Carvana vs Car Dealership: Which is Better

Last Updated on October 16, 2023

If you’re looking at used vehicles, there’s no reason to skimp out on the best deal for your next one. Though, that leaves you with a question. Should you buy your car online or visit a local car dealer?

Chances are, you can find more than one dealer where you live. And there are other car buying options online through companies like Carvana. In a battle between the two, Carvana vs car dealerships, the only way to make the best decision is to know the perks and drawbacks of both.

Benefits of Online Car Dealers

Here’s what you can expect when purchasing from online dealers:

• Big Inventory Selection
• Purchasing Convenience
• No Negotiations
• Test Drives
• Personalized Financing

Big Inventory Selection

With more than 25,000 cars posted online, Carvana is one platform for buying and selling used cars that has grown in popularity in recent years. Their stock includes thousands of varying makes and models, some of which you can’t find locally.

Purchasing Convenience

Similar to Vroom which boasts a wide selection of vehicles, online dealers like Carvana offer a level of convenience you cannot find at a used car lot. As you prepare to buy a car, you won’t have to spend time and energy walking around in bad weather or waiting around in line. You don’t even have to get dressed or out of bed as you peruse online. 

Moreover, your ability to shop is not confined to the typical work day. Even if the local dealership is closed, the online stores are always open for purchasing.

No Negotiations

For some customers, one intimidating part of the buying decision is negotiation. That’s understandable considering those employed at local stores are trained car salesmen who aim for commission fees. When you shop with Carvana, you don’t need this know-how because nothing is negotiable. The only way to alter your price would be to trade in a vehicle.

Test Drives

Car shopping through an online dealer does not exclude you from test drives. You still have the option of testing out your vehicle to ensure it’s a good fit. According to the Carvana, each of their cars undergoes a 150-point inspection beforehand. Each one also comes with a Carfax report and a limited 100 day/4,189-mile “worry-free guarantee.” However, you will have to purchase the used car before test driving. Depending on your preference, if you buy the vehicle and like it, then all the paperwork is already complete.

Personalized Financing

With both Vroom and Carvana, as part of the purchase process you can input your data and see real, personalized numbers. For some, this is more pleasant than giving your data to someone else in order for them to verify you. 

Drawbacks of Online Car Dealers

While online car dealerships offer great benefits, they have disadvantages too. Here are their limitations:

• No Negotiation or Promotions
• Test Drive Limitations
• Returns and Warranties
• Service Packages
• Limited Locations

No Negotiation or Promotions

The flip side to not having to negotiate is not being able to negotiate. If you believe you can get better deals due to your communication skills, buying a used car from an online dealer won’t help. Carvana prices are fixed. Also, don’t expect to see any deals or promotions to increase the value of your purchase. That’s a feature unique to standard dealerships as they compete with other local dealers.

Test Drive Limitations

If you want to test drive with Carvana or similar online dealers, you have to purchase the car first. From there you are given specific criteria for a money-back guarantee if for some reason you dislike the used car. Carvana offers a deal where buyers have up to seven days or 400 miles to return the vehicle, no questions asked. Vroom gives 7 days and a 250-mile limit. You are responsible for shipping charges whether or not you decide to keep the vehicle.

Returns and Warranties

Since the test drive period happens after purchase, saying “no” to the car at that point requires a lot more work than saying “no” to a car after test driving at a local dealership. 

Carvana only offers a 100-day or 4,189-mile warranty. Whereas, a lot of people are used to purchasing vehicles with multi-year protection plans, all vehicle issues are 100 percent the vehicle owner’s responsibility after the criteria is reached. Vroom’s warranty period is 90 days or 6,000 miles, whichever comes first.

Service Packages

While many traditional dealerships offer car repair and maintenance services, online ones do not. They rely on third parties to provide repair work, which can be more of a hassle than bringing your car into your local dealership for repair. The third-party companies may not be reputable or professional.

Limited Locations

If you buy from an online dealer, expect a wait time to get your vehicle. Though you can buy from anywhere in the country, the dealer is not located everywhere. For example, Carvana offers inventory through 39 vending machines, but most of which are on the east coast.

Why buy vehicles online?

For generations, standard car dealerships have been the go-to solution for customers wanting a car, new or used. But the market encountered a big issue in recent years. A shortage of new cars fueled by an undersupply of microchips, was coupled with a high consumer demand for cars. The high demand was fueled by excess cash flow after pandemic-related travel restrictions. All of this has changed the way people do their car shopping.

Besides, while Carvana and Vroom may have grown in popularity recently, for some time now, people have been finding used cars by searching the classifieds for private sellers. People have also used a car broker, car concierge, or a car subscription service. They even use peer-to-peer marketplaces like Craigslist and Facebook Marketplace.

Since people have been using peer-to-peer (P2P) marketplaces for a long time, they are familiar with the scams, safety risks, lack of information, misinformation, ghosting, and other unprofessional activities that sometimes happen. These experiences are mitigated with companies like Carvana and Vroom. Their sites are company-managed and guarantee all products and services. On the other hand, Facebook and Craigslist don’t manage transactions made on their sites.

That being said, buyers should still be careful when purchasing online. Online dealers promise inspections, but one man looking for a “hassle-free car buying experience,” got anything but that from Carvana. Seven months after his purchase, the vehicle was repossessed. Apparently, the automobile was a stolen car, which then revealed the vehicle also had undisclosed mechanical issues.

His story doesn’t mean Carvana is never to be trusted again, but offers reason for potential buyers to be cautious. Always do your homework before buying a car anywhere, and keep in mind, there’s a reason traditional dealerships are still around.

Perks of Traditional Dealerships

Car dealerships still maintain a competitive edge over online sales in various ways. The local car shop is geographically close to you, offers expert service, better warranties, a less committed test-drive experience, and can get you better deals. Car dealerships are staffed by people with whom you can make real connections. 

You will have tedious paperwork to complete, but you can do so while feeling like you have some say-so on the final price. Even if you believe the advice you receive from salespeople at car dealerships is biased, you will still get better help regarding personalizing a car or financial assistance at a dealership than Carvana or Vroom. Related to this are the loyalty incentives that dealerships offer customers who repeat business with them. Not only that, but if you are more likely to get a good trade-in value at a walk-in dealership.

Carvana vs Car Dealerships: The Verdict

There are pros and cons for companies like Carvana and your local dealership. Which is more beneficial than the other will largely depend on you as the consumer. Spend some time weighing your options, and of course consider dealership prices. Perhaps you’ll find that the deciding factor boils down to Carvana prices versus what you see at your local car lot.

If both tie, or you’re just not interested in either, there’s another option to consider. Many dealerships stock their collections by purchasing cars at auctions. They acquire the vehicles, then sell to customers like you. Instead of buying from the dealership you can go directly to an auction. There’s a decent selection and often at a more affordable price. Not all auctions are open to independent buyers, but with a bit of research you can find some online auctions companies willing to sell you your next automobile.