CarMax Review 2023: Financing, Buying, Selling

How does CarMax work?

With a typical inventory of more than 40,000 vehicles, CarMax specializes in buying and selling used cars. Customers can purchase a vehicle at more than 230 CarMax locations or arrange home delivery within 60 miles of select stores.

A potential buyer can prequalify for a loan with a soft credit inquiry, which has no impact on their credit score. If they decide to purchase a vehicle through CarMax, borrowers complete an application for final offer terms. The application requires a hard credit inquiry, which can impact their credit score. Financing is available through CarMax Auto Finance or its partners. CarMax also allows customers to finance through other lenders, such as their credit union or bank.

CarMax vehicles receive a 125-point inspection, and each online listing has an AutoCheck vehicle history report and can be checked for safety recalls with the click of a button. In addition, vehicles come with a money-back guarantee that includes a 24-hour test drive and 30-day return period, as long as you don’t drive more than 1,500 miles. And every vehicle also has a limited warranty for 90 days or 4,000 miles, whichever comes first.

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.

» Jump to: Buying a car from CarMax | Selling or trading a car to CarMax

CarMax financing

CarMax makes auto loans directly to consumers through its own auto finance division — CarMax Auto Finance — and works with other lenders, such as Ally Auto, Chase Bank and Capital One.

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 70 percent of CarMax's customers finance with CarMax Auto Finance or one of CarMax's other financing sources.

The company 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.

The company 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 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 40,000 vehicles online, along with a 30-day money-back 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

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.

• Application process

  • Origination fee: None.

  • Pre-qualification available: Yes.

  • 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-buyer information (if purchasing with a co-buyer).

  • Online, in-person or both: Borrowers can apply online, by phone or in-person at a CarMax store.

  • Approval speed: Within five minutes for most applicants.

• Qualifications

  • Minimum FICO credit score: None.

  • Minimum credit history: None.

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

  • Maximum debt-to-income ratio: Did not disclose.

  • Bankruptcy-related restrictions: No active bankruptcies.

  • States covered: All states except AK, AR, HI, MT, ND, SD, VT, WV and WY.

• Restrictions

  • Maximum vehicle age: 11 years.

  • Maximum vehicle mileage: CarMax doesn’t have a mileage restriction; however, higher-mileage vehicles are less likely to be available for purchase.

  • Other vehicle restrictions: Financing is available only for vehicles purchases through CarMax.

  • Loan amount minimum: $500.

  • Loan amount maximum: $100,000.

  • Maximum loan-to-value ratio: Did not disclose.

• Other loan details

  • Loan terms: 24-72 months.

  • Rate discount: None.

  • Greater-than-minimum payments: Yes, available through automatic payment with CarMax Auto Finance.

  • Biweekly payments: Yes, available through automatic payment with CarMax Auto Finance.

  • Late payment fee: Yes, amount depends on state law and CarMax finance source.

  • Prepayment penalty: None.

  • Co-borrowers allowed: Yes.

  • Co-signers allowed: No.

  • Payment options: By phone, mail, online and in person. CarMax Auto Finance also accepts payments through Western Union, MoneyGram and ExpressPayments services.

  • Selected payment due date: Yes, chosen with first payment up to 45 days from the contract date.

  • Hardship plans: Available with CarMax Auto Finance on a case-by-case basis.

• Customer service

  • Assistance provided: Customer service is available to assist with applications and loan questions.

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

  • Contact options: By phone, email, social media, online chat and in-person.

Buying a car from CarMax

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.

• Other car-buying details

  • 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. 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 purchase a car in a CarMax store or online.

  • Can I take a test drive? Customers can take a free 24-hour test drive of most cars for up to 150 miles. You must provide a driver's license and proof that you carry comprehensive and collision insurance. The 24-hour test drive is not available for express pickup or delivery orders.

  • Does CarMax resell damaged cars it has bought from customers? CarMax does not sell retail cars with flood or fire damage or salvage history. 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

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 or are unable to get an online offer. 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.

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.

• Other car-selling details

  • 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.

  CarMax auto loan rates

  Credit requirements vary by auto lender, but CarMax's lowest rates are typically available only to borrowers with good or excellent credit (a FICO score of 690 and above). With fair or bad credit you won’t get the lowest interest rates, which means your monthly payment and total interest paid will be more. You can check your credit score before applying for a car loan. 

  Loan example

  For a subprime borrower (FICO score between 501 to 600), a $10,000 car loan, with a repayment term of 36 months, an interest rate of 12% and $0 down payment would carry monthly payments of $332, according to NerdWallet’s auto loan calculator.

CarMax auto loan rates

Credit requirements vary by auto lender, but CarMax's lowest rates are typically available only to borrowers with good or excellent credit (a FICO score of 690 and above). With fair or bad credit you won’t get the lowest interest rates, which means your monthly payment and total interest paid will be more. You can check your credit score before applying for a car loan.

Loan example: According to NerdWallet's auto loan calculator that uses the VantageScore credit model, a borrower with a credit score of 300-499 (considered deep subprime), a $20,000 used car loan, repayment term of 72 months, interest rate of 18% APR and $0 down payment would have monthly payments of $456. One year later, if all payments were made on time, the borrower will have paid the loan down to a balance of $17,963. If the borrower is able to then refinance at 12% APR for the remaining 60 months, the payment would drop to $399 and result in interest savings of $3,394 over the life of the loan.