The car community is rallying behind a recent analysis calling Carvana a scam.
Carvana is an online used car retailer that lets customers bypass dealerships. You can even pick up the car from one of Carvana’s “vending machines.” This may seem like a great alternative to going in person, but it could not be worth the extra money you pay, according to skeptics.
A tweet has started going viral, outlining the shady way Carvana makes more money than your typical used-car dealer. According to Anish Moonka’s research, Carvana made $6,800 in profit per car sold last quarter, compared to $1,500 for most car dealers. He noted: “Because the car is just the start of what they sell you.”
The first thing Carvana does to make extra money? Financing. About 85 out of 100 Carvana buyers finance their car through Carvana itself. But when you click “finance” on the website, you may not be seeing the actual numbers. You see one interest rate, but then Carvana sells the loan to a bank or pension fund a few days later. They allegedly keep the difference between what you pay and what that new entity pays them. “That gap, multiplied across hundreds of thousands of buyers, is how they print money.”
During Carvana’s earnings call in March 2026, CFO Mark Jenkins lied to reporters, claiming the company doesn’t sell loans to related parties. He added: “We disclose our related party transactions, and there’s no ambiguity about that.” A dealer on Reddit found this to be false, noting that Carvana sold loans to Bridgecrest, a bank owned by Carvana CEO Ernest Garcia III’s father. It’s also written on Carvana’s own website: a frequently asked question appears to be: “I financed my loan with Carvana. Who is Bridgecrest?”
Instead of marking down inventory, Carvana has also been accused of offloading its cars to DriveTime at a premium. In three years’ time, Carvana generated $105 million in revenue by selling cars wholesale to DriveTime. This is a major affiliated entity, also owned by Garcia III’s father, Ernest Garcia II. Since Carvana knows it can dump the cars off to DriveTime, it’s more likely to keep vehicles at a higher cost without being willing to budge.
Moonka said the second way Carvana rips off customers is through add-ons. There’s an extended warranty offer and insurance referrals to companies that Carvana owns. The company also bought ADESA in 2022, a used car auction company that came with 56 auction yards across the United States, which Carvana has access to. Carvana also owns the body shop that fixes those cars up, as well as the trucks that eventually deliver sold cars. While Carvana was once near bankruptcy, this new process allowed the company to make $405 million in profit in just 90 days. They are now more successful than most traditional car companies, like Ford.
“The whole business looks confusing if you think of Carvana as a car company. The math gets simple once you see them as a lender that happens to deliver cars,” concluded Moonka.
Carvana may be more of a headache than a dealership in the end (and that’s saying a lot)
While some of this financial insight into Carvana’s operations may be new to some in the car community, those looking for a new car have been avoiding Carvana for quite some time. The way Carvana treats customers has been one of the biggest ongoing complaints.
Earlier this year, one Redditor ranted: “Carvana is now aggressively preventing you from inspecting your purchase vehicle before signing over title on your trade. This is an incredibly aggressive business tactic and different from the past experience often posted.”
Another Carvana customer said: “I purchased a car from Carvana a few weeks ago, and my experience was awful. On the second day, I took the car to a local mechanic for an inspection, and they found several significant issues.” This included dirty filters, misaligned wheels, bald tires, and fluids that needed to be replaced. The customer had to bring the car to a Carvana-approved mechanic. Some of the repairs were not covered, leaving them with a $453 bill.
They added: “I cannot recommend Carvana to anyone I care about. I want to help people avoid the same pitfalls I experienced, especially regarding 150-point inspection claims and the lack of flexibility in paying for necessary repairs.”
I am not a finance person, and on my end I have no clue what Carvana is doing behind the scenes. And there are plenty of people who swear by Carvana, especially if you are careful. One repeat Carvana customer said they just pay cash and turn down all of the extras and add-ons. Keep it simple. Another said: “Just bought a car from Carvana, the fact that I could shop thousands of cars at my fingertips, and once I input my trade information, the offer I received was much higher than I expected. Easy.”
However, if you are wary of Carvana and other online retailers, but dread going in-person, there are some tricks to dealing with pushy salespeople. First, if you need a loan, get pre-approved before heading to the dealership. The financing will be much cheaper at your own bank than at the dealership, since they often hike the interest rate to increase their profit. Second, consider the destination fee when you are negotiating the selling price. The destination fee cannot be changed, so be aware that you’ll need to pay that.
Don’t pay any additional fees, like extended warranties. Don’t be afraid to say no to add-ons, like car features you didn’t even know you needed until the salesperson mentioned them.
When calculating the price you will pay for the car, consider the full amount, not just the monthly payments. Depending on the length of your loan agreement, you will be paying a certain amount of interest. This should be considered when you do the math.
And schedule an inspection. Even though you can see used cars in person while at a dealership, you may not notice everything while you’re shopping. It’s best to see if there’s anything wrong so you don’t end up with unexpected bills later.
I’d personally be willing to risk getting ripped off just to get a car from a vending machine.
