finances only cars it sells, so you’ll have to select a vehicle from the inventory it has on hand.

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.
Advertiser Disclosure

We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Pros Cons

Check if you’re prequalified without affecting your credit scores

Available only for in-stock Carvana cars

Prequalification good for 45 days

Minimum annual income of $4,000 required

Considers applicants with all types of credit


What you need to know about Carvana financing

If you’re considering an auto loan from Carvana, which offers its customers the ability to pick up their vehicle from one of its car-vending machines, here are a few key features to consider before deciding.

Only one option

Carvana offers loans only from its own inventory of used vehicles. If you want an auto loan that offers more flexibility, consider working with a bank or credit union, where you’ll likely have more options, including new-car loans, private-party loans and used-car loans that aren’t restricted to a single dealership.

Prequalification available

Carvana offers a prequalification process that won’t affect your credit scores and can be completed online in as little as two minutes. After you fill out an application, you’ll see the estimated financing terms, including monthly payment, minimum down payment and annual percentage rate, that you might qualify for within minutes.

With many lenders, prequalification is often good for only 30 days. But Carvana’s prequalification offers are good for 45 days, giving you ample time to find a car that meets your needs.

All credit types welcome

Carvana considers working with consumers regardless of their credit history — although there are age and income minimums. Because it doesn’t require people to have minimum credit scores for a car loan, you might qualify for a Carvana loan even if you have low credit scores.

A closer look at Carvana financing

If you’re shopping around, here are a few more things to be aware of when comparing a loan from Carvana to those from other lenders.

  • There’s no prepayment penalty for paying more than the minimum due each month or paying off your loan balance early.
  • To finance a vehicle through Carvana you must be at least 18 years old, earn a minimum of $4,000 per year and have no active bankruptcies.
  • It’s easy to see personalized financing estimates. Once you’re prequalified, your financing terms will appear under the picture of every vehicle you view on Carvana’s website. But keep in mind that your estimated terms will differ based on the car you choose.
  • You’ll need to make a down payment, though you can add a trade-in to your purchase to help reduce the amount you’ll need to put down.
  • Carvana offers repayment terms between 36 and 72 months, giving you the flexibility to find a loan term that’s right for your budget.
  • Carvana also offers the ability to buy an extended warranty and gap insurance.

Is Carvana financing the right fit for you?

A Carvana auto loan can be a good option if you’re interested in purchasing a used car, and if you’re comfortable with a buying process that takes place entirely online. Since there are no minimum credit score requirements or prepayment penalties, it could also be a good fit if your credit history has a few dings or if you plan to pay off your car loan early.

Consider getting prequalified so you can compare Carvana’s offer with other lenders’ offers to find the best deal for your financial situation.

How to apply for a loan from Carvana

The first step in the process is to apply for prequalification through the Carvana website. Remember that to finance a vehicle through Carvana, you must be at least 18 years old, earn a minimum of $4,000 per year and have no active bankruptcies.

After you find the Carvana car you want to buy and schedule your delivery or pickup, Carvana will check your credit, which generates a hard credit inquiry and could impact your credit scores. Only then will you know whether you’re approved for a loan and the terms you’re approved for, too.

Before you apply for Carvana financing, it’s a good idea to check your credit and compare other loan offers. Understanding your credit can help set expectations around what loan rates may be available to you. In general, lower credit scores will result in higher interest rates. And shopping around with other auto lenders can help you find the best loan rate and terms for your needs. Read our article on how to get a car loan to learn more about the process.

Auto loan alternatives to consider

If you want to finance the purchase of a car, but you’re unsure whether a Carvana loan is right for you, here are some other lenders to consider.

  • Capital One Auto Finance auto loan: This lender is an option for people who want the flexibility to choose from a wide selection of dealerships.
  • U.S. Bank auto loan: A U.S. Bank loan might be ideal for people who want the ability to choose from a range of loan options.

About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Tow… Read more.