Covid has affected a lot of people and things in unusual ways, but one of the most surprising side-effects of the pandemic, aside from a worldwide toilet paper shortage, is how it has affected the car market. Surprisingly, 30-day plates became a common sight during the worst of the pandemic, and with many car manufacturers turning their attention to making other things, or experiencing a glitch in their supply chain, cars were not being made as fast as they were being sold.
This caused the used car market to boom, as people turned their attention to used vehicles, and sites like Carvana saw an increase in sales. However, while using the site, many find themselves asking, is Carvana cheaper?
Carvana does seem to be cheaper than many of its smaller online competitors. And while Carvana is more transparent and convenient to deal with, often you’ll find the dealership offers better prices.
It is hard to nail down an exact winner in the “who’s cheaper” category because used cars vary in condition and value. When buying a used car, you never know where a good deal might pop up, which is why shoppers should compare vehicles from several places.
Continue reading to learn more about Carvana and why it might not be the cheaper choice all the time.
What is Carvana?
Based in Arizona, Carvana was founded in 2012 as a way for people to “experience” car buying differently. Since then, it has become one of the youngest companies to hit the fortune 500 lists. Carvana was founded by a group of young men (with a lot of money behind them) who figured, you can do everything else online, why not buy cars? While they were not the first to have this idea, they were able to do it in a way that offered a convenience that nobody else had.
There are many reasons that Carvana has grown so quickly, like the car vending machine, but the simple truth is that they arrived on the scene at just the right moment. Had Carvana launched any earlier, people would have balked at the idea of buying a car they had never seen fully online, and since the company launched before the pandemic, they were in the perfect position to receive the push of traffic that Covid sent their way.
The Pros and Cons of Carvana
There was a time, not too long ago, when people were more than hesitant to buy anything online, because buying online meant giving out your credit card number. That is no longer the case. Not only are people more willing to shop online today, but a significant percentage of the world prefers it. Still, there are both pros and cons to using sites like Carvana.
Some of the benefits that come with using Carvana include:
- You avoid the dealership: Nobody wants to sit in a dealership drinking lukewarm coffee and watching TLC all day. With Carvana, everything is done from the comfort of your home. The car may even be shipped right to your house.
- They have a vast selection of cars: Most people do the research and have a general idea about what they are looking for before starting the purchasing process, but even they may find themselves visiting 2-3 different dealers before they find the right car. However, with Carvana, everything is listed right in one place, which makes finding the right car easy.
- They have a return policy: According to Carvana, if you are not happy with your vehicle, you have seven days to return it with “no questions asked.” Still, I imagine that must be a process, especially if there is financing involved.
- They have multiple warranty options: Carvana allows buyers to choose from several warranty options. From Carvana Essentials, which covers basic powertrain coverage, to Carvana Premier, which covers the powertrain, mechanical, electrical, minor body repair, and free oil change and tire rotation for a year.
- They can do everything a dealer does: From buying and selling to trade-ins and financing, Carvana can do everything a dealership does without the annoying salespeople.
Life is a balance, and good always comes with bad. Some of the cons of using Carvana include:
- Technology: In reality, you will need more than a computer and the knowledge of how to click a couple of buttons to buy a car online. The company may need proof of income and identification, which means that you may need to scan or fax documents to them.
- Prices: The prices are often more than you might see at a local dealership, and the prices are non-negotiable.
- You never see the car: One of the best parts of buying a car is being able to test drive it. This is your opportunity to find out if you actually “like” the way the car feels. Even though Carvana goes out of its way to include a lot of details about each car, nothing compares to actually driving the car.
- The car may not be in the condition you thought: Several buyers have reported issues such as damage that was not pictured online (dents, scratches, rust issues, etc.) and features being listed that were not actually included in the vehicle.
- Limited “local markets”: Even though Carvana has almost 300 local markets, there are quite a few people who do not live in a “local market” area. If you do not live in a local market, you may have to have the vehicle delivered. While Carvana claims this is a quick and straightforward process, several buyers have disagreed, with many describing delays and other issues.
Is Carvana Cheaper?
Cheaper than what? There are many ways to buy a used vehicle and we will compare Carvana to many of these ways below.
Is Carvana cheaper than a dealership?
In most cases, Carvana is slightly more expensive than shopping at a local dealership. Additionally, Carvana’s prices are non-negotiable so even when they undercut the dealership’s sticker price by a few hundred dollars, you may be able to talk the dealership down several thousand dollars.
But, what about all the extra fees that dealerships add to the price? This is where it gets a little tricky. Many of the fees that dealers add to the price cover things that you might otherwise need to pay. This content is owned by moc.sotuaytsur. For example, most dealerships will add the sale’s tax into the financed price, allowing you to pay it over time rather than all at once when you register the car. So, even though it technically added to the price you paid for the car, you would have spent it either way.
Additionally, if you live outside of a “local market” you may rack up delivery fees or travel expenses when you shop with Carvana. However, Carvana may reimburse you for part of these fees.
Finally, as we mentioned earlier, Carvana offers horrible trade-in prices. Cars that could easily value at around $9,000 at a dealership only fetch about $3,000 at Carvana. Since people often rely on trade-ins to lower the price of a new vehicle, we have to say the dealership wins this round of “who’s cheaper.”
Is Carvana Cheaper Than Other Online Dealers?
So, you may be able to negotiate a better price at a dealership, but what about other sites like Carmax and Vroom?
As of now, Carmax is the number one online used car site on the market. Like Carvana, they do not charge to deliver a car, but unlike Carvana, they will deliver the vehicle anywhere while Carvana will only deliver within a local market. Carmax also tends to offer a bit more for trade-ins. However, Carvana is more convenient than Carmax and some customers might not mind paying a couple hundred extra if it buys convenience.
While Carvana has not yet beaten its older competitor Carmax, it has done well to come out ahead of others. In many cases, Carvana is cheaper than other used car dealers such as Vroom, Oodle, and CarZing.
Shopping for a used car is much different from shopping for a new car because new cars are all worth the same price. You can easily compare the price of a new car. However, because used cars vary in condition and mileage, it is extremely hard to compare prices between used car dealers.
That being said, while Carvana’s prices might be a few hundred dollars less than dealership prices, their prices are not negotiable. Buyers might be able to negotiate a much better price and get more for their trade-in at a dealership.
You may find the following posts helpful: