CarMax: 2024 Auto Loan Review

Overview of CarMax Auto Loans

CarMax is one of the largest used car retailers in the United States. They not only sell used vehicles, but also provide financing options to customers through their CarMax Auto Finance program and partnerships with several lenders.

What CarMax Offers

Some key things to know about CarMax auto loans:

• Used vehicle financing only
• Loans ranging from $500 – $100,000
• Terms up to 72 months
• Online applications with quick decisions
• Option to prequalify with soft credit check
• Financing available for a range of credit scores
• Inventory of over 50,000 used vehicles nationwide

CarMax works with several lending partners in addition to their own CarMax Auto Finance lending. This gives customers multiple financing options to choose from.

CarMax Auto Loan Pros

Some of the benefits of getting financing through CarMax include:

• Fast online applications and lending decisions
• Soft credit check available for prequalifications
• Used vehicle loans up to $100K
• Loans specifically for their nationwide inventory
• Works with applicants across the credit spectrum
• Can apply financing towards car delivery

CarMax Auto Loan Cons

Some drawbacks to consider with CarMax auto financing:

• Must purchase CarMax inventory vehicle
• No ability to negotiate interest rates
• Rates and terms not disclosed upfront
• Additional fees like processing and shipping fees
• Car returns only within 30 days or 1,500 miles

So while CarMax offers a convenient financing process, the interest rates may not be the lowest and you have limited negotiation ability.

CarMax Financing Options

CarMax offers used auto loans in partnership with several national lenders in addition to their own CarMax Auto Finance lending program.

CarMax Direct Lending

CarMax Auto Finance is the company’s own lending program. With this option, you can finance any used vehicle from CarMax’s nationwide inventory of over 50,000 cars.

Loan details like amounts, rates, fees, and terms vary by applicant credit and other factors. CarMax does not disclose specific lending criteria, rates, or terms upfront. You must complete an application first to view loan offers.

One benefit of using CarMax’s direct lending is they may approve applicants with poor credit that banks would normally decline.

CarMax Lending Partners

In addition to their own lending, CarMax works with several national partner lenders when financing vehicles. This gives customers multiple finance offers to choose from.

Current lending partners include:

• Ally Financial
• American Credit Acceptance
• Capital One
• Chase
• Exeter Finance
• Santander
• Westlake Financial

As with CarMax direct lending, you need to complete an application first to view actual loan offers from any of their partners. Each lender has their own lending criteria.

Having lending options from several partners allows customers the ability to compare offers. You can choose whichever lender provides the best loan terms and rates for your situation.

CarMax Loan Requirements

Since CarMax works with various lending partners, loan requirements can vary depending on which lender you apply with. However, some typical requirements for financing include:

Minimum Credit Scores

CarMax states they can work with applicants across the credit spectrum, but don’t disclose actual minimum scores. In general:

• Prime borrowers typically need 620+ credit scores
• Subprime applicants may be approved with scores as low as 550

Each lending partner sets their own minimum credit requirements. Those with poor credit have the option to apply for a loan from CarMax’s direct lending program.

READ ALSO: Overview of Carvana Auto Loans

Income and Employment

Lenders want to see you have enough income to manage the auto loan payments. Typical requirements are:

• Gross monthly income of around $1,500+
• Steady employment history

Income requirements are not disclosed upfront and can vary by the lending partner. Those with verifiable income sources can likely qualify for financing.

Driver’s License

You must have a valid driver’s license in order to purchase and finance a vehicle through CarMax.

Down Payment

CarMax does not require specific down payments but larger down payments can help improve loan terms and monthly payments, especially for those with poor credit.

How to Apply for CarMax Auto Financing

Applying for auto loan pre-approval and financing through CarMax is straightforward and can be done entirely online.

Prequalify Online

Drivers can prequalify to view estimated loan offers by filling out the short online form. Prequalifying gives you an idea of potential financing offers before formally applying.

The prequalification is a soft credit check so it won’t impact your credit scores. However, only limited details are provided until completing the full application.

Online Application

The online application for CarMax financing includes:

1. Select Vehicle: Choose a used vehicle from their online inventory that you wish to finance. Or select financing without a vehicle if you haven’t selected one yet.
2. Loan Details: Enter requested details – loan amount, down payment, trade-in value, etc based on the vehicle.
3. Personal Information: Provide personal and employment details including income, ID, and contact info.
4. Credit Check: CarMax performs a credit check to match you with lending partners.

After submitting the application, you can view real loan offers showing APRs, terms, and monthly payments. Offers are generally available within minutes so decisions are fast.

If approved, you can use the financing towards either delivery or in-store pickup of your vehicle.

CarMax Loan Terms and Rates

Since CarMax works with several lending partners, actual auto loan rates, fees, and terms offered to borrowers can vary:

Interest Rates and APRs

Specific interest rates ranges are not advertised upfront by CarMax or their lending partners. However, some average rate ranges borrowers might expect are:

Actual interest rates and APRs offered depend on factors like your credit score, history, income, loan amount, term length, and down payment.

Rates tend to be higher for those with bad credit or low credit scores compared to someone with excellent credit. Due to the number of lending partners, its possible to compare multiple rate offers if rates from one lender seem too high.

Loan Amounts

CarMax auto loans range anywhere from:

• Minimum Loan: $500
• Maximum Loan: $100,000

So CarMax financing can work for both inexpensive and luxury used vehicles. Loan maximums can vary slightly by lender.

Loan Terms

CarMax offers used auto loan repayment term lengths of:

• Minimum Term: 36 months (3 years)
• Maximum Term: 72 months (6 years)

Longer terms up to 6 years allow for lower monthly payments but result in higher interest charges over the loan.

Applicants can choose whichever repayment term length works best for their budget when viewing actual loan offers.

Additional Fees and Features

Some other fees, features, and considerations to factor with CarMax auto financing:

Fees

• $399 Processing Fee – CarMax charges this fee when financing a vehicle purchase.
• Shipping Fee – Ranges from $0-$900 for vehicles delivered vs in-store pickup.
• Lender Fees – Additional fees vary by the lending partner chosen.

So first consider around $400-$500 in initial fees when financing through CarMax depending on delivery method.

Late Fees

CarMax does not share specifics on late fees publicly. Typically lenders charge around 5% of the monthly payment or minimums of $10-$50 per late payment.

Review late fee policy details in loan documents when choosing financing. Late payments also negatively impact credit scores.

Co-Borrower Option

CarMax allows applicants to add a co-borrower to the loan application, such as a family member or partner. Adding a co-borrower with better credit can increase chances of approval and improve loan terms offered.

Down Payments

While CarMax doesn’t advertise specific down payment requirements, larger down payments reduce the financed amount and interest charges so can result in more affordable monthly payments for approval.

Use their payment calculator to estimate payments based on potential down payments.

Refinancing

Unfortunately refinancing or trading in for another vehicle mid-loan is not an openly advertised option with CarMax financing. Buyers may be limited to purchasing only CarMax vehicles for the loan term or refinancing with another lender.

Check for potential refinance restrictions specific to the CarMax lender chosen. This should be outlined in the original loan agreement.

No Prepayment Penalties

One benefit is CarMax lending does not charge borrowers penalties for early repayment or paying the loan off faster. So buyers can pay more towards principal without incurring extra fees.

CarMax Versus Other Lenders

How does CarMax financing compare to other popular auto lenders? Here’s how it stacks up against some top options.

CarMax vs Credit Unions

Credit unions can offer lower interest rates, more flexibility, and fewer fees but require membership to qualify. With CarMax you pay slightly higher costs for a faster and more convenient lending process.

CarMax vs Banks

Large banks have strict credit cutoffs, but those who qualify can enjoy lower publicly posted rates. CarMax offers financing to lower credit borrowers with fewer application hurdles but less rate transparency.

CarMax vs Other Online Lenders

Companies like Carvana and Shift also provide online used auto financing and car delivery similar to CarMax:

Other major online lenders like Carvana tend to have higher minimum scores for approval but provide more interest rate transparency upfront. All allow completing the auto loan application completely online for a smooth financing process.

So CarMax holds its own against competitors focused specifically on financing and selling used vehicles even if rates are not advertised. The expansive lending partner network gives customers multiple financing options tailored to varying credit profiles.

READ ALSO: Overview of PenFed Auto Loans

Should You Get A CarMax Auto Loan?

Below are some pros and cons to weigh when considering CarMax for your next auto loan:

Pros

• Soft credit check prequalification
• Large used car inventory
• Quick online application and fast approval timelines
• Multiple lending partners to compare loan offers
• All credit types accepted
• Loans up to $100,000

Cons

• No rate or fee transparency without application
• Must purchase CarMax used car inventory
• Additional fees for processing and delivery
• No refinance options openly advertised
• Inventory smaller than some competitors

So while CarMax offers a convenient lending process, buyers sacrifice some transparency and choice. Drivers comfortable buying exclusively from CarMax inventory without negotiating rates can benefit. But those wanting maximal flexibility or lowest rates may prefer alternatives like credit unions.

Customer Reviews of CarMax Financing

What do actual customers say about financing experience with CarMax based on online reviews?

Positive CarMax Loan Reviews

• Streamlined application and buying process end-to-end
• Quick loan decision turnaround within minutes
• Got approved with credit scores banks would decline
• Lower interest rates than smaller buy-here pay-here dealers
• 7-day money back return policy helpful for vehicle inspection

Negative CarMax Loan Reviews

• No ability to negotiate interest rates offered
• Additional fees beyond interest charges
• Issues contacting lenders for account questions post-purchase
• Rapid buying process leads some buyers to overpay

Based on customer feedback, the convenience and speed of buying a car completely online combined with multiple lender options makes CarMax financing worthwhile for many used car shoppers.

Just note the lack of rate transparency and negotiating ability means you must be comfortable with loan terms offered as-is. Review all loan details upfront rather than assuming you’ll get the lowest rate.

To Recap

Who Should Get A CarMax Auto Loan?

CarMax financing makes the most sense for buyers who:

• Want a fully online used car buying experience
• Have flexible credit requirements
• Prioritize fast financing decisions
• Are comfortable buying from CarMax’s used inventory

Drivers who plan to purchase a vehicle sight-unseen can take advantage of car delivery combined with financing from CarMax and their lending partners.

Borrowers across all credit ranges can likely qualify for competitive used auto loan rates and terms without extensive paperwork or delays compared to other lenders.

Who Should Avoid CarMax Financing?

Drivers who should consider other lender alternatives include:

• Those wanting standardized rate information upfront
• Anyone needing to negotiate loan terms or rates
• People requiring loan pre-approvals based on specific car makes and models
• Owners wanting flexibility to trade-in or swap vehicles mid-loan

Since CarMax doesn’t share specific rates or “best offer” guarantees upfront, buyers will need to complete full applications with various partners to identify the best loans. If you require rate transparency or the ability to negotiate pricing, a standard bank or credit union may be preferable.

In summary, CarMax offers a convenient lending process allowing customers to finance and receive a great selection of used vehicles straight to their door. Borrowers across all credit ranges can likely find competitive rates.

While interest rates and terms aren’t transparent upfront, the lending network gives applicants multiple financing options suited to their budget and scores. Overall, CarMax auto financing provides a stellarhands-off lending experienceas long as you’re comfortable buying exclusively from their nationwide used car inventory.

Frequently Asked Questions (FAQs) About CarMax Auto Loans

Below are answers to some common questions shoppers have around qualifying, applying, and receiving loans from CarMax:

What credit score is needed for CarMax financing?

CarMax approves applicants across a wide span of credit scores, but doesn’t disclose precise minimums publicly. In general:

• Prime borrowers typically require 620+ credit score
• Subprime applicants may qualify with scores as low as 550

Each lending partner sets their own minimum credit criteria. Check if you prequalify to view estimated rates and offers based on your credit profile.

How long does it take to get approved for CarMax financing?

One major benefit of CarMax is the quick application and approval timeline – often the same day.

• Prequalification estimates: Instant decisions
• Full Applications: Many lenders provide official decisions within minutes or hours

So you can complete the entire financing process online in less than a day in most cases.

How much money do you need to put down at CarMax?

CarMax itself does not require a specific down payment amount to qualify for a loan. However, a larger down payment:

• Lowers the amount you finance
• Can result in lower monthly payments
• Improves chances of approval

While minimum down payments vary by the lender, we recommend at least 10-20% down if possible. Use CarMax’s payment calculator to estimate payments based on potential down payment amounts.

Does CarMax do in-house financing?

Yes. CarMax provides financing themselves via CarMax Auto Finance in addition to their lending partners.

In-house financing can help borrowers with bad credit or low credit scores that may not qualify through a traditional bank. Rates may be higher but worth checking rate comparisons.

Can you return a CarMax car after purchase?

CarMax offers a money-back return policy within 7 days or 250 miles on their vehicles. So customers can return the vehicle for a refund if they find issues or simply change their mind shortly after purchase.

You may still owe any registration or delivery fees if incurred upfront. So while returns are allowed, its best avoiding unnecessary costs by sticking with your original purchase if possible.

Does paying off CarMax loan early impact credit score?

Paying your CarMax auto loan early or ahead of schedule will help your credit – not hurt it. Early payoff shows fiscal responsibility.

Just double check your loan contract for any prepayment penalties from the CarMax lender, as some lenders charge fees for paying substantially ahead of schedule. As long as no penalties are in place, early repayment will save money on interest and positively grow your credit history.

In another related article, Overview of Caribou Auto Refinancing Loans