CarMax Auto Loans Review

Our take on CarMax auto financing

CarMax might be a fit if you’re looking for auto loans for bad credit, particularly if shopping for a car in person is important to you. Because most credit profiles are accepted and you can add a cosigner, getting a loan through CarMax shouldn’t be challenging, even with fair, poor, or limited credit.

However, CarMax loans are only available for vehicles purchased through CarMax … and that can be a problem. While buying a used car from anywhere is always a gamble, CarMax has earned a negative reputation on customer review sites for selling poor-quality vehicles with myriad undisclosed issues.

If you’re buying a used car on a tight budget and have poor credit, CarMax can be a great choice. But if you’re buying new or can afford a dealership’s Certified Pre-Owned models, and have good or better credit, consider shopping elsewhere.

Rates, terms, and more

CarMax doesn’t publicly disclose all of its loan details; they can vary depending on the vehicle you purchase, your credit score and income, your down payment, and the financing you choose. (CarMax offers its own financing through CarMax Auto Financing, but it may also connect you with other lenders in its network.)

That said, we do know:

• Rates start as low as 5.49%, but that’s for the most qualified buyers.
• Loan terms typically range from 36 to 72 months, based on CarMax’s auto loan calculator, but your terms can vary.
• There are no upfront financing fees, though you can expect to pay other fees when buying a car through CarMax.

Is CarMax legit?

CarMax is the nation’s largest used car retailer, with 250-plus physical retail locations across 42 states. The first CarMax location opened more than three decades ago, in September 1993; since then, the company has sold more than 13 million vehicles.

CarMax is famous for its no-haggle policy; the listed price is the final price, no exceptions. CarMax also offers a 10-day money-back guarantee, a free vehicle history report, and a 30-day limited warranty (longer in some states).

CarMax reviews and complaints

Despite CarMax’s long history and relatively straightforward process, the used-car retailer has many negative customer reviews. For instance, CarMax is not accredited by the Better Business Bureau (BBB), which gives it a 1.13-star rating.

Here’s a closer look at CarMax ratings across various consumer review sites:

It’s worth noting that these reviews are largely about the CarMax car-buying process (or the process of selling a car to CarMax), rather than the company’s financing. But keep in mind: You can only access CarMax car loans if you purchase through CarMax.

Here are some of the recurring themes across CarMax’s negative customer reviews:

• Poor customer service
• Issues with the warranty
• Undisclosed issues with vehicles
• High prices for poor-quality cars

While I’d take a few negative CarMax reviews with a grain of salt, the overwhelming number of 1-star reviews using words like “scam” and “do not use” is concerning.

How does the CarMax car buying process work?

CarMax financing is only available if you buy a car from CarMax. Most credit profiles are accepted, and you can add a cosigner to improve your approval odds.

Some of the car loans are actually through CarMax (CarMax Auto Financing), though the retailer does work with a network of lenders to find you the best rate.

Who’s eligible?

CarMax doesn’t list minimum credit score or income requirements but says that most credit profiles are accepted. You can get prequalified without an impact on your credit score to get a better idea of your approval odds and rate.

How to repay CarMax auto loans

If your loan is through CarMax Auto Finance, you’ll create an account on the CarMax website and make your payments there directly. You can set up recurring payments and payment reminders to ensure you don’t fall behind.

All you’ll need to set up your account is:

• An account number (created when you get the loan)
• Your date of birth
• The last four digits of your Social Security number
• Your email address

If you get financing through a lending partner, you’ll need to work with that partner to set up repayment.

Can I sell my car to CarMax?

Yes! Selling your car privately can be a hassle (though you tend to make the most money that way), and trading it in at a dealership can be tricky, especially when it’s part of the negotiation.

CarMax has a simple process for selling your car that starts with an online quote. You then make an appointment with a local CarMax, bring the vehicle in for inspection, and hand over the keys to get your cash. Most importantly, you don’t need to buy a car from CarMax to sell a car to CarMax.

CarMax warranty

CarMax offers a generous 10-day money-back guarantee and a 30-day limited warranty (longer in some states).

CarMax MaxCare

You can extend the limited warranty with CarMax MaxCare, though this is an added expense. MaxCare includes emergency roadside assistance, rental car reimbursement, and a $50 discount on any deductible at a CarMax service center or certified repair shop.

Pros and cons

Pros

• Available to most credit profiles

  While CarMax doesn’t publish a true minimum credit score requirement, its website says the company can “accommodate most credit profiles.”

• Prequalify without credit score impact

  You can get prequalified on CarMax’s website in a matter of minutes to have at least a ballpark idea of the rates and terms you can get approved for when buying a car from CarMax.

• Online and in-person shopping for certified used cars

  You can browse more than 40,000 vehicles online on CarMax’s website, but you can also visit physical retail locations to browse inventory and test drive vehicles before committing.

• Easy car-selling experience

  Start with an online quote, and then make an appointment with a local CarMax. You’ll bring the vehicle in for inspection and hand over the keys to get your cash.

• Generous return policy and warranty

  10-day money-back guarantee and a 30-day limited warranty (longer in some states).

• Available extended service plan

  Includes emergency roadside assistance, rental car reimbursement, and a $50 discount on the deductible at a CarMax service center or certified repair shop.

• Cosigner for better rates and approval odds

  CarMax lets you add a cosigner to your loan. This can help increase your approval odds and potentially get you a lower rate, assuming the co-borrower has a better credit score and higher income.

• No upfront financing fees

  CarMax doesn’t charge financing fees, though there are still the traditional fees associated with buying a car.

Cons

• No published amounts

  CarMax does not publish minimum or maximum loan amounts, which makes it hard to compare with the best auto loans.

• Only available if purchasing through CarMax

  The appeal of financing through CarMax is that most credit profiles are accepted; however, to get access to that financing, you must buy a car from CarMax.

• No stores in 8 states

  CarMax does not have physical retail locations in Alaska, Hawaii, Montana, North Dakota, South Dakota, Vermont, West Virginia, or Wyoming.

• Poor customer reviews

  CarMax has less than 2 stars based on customer reviews on major sites, including BBB, Trustpilot, and ConsumerAffairs. Customers complain about poor customer service and vehicles with major defects.

CarMax alternatives for car loans

Here’s how CarMax stacks up against competitors.

CarMax vs. myAutoLoan

MyAutoLoan is a great CarMax alternative if you have a FICO credit score of 600 or better and want to see a handful of options for your new or used car loan. You input some basic information, and the online car loan marketplace will show you up to four offers based on your credit profile. We like that the company is so transparent about rates, terms, loan amounts, and eligibility.

CarMax vs. Carvana

CarMax and Carvana are similar in that you can shop from a huge inventory of used vehicles. CarMax has both in-person and online shopping while Carvana’s is entirely online. CarMax is also a little more transparent, at least listing a starting APR for its loans. (None of Carvana’s loan details are available online.)

A few points when comparing CarMax vs. Carvana:

• CarMax’s money-back guarantee lasts 10 days; Carvana’s is only 7.
• CarMax has more than 40,000 vehicles in its inventory; Carvana is at 30,000-plus.
• CarMax has been around nearly two decades longer than Carvana, though both companies have negative reputations.
• Some of CarMax’s auto loans are held by CarMax itself; all of Carvana’s are serviced by a third party.

CarMax vs. CarsDirect

CarsDirect is another online-only resource for buying a used car. However, CarsDirect is merely a broker for car dealerships while CarMax sells cars directly. Loans are never serviced by CarsDirect; rather, CarsDirect can match you with dealer lenders, even if you have poor or limited credit and prior bankruptcies.

While CarsDirect makes it easier to get financing, its inventory options are more limited if you have bad credit. Plus, CarsDirect’s negative reviews are far more concerning than CarMax’s.

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