The e-commerce industry has progressed to the point where you can buy a car from the comfort of your own home. No need to go outside, look for the right car from one used car dealership to another, you can just look at them online and even purchase without needing to go out. Today we’ll be looking at two well known automotive e-commerce sites: Vroom vs Carvana.
We will be discussing their backgrounds, services, as well as the advantages and downsides of buying from either of them. Hopefully, we’ll help you to make an informed decision before buying a car online:
- Company Background
- Quick Comparison
- A Closer Look at Vroom
- A Closer Look at Carvana
- Questions & Answers
Vroom vs Carvana: How the Two Company Started
The company was founded in August 2013 by Marshall Chesrown, Kevin Westfall, and Scott Chesrown. Vroom is a used car retailer and an e-commerce company that provides a platform for consumers to buy, sell, and finance cars online. Over the years, the company has raised over $440 million in venture capital and private equity. The fundings include an investment from AutoNation Inc, which is the largest auto retailer in the US based on sales units. Vroom also acquired Texas Direct Auto back in 2015 but it acts as a separate brand. The two companies have a combined revenue of $900 million in 2015.
Rather than being a peer-to-peer marketplace (such as eBay, for example), Vroom functions as an e-commerce service instead and handles the entire transaction process with no-haggle pricing. They also provide a delivery service, so the entire process can be done fully online and touchless. Think of it as an online used car dealership.
Carvana was founded in 2012 by Ernest Garcia III, Ryan Keeton, and Ben Huston. The company is based in Tempe, Arizona and it is largely similar to Vroom. They also provide a platform for consumers to buy, sell, and finance cars online where they handle the entire transaction process.
Carvana also offers a delivery service for customers. However, they have a multi-story car vending machine in 24 locations at the time of writing. Their vending machines act as a pick-up point for customers should they wish to pick-up the car themselves. Customers will be given a token once they have purchased a car. They then take that token and insert it into Carvana’s car vending machine, and their car will be retrieved automatically by a car lift.
Carvana sold a total of 177,549 vehicles and made a total of $3.94 billion in revenue in 2019. This makes them one of the biggest used-car retailer in the United States.
Vroom vs Carvana: A Quick Comparison
Both companies are very similar and offer the same sort of services for consumers, making the Vroom vs Carvana debate a bit tricky. Here’s a quick look over some of the key features of Vroom vs Carvana:
- Delivery Fee. Carvana offers a free delivery service for local markets and charges $599 for an out of area delivery. While Vroom charges $499 for a delivery service and $799 for an enclosed trailer delivery service.
- Return Policy. The return policies are largely similar, with both websites offering a 7-day money-back guarantee. However, you can try the car for up to 400 miles with Carvana, while Vroom is limited to 250 miles.
- Warranty. Both websites offer a limited warranty. Carvana offers a 100-day or 4,189 miles limited warranty. While Vroom’s limited warranty is good for 90 days or 6,000 miles.
- Financing Requirements. Vroom requires you to have a minimum yearly income of $21,600 to use their financing services. Meanwhile, Carvana requires you to be at least 18 years old and have a minimum yearly income of $10,000. You can also use third-party financing services on both websites.
A Closer Look at Vroom
Car Buying Process at Vroom
Thankfully, Vroom makes their process clear on their website. Here’s a summary of the buying process at Vroom:
- Browse and choose the car that you wish to purchase.
- Click “Start Purchase” and create an account to save future information and purchase details.
- Choose how to pay, you can choose to pay by cash or financing.
- You can also choose to trade-in your current car before finishing the process.
- Upload key documents such as your driver’s license and insurance and place a $500 deposit (fully-refundable).
- Sign the paperwork which Vroom will send either by mail or e-mail (depending on requirements). You will need to finish this within 24 hours.
- Once the paperwork is finished, you will then arrange for the delivery with Vroom.
- Your car will arrive with temporary tags, which means you can drive the car immediately. Vroom will file the DMV paperwork if you finance the car with Vroom.
- You have 7 days or 250 miles to try the car and you can have a refund should you be unsatisfied with the purchase.
What Customers have to Say about Vroom
Vroom boasts several things on their About Us page, such as 3000+ vehicles available and over 400 makes and models. They also claim to have over 250,000 happy customers. On top of that, they have a total of 120-acre in facilities for vehicle reconditioning. However, these are the things that they boast. Let’s take a look at what some customers have to say instead at DealerRater:
- “Very easy and user friendly. The car is awesome, better than we expected. Everything went great and everyone was very friendly. We will be buying from Vroom again.”
- “Other than being nearly out of gas, a quart low on oil, inside windshield and mirror had gross thick film, and 4-week wait for a response on when my vehicle was going to be delivered after full payment and no lean holder, cash buy. I’d say nerve-racking but still worth it in the end.”
- “Bought, traded in, and financed all in one place. I was very reluctant to buy a car unseen. They offered a 7-day test drive. Car was as described. The transaction was easy. They bought my car and picked it up at my house. EASY! No negotiating all day with a dealer.”
If you’re still not sure, there are plenty of other reviews for Vroom at DealerRater and ConsumerAffairs.
A Closer Look at Carvana
Car Buying Process at Carvana
The buying process at Carvana is largely the same as well with Vroom. Here’s how the buying process works at Carvana:
- Browse and choose the car.
- Click “Get Started” to start your purchase, they will show all the required steps.
- Choose whether you want to pay by Carvana financing, third-party financing, or cash.
- Choose if you want to apply a trade-in, add a GAP coverage, or add Carvana Care extended warranty (if available on the chosen vehicle).
- Upload all the necessary paperwork such as driver’s license and insurance.
- Choose your delivery or pick-up details.
- An underwriting team will review your account and reach out once the order is placed.
- Once everything is done, delivery or pick-up will take place. This would depend on your location.
- Take the car out for a drive and see if it fits you. Carvana comes with a 7-day or 400 miles money-back guarantee. They also come with a 100-day or 4,189-mile limited warranty.
What Customers have to Say about Carvana
Carvana’s main advantage would be its free home delivery service should you buy a car from your local area. The financing requirements are also easier, as you only need to have $10,000 of yearly income rather than Vroom’s $21,600. The multi-story car vending machine is also convenient should you live nearby.
However, it’s always best to read what other people have experienced before proceeding to buy a product or service. Here are some reviews from consumers:
- “The easiest car buying process I’ve ever been through! 10/10 will buy here again! There was no one showing me cars I didn’t want or trying to push certain cars off! All in all great experience.”
- “Not as linear a process as I would have liked. Hard to talk to anyone–callbacks and texts not efficient. Would talk to one person and get one answer and another for another answer. We did have to have the car cleaned as it was dirty & there was a big scratch on the windshield that wasn’t reported on the multi-point inspection. Carvana took care of the windshield after we sent pics and gave us money towards having the car cleaned (though we are still waiting on half of it). Otherwise, fairly pleased and would buy from them again.”
- “I bought my car on Carvana and was surprised how easy and quick it was to get my car! I did have some technical issues with the app, but not Carvana itself. My car’s engine died so I couldn’t do a trade-in, but no worries I was still able to do $0 down without a trade-in! Will use again!”
Vroom vs Carvana: Selling Your Car
The Vroom vs Carvana debate goes beyond just buying a car since you can also sell your car at the two websites. You can either sell or trade-in your current car while purchasing a car from them. While the steps are largely the same, there are a few differences between the two. Here’s a look at the buying process:
Selling Your Car at Vroom
If you’re looking to sell instead of buying, here’s how to do it at Vroom:
- Get a free appraisal with Vroom by completing their form. Vroom will require either your license plate or VIN, mileage, and fitted features. It’s recommended that you get an appraisal first before proceeding with a trade-in.
- They will send a price which is good for 7 days or 250 additional miles.
- Upload your photo ID and registration (within the 7-day window).
- Their team will reach out to discuss and finalize the deal.
- Vroom will a free vehicle pick-up. The driver will give you proof of pick-up, which you will then need to send to Vroom.
- Vroom will send you a check via overnight mail within 2-3 days after the vehicle was picked up.
If you’d like to learn more, the video below is a Youtuber’s experience selling his car to Vroom:
Selling Your Car at Carvana
Carvana on the other hand does not state their selling procedure as clearly as Vroom. However, from what we could gather, here are the steps to selling your car at Carvana:
- Fill in your vehicle’s plate number or VIN at their website. They will give you an offer within 2 minutes, this offer is good for 7 days.
- They will ask you to provide other information as well regarding your car.
- Upon arrival, the Carvana team will inspect the car with the information you’ve provided.
- They will take the car for a test-drive before loading it onto their truck.
- The Carvana team will ask you to sign some documents and you will receive a bill of sale.
Keep in mind that if you live outside of their delivery market, Carvana will not pick up your car. You will have to meet them halfway at the nearest delivery market to get your car picked up.
Questions & Answers about Vroom vs Carvana
Can I negotiate prices at either Vroom or Carvana?
No. All prices at both Vroom and Carvana are fixed-price. What you see on their database is what you will have to pay.
Can I test drive the cars before buying?
You won’t be able to test drive the car before you buy it. However, both Vroom and Carvana believes that their 7-day trial period is a much better alternative. This trial period means you have more time to get to know the car you’ve chosen. They believe this is better than the 30 minutes you spend test driving the car from a traditional dealership.
While it does mean you will need to put a payment first, you do get a much longer period to get to know the car. Both websites also offer a 7-day money-back guarantee should you be unhappy with your car.
Can I at least inspect the car before buying it?
Sadly, no. Not only you can’t take the car for a test drive pre-purchase, but you also won’t be allowed to inspect the car either. You will have to inspect the car after you take delivery of it, and it is advised that you inspect the car immediately after delivery. That way, you can immediately identify if there are any issues with the car, and you can ask for a refund if you’re not happy with the car’s condition.
It’s always wise to do an inspection when you’re purchasing a secondhand car, even if you can only do it after you’ve purchased it. You can ask your local mechanic or use services like LemonSquad. It should cost no more than $200 to inspect most cars.
How long does it take to deliver my car?
Vroom states that delivery of the car you’ve purchased will take between 10-14 days after the purchase. However, they also state that it might take longer sometimes. Meanwhile, Carvana does not state how long it will take for them to deliver your car once purchased. They will simply finish the purchasing process and ask you to confirm an appointment to either deliver or pick up your car.
Do Vroom and Carvana Do a Hard Credit Check?
There are two types of credit checks (sometimes called a “pull”), which are hard pull and soft pull. A soft pull works like a background check and does not affect your credit score. On the other hand, a hard pull could affect your credit score and is usually only done when a vehicle is purchased and if a loan is established.
Carvana states that they do not do a hard credit check, they use soft-pull information to allow users to see their estimated credit terms on each of our vehicles, including APR, Monthly Payment, and Term. Meanwhile, Vroom states this on their website: “When applying for financing through Vroom, we will run a formal credit inquiry to view your credit and determine the best possible lenders to work with you. This inquiry may negatively impact your credit score.”
What Should I Look Out for Before Buying from Vroom or Carvana?
Both Vroom and Carvana have received mixed reviews online. Some people found their experience to be smooth, and even fun, while others dreaded the experience. The complaints seem to come mostly from miscommunication issues, some customers find that communicating via texts and calls with either Vroom’s or Carvana’s team to be inefficient. Some customers also complained that there was very little communication at times, making the process long and unpleasant.
Delayed delivery also seems to be a relatively common complaint from customers. Some customers had to wait for weeks or even months to receive delivery of their car or even get a pick-up appointment. There have also been quality issues associated with both Vroom and Carvana, where customers receive cars with faults that were not mentioned on their website.
Vroom vs Carvana Conclusion
The Advantages of Buying a Car Online
There are a couple of very obvious advantages of buying a car online. First, at the time of writing, we’re still living in the middle of the coronavirus pandemic, and buying a car online means you can stay home and reduce contact with other people. Which will reduce the probability of you contracting the nasty virus, and slowing the spread as well.
Thanks to the pandemic, buying online seems to be the preferred way for many people. Or at least, they’re willing to give it a try now more than ever. Small wonder that Carvana experienced a 25% increase in sales in 2020.
The second advantage is that you won’t have to negotiate on prices. While that does mean you will have to pay for what either Vroom or Carvana asks for, you won’t have to haggle – since it isn’t an option. If haggling isn’t really your forte, then this is excellent news. You won’t have to spend hours haggling with a salesperson, only to finally get a discount that is barely below the sticker price of the car.
As for the prices, no haggling isn’t always a good thing. Yes, Carvana and Vroom often have lower prices compared to the sticker price at a local traditional dealership. However, if you’re good at haggling, you may potentially find a better deal compared to buying the car online. We would advise checking the average market price of the car you’re going to buy. Afterward, compare it to the price at Carvana and Vroom, as well as at your local dealership.
Vroom vs Carvana: Which One’s Better?
Both Vroom and Carvana seem to have a solid website and app. There have been little to no complaints at all regarding their website and app’s usability. It’s really a matter of taste and preference when it comes to their website. However, Vroom’s website does seem easier to navigate through, while Carvana’s is a little cluttered. But again, this totally depends on your preference.
So, which one should you go for? Well, as we’ve said, both e-commerce sites have received mixed reviews from customers and it can be hard to decide. Carvana does seem to be the more popular site, and with total revenue of $3.94 billion in 2019, Carvana is ahead of Vroom which had a total of $1.1 billion in revenue. Suggesting that Carvana is the preferred site for many consumers.
To help you decide between Vroom vs Carvana, be sure to weigh in the key services we’ve mentioned before. For example, if you live nearby a Carvana vending machine, then maybe Carvana would be the better option since you can pick-up the car yourself for free. Carvana also offers easier requirements to use their financing services, which might be important for you. On the other hand, Vroom’s warranty lasts for 6,000 miles rather than Carvana’s 4,189 miles, which might give you better peace of mind.
Whichever service you choose, be sure to visit their website to get more detailed information before you buy a car from either of them. They also have a customer service line that you can call should you want to inquire more about them.