CarMax Review 2022: Buying, Selling, Financing

CarMax is a used-car retailer that also offers financing for the cars it sells.

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Our Take

The bottom line:

Best for used-car shoppers wanting to purchase from a large inventory and finance a car online. Vehicles can be delivered or picked up at a CarMax location.

CarMax
CarMax - Used car purchase loan
Est. APR
2.95-26.00%
Loan amount
$500-$100,000
Min. credit score
None

Pros & Cons

Pros

  • Offers a three-day window to replace CarMax financing with a better loan offer.

  • Application process can be 100% online including document upload.

  • Minimum loan amount is lower than other lenders.

  • CarMax Auto Finance borrowers can select payment due date and manage their loan through the MyCarMax online platform.

Cons

  • Maximum APR is higher than many other lenders.

  • Only finances vehicles sold through CarMax.

  • Does not offer pre-qualification with a soft credit check.

  • Does not allow co-signers, only co-borrowers.

Compare to Other Lenders

Carvana
Capital One
LightStream
Est. APR

3.90-27.90%

Est. APR

N/A

Est. APR

5.99-10.49%

Loan amount

$1,000-$100,000

Loan amount

$4,000-Max. not disclosed

Loan amount

$5,000-$100,000

Min. credit score

450

Min. credit score

Did not disclose

Min. credit score

660

Full Review

How does CarMax work?

CarMax is the largest retailer of used cars in the United States, with a typical inventory of more than 55,000 vehicles that can be viewed at carmax.com. Customers can pick up a vehicle at one of more than 220 CarMax stores or arrange home delivery within 60 miles of a store in select markets.

Car buyers can apply for preapproved financing on the CarMax website, even if they choose to shop at a CarMax store. Preapproval requires a hard credit inquiry, which can cause a temporary drop in your credit scores. Financing is available through CarMax Auto Finance or other lending partners. CarMax also allows customers to finance through their credit union or bank.

CarMax vehicles receive a 125-point inspection, and each online listing has an AutoCheck vehicle history report. In addition, vehicles come with a Love Your Car Guarantee, with 24-hour test drives and 30-day returns. Every vehicle also has a CarMax Limited Warranty for 90 days or 4,000 miles.

CarMax also buys cars and accepts trade-ins. (Trading in a car may save you money on sales taxes.) If you're trading or selling to CarMax, you must take your vehicle to a CarMax store.

This review looks first at CarMax financing options and then at buying or selling through CarMax.

CarMax financing

CarMax makes auto loans directly to consumers through its own auto finance division — CarMax Auto Finance. It also arranges loans through other financing sources, such as Ally Auto, Chase Bank and Capital One.

CarMax customers can also use their own lender and should provide that lender's information when they begin the car-buying process. In addition, NerdWallet strongly recommends getting preapproved auto loan offers from other lenders so that you can compare the rate with CarMax's offer.

If you finance through CarMax Auto Finance or a CarMax lending partner and then find a better loan offer, you can take advantage of a three-day payoff option. Within three business days of closing on your CarMax loan, you can replace it with another lender's financing at no cost.

CarMax sales consultants do not receive a commission based on whether customers finance their car through a CarMax finance source or a third-party lender. Even so, approximately 80 percent of CarMax's customers finance with CarMax Auto Finance or one of CarMax's other financing sources.

CarMax has no minimum credit score or credit history requirements and says its range of financing sources enables it to serve customers across the credit spectrum. This includes car buyers with bad credit — typically FICO scores below 630 — who may have trouble getting car loans elsewhere.

CarMax does not allow loan co-signers, but it does allow co-buyers or co-borrowers, which can help with the loan approval. A co-borrower, unlike a co-signer, is a legal owner of the car along with the primary borrower.

CarMax says it approves approximately 95 percent of its applicants through CarMax Auto Finance or one of its lending partners and encourages car buyers to apply regardless of credit score or profile. Loans for car buyers with bad credit usually come with a much higher APR, so it's always a good idea to shop and compare loan rates.

CarMax may be a good fit for those who:

  • Prefer a streamlined process for buying and financing a car. CarMax customers can browse and select used cars, arrange financing and schedule pickup or delivery from carmax.com.

  • Want more choices when buying a used car. CarMax provides access to an inventory of more than 55,000 vehicles online, along with a 30-day return guarantee.

  • Want financing flexibility. Customers can finance through CarMax Auto Finance, CarMax financing partners or their own lender, enabling them to shop rates and find the best offer. CarMax also offers flexibility to help bad-credit borrowers and first-time car buyers qualify.

CarMax financing at a glance

Note that CarMax is a direct lender through CarMax Auto Finance, but it also finances cars through lending partners and third-party lenders. Therefore, the information below pertains to CarMax Auto Finance, with notes where information may vary for other lenders.

  • Origination fee: None.

  • Pre-qualification available: Pre-qualification with a soft credit check is not available. CarMax and its lending partners offer preapproval, which results in a hard credit inquiry.

  • Personal information needed for approval: A valid driver's license, phone number, vehicle information, loan amount, Social Security number, down payment amount (if making one), employment information, income, co-applicant information (if using co-applicant).

  • Online, in-person or both: Applications can be submitted online, over the phone or in a CarMax store.

  • Approval speed: Decisions in 10 minutes or less for most applicants.

  • Funding: When a customer signs the contract and takes delivery of the vehicle, the loan is funded. Funding time may differ with third-party lenders.

  • Minimum FICO credit score: None.

  • Minimum credit history: None.

  • Minimum annual gross income: Depends on CarMax finance source and application details.

  • Maximum debt-to-income ratio: Depends on CarMax finance source and application details.

  • Bankruptcy-related restrictions: No active bankruptcies.

  • States covered: CarMax has more than 220 brick-and-mortar locations in 41 states and a nationwide inventory available online. CarMax finances any CarMax vehicle in its inventory.

  • Maximum vehicle age: CarMax finances any vehicle in its inventory and does not sell vehicles more than 11 years old.

  • Maximum vehicle mileage: CarMax finances any vehicle in its inventory. CarMax doesn't have a maximum mileage restriction for cars they purchase or acquire by trade-in, but high-mileage vehicles may be sold at auction and not become part of CarMax inventory.

  • Other vehicle restrictions: CarMax finances only vehicles that are purchased at CarMax.

  • Loan amount minimum: $500.

  • Loan amount maximum: $100,000.

  • Loan terms: 24-72 months. Availability of certain terms depends on the financing source and the vehicle selected.

  • Automatic payment: Available but not required.

  • Rate discount: None.

  • Greater-than-minimum payments: Yes, and are accepted through automatic payment. May differ for loans through financing sources other than CarMax Finance.

  • Biweekly payments: Yes, and are accepted via automatic payment. May differ for loans through financing sources other than CarMax Finance.

  • Late payment fee: Yes, amount depends on the CarMax finance source.

  • Prepayment penalty: None.

  • Co-borrowers allowed: Yes. Co-buyers can be added to preapproval applications or finance applications.

  • Co-signers allowed: No.

  • Payment options: Online through MyCarMax account, USPS, Western Union, MoneyGram® ExpressPayments® service and in-person at one of more than 220 CarMax locations. May differ for loans through financing sources other than CarMax Finance.

  • Selected payment due date: Yes, borrowers can select the first payment date, up to 45 days from the contract date. May differ for loans through financing sources other than CarMax Finance.

  • Hardship plans: Hardship plans are evaluated on a case-by-case basis. If financing is through a lender other than CarMax finance, that lender's hardship plans may apply.

  • Availability: Mon.-Fri. 8 a.m.-10 p.m., Sat. 9 a.m.-6 p.m. EST.

  • Contact options: Phone at 1-800-925-3612, email, social media, chat, in-store.

Buying a car from CarMax

Key facts

  • No-haggle pricing. Prices are non-negotiable.

  • Delivers vehicles at no cost in certain areas.

  • 30-day return option.

  • Large national inventory with shipping options.

  • Does not accept credit cards for down payments.

Cars and trucks sold through CarMax are mostly low-mileage used vehicles that have passed safety, mechanical and cosmetic inspections.

Car prices are non-negotiable. Vehicles have passed a 125-point inspection and been reconditioned for sale. Vehicles come with a free AutoCheck vehicle history report, which can be viewed in the details of each car listing. Listings include 360-degree photos and detailed photos of imperfections. CarMax has more than 220 stores in 41 states. It does not have stores in Alaska, Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont, West Virginia and Wyoming.

Does CarMax sell new cars?

CarMax sells used cars; its inventory is mostly low-mileage and late-model used vehicles.

Can buyers negotiate with CarMax?

No. The company does not negotiate pricing.

Does CarMax take trade-ins?

Yes. The CarMax offer for your used car is the same if you wish to sell it to CarMax or use the equity as a down payment on a CarMax vehicle.

Costs and fees

CarMax charges a non-refundable shipping fee if the car needs to be transported between CarMax stores. The fee ranges from zero to $1,999, depending on location. Shipping fees to your store of choice are posted online. You can avoid the fee by selecting a car from a nearby CarMax store.

Guarantees and warranties

Vehicles sold by CarMax can be returned within 30 days (or 1,500 miles, whichever comes first) for a full refund minus any shipping fee. NerdWallet strongly recommends you pay for a vehicle inspection during this period. All CarMax cars come with a limited warranty for 90 days or 4,000 miles, whichever comes first.

  • Is extended warranty coverage available? Yes. CarMax offers MaxCare extended service plans on every car it sells. MaxCare plans include emergency roadside assistance and rental reimbursement. Coverage options and prices vary.

  • Can I buy a car online? Buy online and pick up your car at the nearest CarMax store. When available, delivery is free within 60 miles of some stores.

  • Can I ensure a car I saw online will still be at the store? You can reserve any car you see online for up to seven days.

  • What if the online car I want is not at my nearby CarMax store? CarMax will ship almost any car in its inventory to another CarMax store. (Some states have laws that prohibit the transfer of some cars across state laws due to either title, mileage, or emissions requirements.) Shipping can take up to 28 days. You will not be obligated to buy the car before seeing it in person. However, you may be charged a non-refundable shipping fee. Shipping fees can be paid with a credit card.

  • Is buying online the only way to buy a car at CarMax? You can get preapproved, secure a trade-in offer and buy a car in a store, online, or both. Some stores are open by appointment only.

  • Can I take a test drive? In-store customers can take a free 24-hour test drive of any car for up to 150 miles. You must provide a driver's license and proof that you carry comprehensive and collision insurance. Online buyers can use the 30-day return policy.

  • Does CarMax resell damaged cars it has bought from customers? CarMax does not sell retail cars with flood or fire damage or salvage history. Tires and wheels must also pass inspection. Due to manufacturers' requirements, CarMax is unable to repair safety recalls. Your CarMax representative can help you determine if the car has a pending recall.

Selling or trading in a car with CarMax

Key facts

  • Offers are good for seven days and non-negotiable.

  • Current loan or negative equity are OK.

  • Salvage titles or damaged cars are OK.

  • Vehicle inspections completed at CarMax stores.

To sell your vehicle to CarMax, you'll need to get an appraisal online or at a CarMax store. To get an appraisal online, enter your car's 17-digit VIN or license plate number along with the registration information, mileage, vehicle options and any loan information. You'll also provide your ZIP code, email address and fill out a brief vehicle condition questionnaire.

CarMax will email you an appraisal offer within seconds. CarMax does not finalize sales remotely, however. You will have to bring your car to any CarMax store within seven days for a vehicle inspection. Some stores may require that you make an appointment. You can also have the appraisal done at the store if you don't want to enter your information online. If the inspection does not find any significant undisclosed damage, you will receive a bank draft on the spot for the quoted amount.

CarMax will buy vehicles of any age. CarMax reconditions the cars it buys to sell to retail customers or sells them at auction to wholesalers. CarMax opened its first store in 1993 in Richmond, Virginia. In the third quarter of 2021, it bought about 383,000 vehicles from consumers. Of those, 194,000 were bought using an online instant appraisal.

Where does CarMax buy cars?

CarMax buys cars directly from customers except in the following states: Alaska, Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont, West Virginia and Wyoming.

Is my offer from CarMax negotiable?

No. All offers are firm and are good for seven days.

Will CarMax buy my car if I owe on it?

Yes. You'll need to provide loan information so CarMax can pay off the lender. If you owe more than your offer, you will need to cover the difference. In some cases, the amount can be included in your financing or paid directly to CarMax. CarMax will accept a personal check for amounts under $250. For larger amounts, CarMax stores accept cashier's checks, certified checks, certified funds, cash, and debit cards.

Does CarMax buy leased vehicles?

Yes, as long as the leasing company allows sales to independent dealers at the time. If not, you can buy out your lease at its residual price, obtain a new title in your name, and get a new offer.

  • Do you have to buy a car from CarMax to sell your car to them? No. Whether you buy a car from CarMax or not, your offer is the same.

  • Does CarMax have restrictions on the vehicles it will buy? CarMax will purchase damaged vehicles, including those with flood damage. If a car is undrivable, you can have it towed to CarMax for an appraisal. However, some states restrict CarMax's ability to purchase salvage vehicles.

  • What is needed to complete a sale? Requirements can vary by state, but in every state, you will need your car's title or loan information, a valid registration, and all keys and remotes. In addition, anyone named on the title should be present and provide a valid state-issued photo ID.

  • Will CarMax pick up my car? CarMax will pick up your vehicle only if you are also buying a car and having that car delivered.

  • When am I paid? As soon as you sign over your car, CarMax will hand you a bank draft. A bank draft must be deposited and can take a few days to clear before a withdrawal.

  • Will I be charged any fees? There are no fees to sell a car to CarMax.

  • Can the price change after I've handed over the car? The price can change if there is undisclosed damage.

  • If someone else's name is on the title? CarMax will walk you through selling a vehicle that has a lost title, has someone else's name on the title, or belongs to someone deceased.

To review CarMax, NerdWallet sent a survey to CarMax requesting more than 60 data points and followed up with company representatives. The information was compared with other companies that seek the same customer or offer a similar product.

Frequently asked questions