Tips, Tricks & Trends

How Does Carvana Actually Work?

During a pandemic, people have found that many services can be delivered online. This includes car buying. Carvana’s business model is just right for anyone who prefers buying or selling a car primarily from the comfort of home. Here’s a look at how it works.

How Carvana works

Carvana does all of its business online rather than at a physical dealership, making it different from competitors like CarMax. The company can still provide nearly all the same services though. It handles buying and selling, trade-ins, plus financing of vehicle purchases. Carvana locates its cars from private sellers, trade-ins, auctions, and dealer partners, and they range between $7,000 and $100,000.

Its website makes it easy to find a car. To locate a car, visit the Carvana website and click on “search cars.” Cars can be filtered by price and plenty of models and features. Clicking on an individual search result provides details about that vehicle. The details include a 360-degree view of the vehicle along with a photo gallery. All the cars have a free CarFax report and are Carvana Certified.

According to Car and Driver, the Carvana Certification means the vehicle has passed a 150-point inspection plus no accidents have been reported. The vehicle has a clean title and no damage from fire, frame, or flooding. Despite this certification, Car and Driver recommends having an independent mechanic inspect the car during the seven-day trial period.

A pop-up on the details page shows if someone has already started the purchase process and how long the vehicle will be held for that person. Cars marked as “purchase pending” have already been purchased. They sometimes become available again if they are returned. A buyer interested in one of these cars can sign up for email alerts to find out if the vehicle is returned and available again.

To know how soon a vehicle can be delivered to your area, click on “delivery & pickup options.” Cars found can be saved as “favorites,” and searches can be saved to be rerun again in the future.

Buying a car from Carvana

To start buying a car, click on “get started.” Buyers will need to set up a Carvana account first. The price can’t be negotiated. Carvana offers financing to qualified buyers or cash and other financing can be used. Carvana also sells gap insurance and an extended warranty. It can apply a trade-in value to the price too.

Carvana currently has 261 local markets and is located in 31 states and Washington, DC. Buyers who live in a local market can have their Carvana car delivered at a scheduled time. There isn’t usually a delivery charge, although there may be if the car has to be brought from a far distance. Buyers can run a search for vehicles that don’t have shipping charges, and cars returned (within seven days) have their shipping charges refunded. 

Buyers who aren’t in local markets can either pay a fee to have a third-party company deliver the new car within a several day delivery period or the buyer can pick up the car in a local market. If the buyer decides to keep the car, then Carvana will reimburse $200 of a plane ticket. A rep from Carvana will then drive the buyer to pick up the car. There are 25 locations that have a car vending machine the buyer’s new car will come out of. Carvana offers touchless delivery and touchless private appointments at the vending machines. Buyers get a 20-minute test drive after producing a driver’s license and proof of insurance. The buyer can decide not to take the car or can complete the paperwork to finalize the sale.

Carvana offers a seven-day money-back guarantee that starts when the car is delivered. The new buyer has 400 miles to drive for free. If the car is returned, there’s a $1 per mile cost for driving more than 400 miles. The car can only be returned if it hasn’t been damaged or altered. There aren’t any additional charges for returns. In a local market the whole cost is returned. Buyers outside a local market have the price refunded but not the delivery charge. Carvana sends the registration and license plates to the buyer’s home in most states but not all.

Selling a car to Carvana

RELATED: How Many People Still Want to Buy a Car During the Pandemic?

Carvana will also buy cars and accept trade-ins within local markets. The car owner will need to provide Carvana with details on the car’s current miles, condition, and history. Carvana then makes an offer that remains available for the next seven days. Sellers who live outside the local market would need to take the car to a local market.

When completing the sale, the Carvana rep confirms the car is as expected. If the sale is a trade-in as part of a new purchase, then Carvana will hang onto the old car until the end of the new car’s seven-day trial period. Buyers who change their mind can still get their old car back.

Car and Driver mentioned that some people have reported problems with location, delivery, timing, or registration. While it isn’t a perfect system, Carvana’s process of buying or selling a car primarily from home is a great option for many people.