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CarMax Auto Loan Review 2024

CarMax offers a convenient way to buy a car if you can overlook its bad reputation among customers

Lindsay VanSomeren

Updated August 22, 2023

Fact checked by

Brendan Harkness

CarMax

Investopedia’s Rating

3.8

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Our Take

CarMax offers a streamlined, easy way to buy a car entirely online if you choose—complete with an auto loan financing package and everything. It’s a good choice if you’re not too picky about the car or the customer service, but for most people, we’d recommend keeping your options open because some customers indicate warning flags about how the company operates.

Pros and Cons
Key Takeaways
Company Overview

Pros and Cons

Pros

Works with partner lenders
No payments for up to first 45 days
Flexible online car-buying experience
Limited purchase and financing warranties

Cons

Not available in all states
Negative company reputation
Can only be used to buy CarMax cars
No co-signers allowed; only co-borrowers

Key Takeaways

CarMax is the largest used car dealership chain in the country and is based out of Richmond, Virginia.
You can line up your own financing to buy a car from CarMax or use its in-house financing department, which may finance your loan directly or use a partner lender.
CarMax offers pre-qualification for its loans, which allows you to see whether you’d be likely to qualify and what your estimated loan costs would be before you apply.

Company Overview

CarMax was founded in 1993 by Rick Sharp, who at the time was concurrently serving as CEO of Circuit City. Circuit City may have closed, but CarMax persisted and grew. Today, it’s the largest online retailer of used cars, operating 241 stores in 41 U.S. states, mostly sprinkled in a U shape around the country with a noticeable gap across the Dakotas, Wyoming, and Montana.

As a dealership, CarMax sells its own used vehicles and works with a network of partner lenders to finance them, although you can opt to use your own financing. That means you won’t be able to use CarMax financing to purchase a non-CarMax car, of course. In recent years the company has come under fire for its poor quality control and service practices, with several class-action lawsuits filed against the company.

Loan Types Offered Used
Used APR Range Not disclosed
Used Loan Amounts $5,000–$100,000
Used Loan Terms 36–72 months
Recommended Minimum Credit Score 500
Maximum Accepted Mileage Not disclosed

See our picks for the best auto loans in a variety of categories:

Pros Explained

Works with partner lenders: CarMax underwrites some loans directly, or it may fund your loan through one of its partner lenders. That increases your options and may help you find a lower-cost loan.
No payments for up to first 45 days: You can choose your first payment due date when you finalize your loan, up to 45 days out.
Flexible online car-buying experience: CarMax allows you to test-drive a car for 24 hours if you choose, and when you’re ready to buy, you can have it delivered to your home or pick it up from a dealership location. The entire process can be completed online, aside from the test drive.
Limited purchase and financing warranties: You can get a full-cost refund on your CarMax loan if you line up another financing source within three days, and you have a full 30-day period to return the car you’ve purchased if you don’t like it.

A three-day loan refund sounds nice, but in reality, lining up another auto loan may take longer than that unless you already have one in the works as you’re purchasing the car.

Cons Explained

Not available in all states: CarMax operates locations across the country in 41 states. Importantly, if you’re hoping to have your new car delivered to your home, you’ll need to live within 60 miles of a CarMax location.
Negative company reputation: CarMax does not have a good reputation online among customers who’ve left reviews of the company, and it’s the subject of several class-action lawsuits for shady behavior.
Can only be used to buy CarMax cars: CarMax is a used car dealership, and as such, you can only use a CarMax auto loan to purchase a used car from CarMax.
No co-signers allowed; only co-borrowers: You can apply with someone else if you’re looking to share ownership of the loan and the car too, or if you’re otherwise not able to qualify for a loan on your own. Anyone listed on your loan will be a co-owner of the car, however.

Types of Auto Loans Offered by CarMax

Since CarMax sells used cars, it only offers one type of auto loan.

Used Auto Loans

APR: Not disclosed
Loan amounts: $5,000–$100,00
Loan terms: 36–72 months

Time to Receive Funds

It only takes five minutes or less to get pre-qualified for a CarMax loan, but the company doesn’t disclose how long it takes for a full application after that. If you are approved, your loan may be funded on the same day.

Borrower Requirements

CarMax doesn’t provide very many details about the qualifications you’ll need to meet in order to qualify. However, credit is a barrier to many would-be car buyers, and CarMax is relatively forgiving of low credit scores.

Minimum recommended credit score: 500
State availability: 41 states; not available in Alaska, Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont, West Virginia, and Wyoming.

Vehicle Requirements

CarMax loans can only be used to purchase CarMax cars, so you’ll be limited to whatever you can find in its online catalog.

Maximum age: Not disclosed
Maximum accepted mileage: Not disclosed
Maximum loan-to-value ratio: Not disclosed

CarMax Auto Loan Features

CarMax offers a few nice touches for its loans, including:

Origination fee: $0
Can change due date: You can change your monthly due date to better align with your finances, such as setting it for after you receive your paycheck.
Mobile app: You can use CarMax’s app to complete your entire auto loan application, locate a car and finalize its purchase, and even manage your loan payoff afterward.

Co-Signers and Co-Applicants

If you need help in qualifying for a car loan or if you want someone else to be listed as a co-owner of the car, CarMax allows you to apply with a co-borrower. It does not, however, allow you to apply with a co-signer.

A co-signer and a co-borrower are not the same thing; a co-borrower will be listed on the title as a co-owner of your car, while a co-signer will not share ownership rights to your ride.

Customer Service

CarMax offers a useful suite of customer support channels. You can get help through regular routes like a phone call or email, but you can also reach the company via live online chat or even social media. However, many customers on publicly available review websites, like Trustpilot, have complained that reaching specific team members during their car purchase can be difficult.

Customer Satisfaction

CarMax does not have the best reputation for customer satisfaction, at least according to reviews from customers on some websites.

Customers frequently complain that CarMax representatives are often hard to get ahold of and the vehicles they purchased don’t show up as advertised, although there are many happy customers as well.

The company has also been the target of multiple class-action lawsuits. In one case regarding CarMax’s 125+ Point Inspection, claimants alleged that CarMax didn’t disclose certain important vehicle problems before purchase. In another lawsuit, CarMax is alleged to have knowingly sold cars that failed to meet emissions standards to unlicensed dealers, who then sold them to CarMax customers.

How to Apply for a CarMax Auto Loan

CarMax makes buying a car super simple—a little too simple, in fact. In order to get the most out of your car-buying experience, we recommend taking a few extra steps during CarMax’s application process.

Check your credit: Get a copy of your three credit reports (one from each major bureau) and scan them over. Check whether there’s anything you can do to improve your credit score before you apply.
Check your budget: Draft up a comprehensive list of your income and expenses, if you don’t already have one. See what you can afford for a monthly payment, rather than relying on what CarMax or any other lender tells you.
Gather documents: You’ll typically need proof of identity, income, and address. Scan these ahead of time so you have them on hand.
Get pre-qualified: You’ll need to create a CarMax account in order to get access to its loan pre-qualification tools.
Check your rates with other lenders: CarMax may or may not have the best financing offer for you, so it pays—literally—to shop around with other used auto loan lenders too.
Complete your application: If you decide to go with CarMax’s financing offer for your CarMax vehicle purchase, simply log back in to your account to finalize your loan application. You may need to provide your documents at this time.
Get a loan decision: CarMax will notify you if your application has been approved, and if so, it’ll be in touch with the next steps about how to complete your used car purchase.

Alternatives to CarMax

	CarMax	Carvana	AUTOPAY
Loan Types Offered	Used	Used	New, used, refinance, cash-out refinance, lease buyout, motorcycle
States Available	All states and D.C. except AK, AR, HI, MT, SD, ND, WV, WY, VT	All states and D.C. except AK, HI	All states and D.C.
Used APR Range	Not disclosed	Not disclosed	2.99% and up
Used Loan Amounts	$5,000–$100,000	Not disclosed	$2,500–$100,000
Used Loan Terms	36–72 months	36–72 months	24–96 months
Minimum Time to Receive Loan	Same day	1 day	Not disclosed
Recommended Minimum Credit Score	500	500	500
Maximum Accepted Mileage	Not disclosed	140,000 miles	150,000
Maximum Accepted Age	Not disclosed	Varies	10 years
Maximum Accepted Loan-to-Value Ratio	Not disclosed	Not disclosed	Not disclosed

Final Verdict

CarMax isn’t one of our top-rated auto loan lenders, and given its recent history of legal problems and customer complaints, we’d recommend considering other dealerships and auto loan lenders first. But if you don’t care too much about that and just want a car—any car—quickly and easily, CarMax may be your best bet.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points across more than 20 auto loan lenders, including interest rates, fees, loan amounts, borrower requirements, and vehicle requirements, to ensure that our reviews help users make informed decisions for their borrowing needs. We also conducted a survey of 1,016 auto loan borrowers for attitudes and opinions about lenders and the loan approval and disbursement process. See our full auto loan review methodology for more information.