Carvana auto loan review: Used-car loans, with restrictions

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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 online car-buying experience, a Carvana auto loan might be a good fit for you. But Carvana only finances cars it sells, so you’ll have to select a vehicle from the inventory it has on hand.

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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: $10,000
Will consider applicants with all types of credit Co-signers not allowed

What you need to know about Carvana auto loans

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 cars. 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 Carvana doesn’t require borrowers to have minimum credit scores, you might qualify for a Carvana loan even if you have low credit scores.

Your guide to credit score ranges

A closer look at Carvana auto loans

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. That can help you save on interest charges.
  • Carvana doesn’t allow co-signers. If you want to add a co-signer to your loan, you’ll need to work with a different lender.
  • To finance a vehicle through Carvana you must be at least 18 years old, earn a minimum of $10,000 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 price of the car you choose.
  • Carvana offers repayment terms between 36 and 72 months, giving you the flexibility to find a loan term that’s right for your budget.

Is a Carvana auto loan the right fit for you?

A Carvana 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 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.

Should you consider an online car loan?

How to apply for a loan from Carvana 

All loan applications must be submitted through the Carvana website. The first step in the process is to get prequalified.

1.  Select “Get Prequalified” from the financing menu on the home page.

2. Provide the requested information, including your name, annual income, full mailing address and date of birth. Click “Next.”

3. Create an account by providing your email address and phone number and creating a password.

4. Carefully read the terms and conditions. If you agree, click “Get My Terms.” Agreeing to the terms will generate a soft credit inquiry, which won’t impact your credit scores.

Take note: Getting prequalified doesn’t guarantee that you’ll be approved for an auto loan or what terms you’ll receive. After you find the Carvana car you want to buy, you’ll still need to submit an official loan application, 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.

Not sure a Carvana auto loan is right for you? Consider these alternatives.

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 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 to finance a new car or a used vehicle from a private seller.