Today there are more options than ever before for both buying and selling used cars. If you are in the market for a used vehicle, you might be overwhelmed with where to start shopping. CarMax and Carvana are a couple of the most prominent players in the nationwide used car market. While there are some similarities between the two, there are also a few big differences. Keep reading as we tell you how each of these businesses works, explore the differences between the two, and help you decide which one you should choose. Let’s dive in and get started!
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How Does Carvana Work?
Carvana is a reasonably new player in the national used car market, and they are attempting to disrupt that market by using some new and different techniques. First, they are not like a traditional dealership because they do not have car lots open to the public. Carvana is an online dealership, so you can select your vehicle and complete your purchase from your computer or phone. Carvana has over 20,000 vehicles to choose from, so you will likely find a car that meets your needs.
Carvana uses a no-haggle sales approach. The price you see on their website is the price you pay for the car. Once you purchase a vehicle, Carvana will deliver it to your door. You also have the option to pick up the car from one of their vehicle vending machines, assuming there is one located in your area. Although you do not get to test drive the car before your purchase, you can return the vehicle for a full refund within seven days of the sale. They also offer in-house financing options if you need an auto loan to fund your purchase.
In addition to selling cars, Carvana also buys cars. If you have a used car that you need to sell, Carvana will make you a cash offer to buy it. Simply go to their website and give them some basic details about the vehicle. They will make you an offer within a couple of minutes. If you choose to accept the offer, a Carvana representative will come to you and inspect the vehicle. As long as the vehicle matches what you described, they will give you a check on the spot. They will pick up your car, and you will have your money! They make selling a used car extremely easy. A quick online search reveals somewhat mixed Carvana reviews. Some people were extremely happy with the process, while others did not feel that the offer on their vehicle was competitive.
How Does CarMax Work?
CarMax works much like a traditional dealership, with a few notable exceptions. First, they have nationwide locations and thousands of vehicles to choose from. They allow you to browse their website and find vehicles across their entire inventory. You can also complete the entire car buying process through their website if you choose to do so. However, you can also head down to your local CarMax and test drive a vehicle of your choice as well. Even if the vehicle you like is at another location, they will transfer it to your local CarMax location for a small delivery fee.
CarMax also utilizes a no-hassle approach. The price you see online or on the windshield of the car is the price you pay. Unlike many traditional car dealerships, they do not negotiate on pricing. Whether you choose the online car buying process or the in-person method, CarMax will provide you with a free Carfax report so that you can see the entire vehicle history report before purchase. CarMax will accept trade-ins, so you can get rid of your old car at the same time as you purchase your new vehicle. CarMax offers a 30-day return policy, so you can return the car during this period for a full refund if you are not happy with it. It is a full money-back guarantee, and they call this their “Love Your Car Guarantee.”
In addition to selling cars, CarMax will also purchase your vehicle even if you do not buy a car from them. CarMax was one of the first dealerships in the country to begin making cash offers on used cars. If you want to sell a used car, simply head down to your local CarMax for an appraisal. You can also have CarMax give you an online appraisal, but you will still need to visit their location in person to complete the transaction. Their offers are typically lower than private sale values, but they make the process much easier. Private sellers often need to do quite a bit of work to get their car sold, but CarMax makes it easy to sell a used car.
Carvana VS. CarMax: Key Differences
While both of these businesses sell cars and buy cars, there are a few big differences between the two. Here are some of the major differences that you should know.
— Physical Car Lots
CarMax utilizes physical car lots, while Carvana does not. This also introduces some differences in their process. CarMax will allow you to visit their lot and test drive a vehicle before you purchase it. However, test drives are not an option with Carvana. Since Carvana does not have physical car lots, you must complete the purchase online without seeing the car in person beforehand. Many people have an inspection process that they like to complete before buying a car, so they enjoy going to the car lot and being able to see the car before buying. For others, this is not as much of an issue since Carvana does offer a 7-day return policy.
— Overhead Expenses
Carvana typically operates with fewer overhead expenses than CarMax, mainly because they do not have physical car lots. Operating these physical locations costs a lot of money — both in terms of real estate and staff. Since Carvana does not have physical car lots, they can save money on real estate and staffing expenses. These lower expenses sometimes translate into lower car prices. Although Carvana does operate several car vending machines across the country, these expenses are usually lower than running a large car lot location. For this reason, Carvana cars are sometimes a little less expensive than CarMax vehicles.
— Selling Process
If you want to sell a used car, the process is a little different between these two car dealers. First, Carvana will make you an offer entirely online. If you accept the offer, someone will come to your location and inspect the vehicle. If the vehicle passes, they will give you a check and take the car. With CarMax, things are a bit different. CarMax has begun making online offers, especially during the recent COVID pandemic. However, if you choose to sell your car to them, you will still need to visit a CarMax location. You should arrive with your online offer, and someone will inspect your vehicle. If the vehicle passes inspection, they will issue you a check for your car. You will then need to find a ride home as you must leave your car at their location!
— Return Policy
While Carvana offers a 7-day return policy, CarMax now has a 30-day return policy. If you decide to return a vehicle that you purchased from CarMax, you will need to head to your local CarMax location to start the process. However, if you want to return a Carvana car, you simply need to call customer service. They will schedule a driver to come and pick up the car. Both dealers offer a “no questions asked” return policy, although you might owe them a little money if you have damaged or substantially changed the value of the vehicle in any way.
— Car Buying Experience
Overall, the car buying experience is fairly different between CarMax and Carvana. While you can use a no-pressure online car shopping process with both, the buying process is a little different. First, Carvana’s buying process is completely online. You cannot test drive the vehicle before you buy it, and Carvana will deliver the car to your door after the purchase. There is a small delivery fee in some cases, depending on where the vehicle is located. CarMax, on the other hand, has physical locations where you can go and test drive the cars. If you choose to do so, you can purchase your vehicle online from CarMax. However, you will still need to visit a CarMax location to pick up the vehicle. CarMax and Carvana both offer in-house financing, although the interest rates with both tend to be higher than most people can get on their own through other lenders.
— Warranty Policy
Both CarMax and Carvana offer limited warranties with your vehicle purchase. The warranties they offer are similar, although there are some slight variations in the terms. CarMax typically offers a 90-day, 4,000-mile warranty on their vehicles. All vehicles that they sell have undergone a multi-point inspection, so they should all be in good condition at the time of the sale. Carvana, on the other hand, offers a 100-day, 4,189-mile limited warranty. This is just slightly longer than the warranty offered by CarMax. Similarly, all Carvana cars have undergone an inspection prior to the sale, so they should be in good condition as well. If you wish to purchase an extended warranty, you can do so with either dealer. The price and terms of the extended warranty vary depending on the vehicle you are purchasing, the number of miles on the vehicle, the deductible of the policy, and other factors.
Similarities Between CarMax And Carvana
Although we have highlighted several key differences between CarMax and Carvana, they also have many things in common. First is the fact that they both offer a huge selection of used vehicles. Whether you are looking for a specific make, like a BMW, Toyota, or Tesla, or are just browsing by body type, you will have thousands of vehicles to choose from. Both dealers also have cars in a variety of price ranges. So, if you are searching for vehicles around $20,000 or closer to $50,000 for your next car, you should have a wide range of cars to choose from at both dealers.
Both dealers also utilize a no-haggle approach to buying a vehicle. The price marked on the car is the price that you will pay for the car. No haggling back and forth or negotiating is necessary. You will find their best price on the car, and you know how much it will cost you if you decide to purchase the car. Similarly, both dealers offer financing options for purchasing your vehicle. You can complete a finance application right on their website, get approved for a loan, and complete the purchase process without ever visiting a physical location.
In addition to selling cars, both of these dealers also purchase used cars. If you have a used vehicle you want to sell, both of these dealers will make you an instant offer to buy your car. You can get an online offer from both dealers, although you will need to visit a CarMax location to complete the sales process. You can expect the offer you receive to be similar at both dealers, and their offers are typically a little less than you might expect from a private party sale. Both dealers also take care of all the required paperwork for you, like transferring the car title and completing the bill of sale.
Another car dealer that you might hear discussed along with these two is Vroom. Vroom is extremely similar to Carvana in the fact that it is an online car dealer that sells and buys used cars. Vroom offers similar pricing and terms on their vehicles, and they offer a large, nationwide selection of vehicles. In fact, when comparing Vroom vs. Carvana, it can be challenging to distinguish between the two in many categories.
Is Carvana Or CarMax Better?
These two car companies are very similar, and the one you choose might come down to personal preference. If you prefer to test drive your vehicle before you buy it, then you will want to head to CarMax. Test drives are not an option with Carvana, as the entire purchase process must be completed online. However, if you are OK with buying a vehicle without a test drive, then Carvana might be the choice for you. They can sometimes offer slightly lower prices due to their lower overhead expenses.
When selling your car, the offer you receive from each will generally be about the same. However, if you want the easiest process, then Carvana is the way to go. You can get an offer for your vehicle completely online, and Carvana will come to you to get the car. If you choose CarMax, then you will need to head to a CarMax location to complete the inspection process. Carvana makes things a little easier because you never need to leave home to complete the deal. Everything from start to finish can be done without leaving your house.
The Bottom Line
Carvana and CarMax both offer great options for both buying and selling used cars. Both dealers make the process quick and easy, and they both offer a hassle-free buying experience. When you get ready to sell a car, they will buy your vehicle even if you decide not to purchase anything from them. The biggest difference between the two is the fact that CarMax has physical car lot locations while Carvana is completely online. Carvana provides home delivery of your vehicle, while you must visit a CarMax location to pick up your car even if you complete the purchase online.
Frequently Asked Questions
Does Carvana match CarMax?
No, Carvana will not match a CarMax price. The price that you see on the Carvana website for a specific vehicle is the price that you will pay if you decide to purchase that car. They offer competitive pricing and home delivery, but they will not match prices with CarMax or any other dealer. Carvana typically has slightly lower pricing than CarMax on many vehicles because they have lower overhead expenses. If you find a vehicle for a lower price at CarMax, then you should likely buy the car from CarMax instead. Similarly, they will not price match trade-in offers either. If another dealer offers you more for your trade, Carvana will not match that offer.
Can I negotiate a price with Carvana?
No, Carvana does not negotiate the prices of their vehicles. They price their vehicles as competitively as possible from the start, and they will not negotiate on the listed price. Carvana also does not charge any dealer fees or add extra charges to their vehicles like many local dealers. They also provide free home delivery within their local area, although there may be a small delivery fee for deliveries outside the local area where the vehicle is physically located.
Which one is cheaper, Carvana or CarMax?
Carvana and CarMax generally offer very similar pricing. However, Carvana is sometimes slightly cheaper than CarMax. The reason for this is because of Carvana’s lower overhead expenses. Since they do not maintain physical car lot locations, their operating expenses are generally a little lower. This allows them to sell their vehicles at slightly lower prices compared to CarMax. Keep in mind that this is sometimes the case, but not always. You might find that CarMax has a lower price on a specific vehicle, so you should always do comparison shopping prior to purchasing a vehicle from either dealer.
What is Carvana’s warranty?
Carvana provides a 7-day money-back guarantee on all cars they sell. In addition, they offer a 100-day limited warranty on their vehicles. This warranty applies 100 days or 4,189 miles from the time of purchase — whichever comes first. On top of their basic warranties, they also offer extended warranty options for purchase. You can choose to purchase extended coverage, or you can decline this coverage. The cost associated with the extended coverage will depend on the type of coverage as well as the age and mileage of the vehicle.