Here's The Problem With Carvana - The REAL Problem.

I have now had three separate interactions with Carvana.

My goal of course was to buy a car - but I also took it as an opportunity (given that business process improvement is what I do for a living) to try and understand exactly why they seem to be having so many problems with lawsuits and the like.

Mind you: Carvana claims that you can do the process "100% Online".  That's simply not true, and frankly, them trying to do this is part of the problem and why it's such a headache for both them and customers.  More on that later (and I speak as someone who designs and builds technology-based solutions as part of what I do for a living).

First Attempt: Nothing.

The first time I tried to go through the Carvana process, I didn't end up getting past the online application.  This is because they coded the application to force Experian, which I generally keep frozen because they promote fraudulent entries.  Even when unfreezing it, Experian has a 24-hour delay, but the point is, any other dealer is more than happy to fall back to Transunion and/or Equifax (Transunion is used dominantly by dealers because it's most often the "cleanest" credit report, but also the cheapest).

Second Attempt: Silly Hoops With The Application Process.

This is if you're financing with Carvana, by the way.

The way this works is, you'll go through the credit screen, then you choose your financing, etc.  It will quote you a down payment and monthly for the car based on what it saw, and in most cases Carvana's rates are going to be significantly higher than everywhere else. 

I know what you're thinking: "bring your own financing!".  Except then you run into the first problem with Carvana's model.  More on this under Third Attempt.

Going through the online application process was a pain, but I finally got to the end, where it quoted me 2 weeks to get a downpayment in.  No problem - but then it changed to 24 hours.  What?

Turns out (and this is the first issue), when they go through Underwriting, based on what they saw of the credit screen, they force you to pay them faster.  That's not the issue though.  The issue is that the only payment method that they will accept under this condition to meet their 24-hour standard is basically a cashier's check (which is NOT an online thing, because you'll need to get that from a bank, whether you order it online or walk in, it's still a manual process.  Then you have to hand it to the driver. That's not online).

They offer ACH pull but not ACH push.  What's the difference?

With banks, they want you to push funds to the destination.  Both sides like that.  So it's usually 24 business hours to having funds in the other account as long as you're in by 2pm Pacific/5pm Eastern, which are banker's hours.  All online, clean, no fuss no muss, generally no limits on the amount.  (More on this later)  Carvana doesn't support push, only pull.  Pull almost always comes out of your account within 24 business hours, but it takes the recipient bank 5-7 business days to clear funds even if they verify receipt in 24 hours.  Carvana will force you to wait the full time.

This would be easily resolved if they just allowed push.  They don't.  This means their system isn't built to be able track specific payment from specific customers without doing the pull and reconciling after the fact.

The other option is a wire transfer.  Wire transfers are basically immediate to no more than an hour during bankers hours.  But with Carvana, they quote 2 to 5 business days to credit.  This means, again, they have no way of quickly reconciling that they've received a payment.

No credit card.  No debit card.  No Western Union.  No other way to satisfy them other than a piece of paper that says they'll get paid.

That means that payment is not "100% Online", because the only method that they treat as instantly accepted requires manual work offline to get it done.  So that's a lie.  When I saw this, there would have been no way to get the car I wanted in time; so I canceled.

Third Attempt: Lies About The Car.

This time, I had them do the ACH pull, knowing there'd be a delay, since the car I needed wasn't due for a few weeks.  Now, this attempt exposed all sorts of problems, and I need to go through these step-by-step.

They will NOT clear payment automatically; you need to call them if you want the process to move forward.

As I said, they have no way of reconciling payments automatically.  So their system will log the payment but nobody is actively clearing pending payments.  You really need to call them to get the process moving again; that's not "100% Online".

They can override the 24-hour issue if you use one of the other payment options; but they won't fix the reason it's going to 24-hours in the first place when that's not reasonable, and you have to call them for the override, it's not online.

This seems to have to do with financing with them only.  But when I offered to pay full cash out for a different car...

Paying cash out or bringing your own financing means THEY WILL NOT DELIVER; YOU HAVE TO PICK IT UP ("for security reasons").

This is the big flaw in their process, or at least one of them.  You can pay the whole thing cash, they can pull it from your account, but they force you to one of their buildings to pick up the car, which I wasn't doing, plus the car I wanted was in another state anyway. 

If you want delivery, you'll have to finance with them.  Which is fine - finance with them, pay it off a month later, whatever - except that then you run into the other issues I mention.

Another customer indicated that even when going through this they forced her to have the car loaded into their pointless vending machine just to watch the car come down - so it's no different than some other dealership in that regard.  In any event, this is silly, and I almost canceled just based on how stupid it is because at that point I might as well just cash out from a local dealer. 

The "150-point inspection" is a VISUAL one.  It's not truly an "inspection".

It's basically, we'll visually check stuff out but that's it.  It's not a true inspection.  How do I know this?

The car I chose was supposed to be delivered today, 45 minutes from when I write this.  I got a call from the driver indicating that they "saw an error code about the camshaft (sensor) and" she "wasn't comfortable delivering it".  Good...except not good, because if you did a true inspection, OBD is one of the things you should be doing. 

Which means if there was such an issue (and camshaft is a SERIOUS problem), it should have been caught and fixed the moment the car was bought from wherever they bought it from. 

Which means logically means they could not have done a true inspection and thus, none of it can be trusted nor should it.  I had planned to take it to my own shop, but a camshaft issue is a serious thing and they should fix it.  Which brings me to the other issue...

They will NOT fix prior to delivery, and if they were closed the day before, it means you won't be getting a car, because their delivery slots fill up fast.

Benefit of the doubt,, they're closed, great.  So take it down to whatever mechanic and get it fixed, then deliver it.  Apparently they don't do that, and what the driver said was, "you're probably not getting a repair done this week".  Well, I'm moving at the end of this week and it's really not an option otherwise at this point, so that's not an acceptable answer.  I don't mind a different car, but it's the same risk because once again they won't do a true inspection.  You basically can't trust what you're told online.  Which means the process is not "100% Online".

Even if you "know a guy" and get it fixed, they won't offer to reimburse.  Their warranty forces you to go to specific shops that may - or may not - fix the problem.

IN my case, because I planned to take it to a shop anyway, I would have been fine with a reimburse process; but learned this isn't offered, either.  That would have allowed me to get the car checked, fixed and reimbursed with time to spare within the 7-day period in the event I still didn't like the car, which would have avoided the issue happening to someone else but not put me out.

Issue Summary

  • The real inspection happens on the day of delivery, not before.
  • The "150 point inspection" is visual only.  It's not a true inspection.
  • The Carfax can't be trusted either, because whatever maintenance may or may not have included full inspections, plus whatever issue could have happened after whatever maintenance.  Now, in the case of a camshaft, the only way that could be an issue after the fact is if maintenance wasn't done right (fluids etc.).  If they took it to some Jiffy Lube or whatever, that's a red flag.
  • You must call them to move the process along, no matter what.  Not just once, all along the process.  Don't trust the website at all.
  • If there are issues before you take possession of the vehicle, Carvana will not fix them nor will they reimburse you getting them fixed.
  • It's clear that their system was built to minimize humans in the process, but they removed humans where more are needed (inspections, safety, registrations, etc.) and added humans where there shouldn't be a need for them (payments, underwriting, etc.)
  • They don't account for the "What if" scenario, meaning they don't queue up a Plan B vehicle that's ready to go in the event there's something wrong with the selected one.
  • When such an issue happens, all of a sudden things grind to a halt and they're no longer as fast or efficient with contact.  This is called their "HUB" and it seems like nothing gets done without going through them - they're the primary chokepoint of the process.

My gut tells me that Carvana was more worried about quantity over quality - just pushing units rather than focusing on a quality experience.  Which has then led to other issues that I haven't even talked about (because I never got that far) around registrations and titles.  But if they can't even do a proper inspection and they lie about what inspection they claimed to have done, already you have fundamental issues.  Lemon laws are a thing (misrepresenting the state of a vehicle you sold), and it's surprising they haven't had their dealer license yanked in all states by now. 

But more importantly, it's a simple fix: do a REAL inspection the moment you acquire the vehicle, and pay to fix whatever you must.  If the customer gets a vehicle that slipped through the cracks, simply offer to compensate whatever they need to get it operational, OR have a process to expedite an alternative and pay the difference in price, whichever happens to be cheaper.  There's ways to avoid this type of chaos in just buying a vehicle.