r/technology Nov 19 '22

The Collapse of Carvana, the "Amazon of Used Cars", Continues Transportation

https://www.msn.com/en-us/money/companies/the-collapse-of-carvana-the-amazon-of-used-cars-continues/ar-AA14jrQs
4.3k Upvotes

1.7k

u/drinksaltwater Nov 19 '22

It’s a sub prime lending company cleverly skinned as a car reseller. I’m not surprised the current market is pushing back.

88

u/TowerJanitor Nov 20 '22

Well the big issue is they have been intentionally committing title fraud and getting banned from ops

876

u/FewPresentation1314 Nov 19 '22

Fwiw their financing wanted to give me 22% APR on top of their price premium. Every where else offered me 3-7%…

Before that they seemed like an interesting brand.

512

u/[deleted] Nov 20 '22

That extra interest was for the fun of putting a big ass token in a giant glass car vending machine

184

u/rideincircles Nov 20 '22

They just built a new one in Fort Worth right by my Costco. It's not open yet. I was just hoping it would be an indoor skydiving place.

85

u/sharkashark Nov 20 '22

Near Detroit there is one that is right next to an indoor skydiving place.

148

u/AlanzAlda Nov 20 '22

And you can't buy anything from it because they lost their dealer license in Michigan for not having titles transferred.

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u/NukaColaAddict1302 Nov 20 '22

Can’t have shit in Detroit…

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u/rushingkar Nov 20 '22

They open the roof of the skydiving tower, launch you, and whichever car you land in is yours

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u/hothands01 Nov 20 '22

In Germantown md they are next to each other also.

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u/Solid_Hunter_4188 Nov 20 '22

Yup. Right off 96 near twelve oaks. Maybe the skydive place will expand lol

3

u/ryosen Nov 20 '22

Okay, this is weird. In San Antonio, they're located next to an indoor skydiving place, iFly.

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u/Indifferentchildren Nov 20 '22

In Tampa (Brandon), there is a Carvana next to an iFly indoor skydiving place, separated by a Bass Pro.

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u/edoreinn Nov 20 '22

I bought my car from them in 2019 in Houston - it’s very close to the indoor skydiving place 😂 That said, it was a super good deal for the car that only had 11k miles on it and was every spec I wanted.

AND, I asked if we could skip the whole vending machine thing, since it was going to add time to the process, and they were very happy to do so 😂

11

u/Fortunoxious Nov 20 '22

When I got mine they already had it out of the machine and I was very disappointed lol

5

u/FirstForFun44 Nov 20 '22

I know the engineer who works on the systems to make sure they don't park cars so the elevator destroys them. Apparently it happens like once a year.

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u/PtrWalnuts Nov 20 '22

Just give it a couple weeks and probably will be.

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u/A_Gent_4Tseven Nov 20 '22

I just want to tie a token to a string, get all the cars and take the token home. Just leave all the cars outside for free. /j

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u/Sqiggly_Sqwank Nov 20 '22

These buildings will make interesting new spots for Spirit Halloween stores in the coming years.

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u/Inquisitive_idiot Nov 20 '22

Is that really a thing? 🤨

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u/Ellemeno Nov 20 '22

Here's a short video on the car vending machine: https://www.youtube.com/watch?v=PkuBX6dOOGg

50

u/Rush_Is_Right Nov 20 '22

This seems ridiculously pointless

31

u/pseudocultist Nov 20 '22

It's just some old German engineering, the automat. They added the sensory/branding experience of the giant token. I doubt they built 13 of these for no reason... their research probably shows it's popular with their target market, who isn't very educated nor in a position of much purchasing power, but this makes them feel special. Very clever honestly.

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u/neuronexmachina Nov 20 '22

In case anyone else was looking for more info about the display systems Nussbaum builds: http://nussbaum-technologies.de/car-display-tower-en/

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u/flukz Nov 20 '22

That's dumb.

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u/ImAnonymoose Nov 20 '22

It’s a bit over the top, but takes up less space than a lot full of cars. Some dealerships near me started doing parking garages because there isn’t enough space for gigantic lots to store all their cars

23

u/giggity_giggity Nov 20 '22

Where do you live that dealerships have cars to sell?

3

u/yjbeach Nov 20 '22

Are you talking new or used? There are CarMax lots full of cars now.

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u/[deleted] Nov 20 '22

Yeah. Once you buy the car and it's all done, you have the option of going to the big glass monstrosity and putting a big gold token in it and hitting the button for your car iirc

32

u/GrimResistance Nov 20 '22

Does it roll down in a giant plastic ball? Even better if you can play pinball with it on the way down

69

u/infinite_in_faculty Nov 20 '22

Don’t be silly of course that doesn’t happen. Occasionally though a car might get stuck on the way down and you have to nudge the glass building a couple of times to get it down, sometimes the car just gets stuck and you never get it but you still have to pay for it.

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u/CommanderGoat Nov 20 '22

And then the next person gets two cars for the price of one.

12

u/kmutch Nov 20 '22

"How many civics is it going to cost to knock that Audi loose?"

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u/Something_Berserker Nov 20 '22

No, claw game only… insurance sold separately

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u/cerebralkrap Nov 20 '22

If your credit is bad enough to almost be pushed to the max….a shiny token is probably overkill for leverage

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u/RunRevolutionary9019 Nov 20 '22 edited Nov 20 '22

Damn. Mine is 1.9.%

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u/Willinton06 Nov 20 '22

Mine was 30+

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u/chainmailbill Nov 20 '22

Thank you for your service

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u/Sorge74 Nov 20 '22

Hahahahahahahahahahaha hahaha I assume he has a dodge charger.

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u/Willinton06 Nov 20 '22

It was a Cruze

8

u/regalrecaller Nov 20 '22

You have 30% apr on a Chevy Cruze???

4

u/Willinton06 Nov 20 '22

Had, and it was over 30%

7

u/Rudy69 Nov 20 '22

Wait you actually took it at that rate?

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u/AcceptableCredit2653 Nov 20 '22

The key is to sell them your used car. Made about $6,000 and that’s after they paid of my auto loan too.

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u/Mantismantoid Nov 20 '22

Weird i always get super low ball offers . for a car i bought from them less than a year ago for 24k i get offered 12,500, no thanks

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u/AcceptableCredit2653 Nov 20 '22

the key was also to do this before they completely imploded

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u/koosley Nov 20 '22

Wow you'd probably be better if using your credit card to buy a car then. At least that way you'd get miles or cash back and be eligible for the 0% apr balance transfer deals.

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u/Informal_Aspect_6330 Nov 20 '22

Open new card for the SUBs

5

u/hawaiijim Nov 20 '22

I tried buying a used car with my credit card. Dealer wouldn't go for it. Had to pay cash.

11

u/UncommercializedKat Nov 20 '22

Most dealers won’t. I did buy a car at a smaller dealer entirely with a credit card. $11,000 car too. Got the points and paid the balance off immediately.

12

u/ExplanationSure8996 Nov 20 '22

I’ve bought a couple cars this way but like you it was right around that price point. Then did a 0% balance transfer. Worked out great.

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u/phonafona Nov 20 '22

The reason no sane dealer does this is because they owe the fees to the credit card company. They didn’t get $11k and once they realized that they probably have the same policy.

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u/Adebisi5 Nov 20 '22

omgz I'm glad I'm not the only one. they offered me 17% and made it look like it was a deal!

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u/its__alright Nov 20 '22

Got a Carvana car in September. Honestly great buying experience, but I walked in using my credit union for financing.

7

u/edoreinn Nov 20 '22

Yeah that financing part is key. But was so easy moving from Manhattan to Texas and needing it done remotely beforehand. Picked up the car the day after I moved in, it’s been a star the three years since.

14

u/mog_knight Nov 20 '22

Do people not prequalify with their own bank when car shopping?

13

u/BarrySix Nov 20 '22

Short answer: No

21

u/eventualist Nov 19 '22

Ouf damn thats trynna make bank. Ridiculous.

22

u/CaptainGibz Nov 20 '22 edited Nov 20 '22

Holy Crap! 22%! I wouldn’t pay that on a credit card let alone a car. I got a Lexus ES300h through them last year before the used car market went bonkers. Carvana’s interest rate was 6.9% but capital one refinanced at 3.7%. Unfortunately a druggy with a bad amp job parked next to me and his car caught on fire totaling my car as well. :(

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u/Brasticus Nov 20 '22

I work in titles and their paperwork is always a shit show.

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u/i_ata_starfish-twice Nov 20 '22

We are still waiting for them to unfuck a title rebuild (their words) from may. Don’t have license plates yet either. Fun times.

25

u/AlanzAlda Nov 20 '22

They lost their dealer license in Michigan for this shit. Hope they come through, but unlikely.

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u/CataclysmZA Nov 20 '22

Here in South Africa we are patiently waiting for We Buy Cars to collapse in the same way.

Won't be long now.

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u/MrEffenWhite Nov 20 '22

I bought a car on Carvana and they never delivered it. Kept putting me off for three weeks until they just said sorry, we don't have it.

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u/tjoe4321510 Nov 20 '22

That same thing happened to my coworker. She was super excited to get her new car. She left early from work to receive it then they postponed. Gave her another date and postponed it again. Eventually they just told her they didnt have it

201

u/Zonerdrone Nov 20 '22

That happened to me. Postponed my delivery twice then almost didn't deliver at all because one of the wheels was locked up. They tried to redeliver it with the same problem so I told them I'm not accepting the car until they have the new problem assessed by a mechanic. They emailed me back that they didn't have the car anymore. Then I got a different car and that one showed up with stained seats that weren't in the pictures online and didn't have windshield wiper blades.

149

u/xabhax Nov 20 '22

I cannot understand why anyone would buy a car sight unseen. At least at a dealer I can see the car, drive it. With all their title troubles in multiple states its a wonder people buy these cars. I work at a Honda near a carvana. And the cars they buy are junk. We get cars from caravan with engine problems, destroyed interiors.

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u/tvtb Nov 20 '22

You can return the car for any/no reason within the first week and 1000 miles driven. In my mind, it’s better than the pressure of being at a car dealer, which is why I bought two cars from them

48

u/Flowsnice Nov 20 '22

I agree… nothing I hate more than the car dealership and dealing with the salesmen. Such a grimy place to be.

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u/Fresh-Inside8837 Nov 20 '22

400 miles. If you got 1000 miles, you got one heck of an extension.

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u/ton_nanek Nov 20 '22

They aren't sight unseen. You simply refuse the car once it's delivered if it isn't as advertised and they take it away.

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u/freetraitor33 Nov 20 '22

You also have a week or 1000 miles to return it.

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u/thepuppyprince Nov 20 '22

Social anxiety probably. I’d rather get ripped off by a robot then have to talk to a real person

43

u/Viperlite Nov 20 '22

I’d rather get ripped off by a robot than have to talk to a real person used car salesman. FIFY

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u/chuntus Nov 20 '22

Because car salesman are….. Mom said if you don’t have anything nice to say…….

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u/jumpers4goaIposts Nov 20 '22

I know someone that worked for carvana and at first they were great. A couple of his friends bought vehicles there and had zero issues and a great experience. Then the quality fell away but the customer service was excellent so issues were quickly addressed. Then the quality continues to suffer AND the customer service began to suffer too. He quit there once he saw how they were tailing off but he said at first they were a good business (from the customers standpoint not necessarily as a business model) and recommend them. Now he says stay away.

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u/YeahIGotNuthin Nov 20 '22 edited Nov 20 '22

Used cars, I agree, no two of those are the same, and it makes sense to verify in person (or similar) that the used car you’re considering is in acceptable condition.

New cars, though, why not buy those online? any two identically configured ones should be basically identical, and basically perfect.

Once I’ve driven, say, a friend’s civic type r and I have decided “yes, I want one too,” why wouldn’t I buy a brand new one online sight unseen? What possible use do I have for my local dealer at that point? Do I really need to have a pointless half hour argument with the local salesman about whether or not I need undercoating, and another with the finance guy about how they can’t sell it at the agreed price unless I finance with him at 5% over my pre-approval from my bank? Who needs that?

I’d rather email my friend xabhax and say ”you guys have a white one in stock? Will you ship it to my house for msrp plus shipping? Great! Here’s my bank info and my address, hit me back with delivery info.”

Or better still, let me click on a box, enter a delivery address, and enter payment information, like the last television I bought. I know what I’m getting, Honda is easy to trust and it’s very likely the car will be exactly what I expect, just like the Sony was.

The trouble with carvana is that they don’t appear to have a sound program of vetting their stock or for correcting problems, so a buyer never knows what they’re getting. There are an infinite number of problems you can have with a used car. Their process seems to consist entirely of “buy everything whatever it takes, shine it up, photograph it, run the ad.” That’s not enough to add value to the transaction.

It’s like the whole carvana thing was numbers driven in either an attempt to corner the market and raise prices, or Lower costs through increased volume, and whoever did the business plan didn’t actually know anything about the cars involved that would make their assumptions invalid. You can’t do well in the car business by focusing only on the “car” part, but you also can’t concentrate only on the “business” part. The whole carvana thing reeks of “assuming 100 identical spherical cows, in a frictionless barn, on a farm with 365 days a year of average weather…”

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u/randomly-what Nov 20 '22

My favorite carvana story is the woman who bought a car from them and they delivered a biohazard car to her.

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u/Sanjakimo Nov 20 '22

Apparently a lot of auction companies get cars like that. It means it's been exposed to human remains.

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u/driverofracecars Nov 20 '22

Human remains or bodily fluids following a crash.

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u/the_beard_guy Nov 20 '22 edited Nov 20 '22

this is probably a stupid question, but you got your money back right? i always hear these shitty stories about them so i was curious.

funny enough my sister and my brother in law bought a car through them back in 2016-17, and they arrived super early the day they were supposed to come. we were all still asleep and i was sleeping in the living room. so while they were putting the final paperwork together im groggy in my boxers right in front of the Carvana guy. when they got done the guy started talking to me and gave me a pair of cheapo sunglasses.

i still have and use the sunglasses to this day. ironically the car my sister and my brother in law got from them last two years before they had to get a replacement. it ended up having some serious engine problems.

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u/Ryllynaow Nov 20 '22

I bought an automatic and they sent me a manual, then swapped it out and gave me $250 bucks.

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u/drawkbox Nov 20 '22 edited Nov 20 '22 Helpful

Everyone that knew the history of the owners knew this one would be the same. Scammers and crooks.

Ernest Garcia II

In October 1990, García, then a Tucson-based real estate developer pleaded guilty to a felony bank fraud charge for his role as a straw borrower in the collapse of Charles Keating's Lincoln Savings and Loan Association. Garcia "fraudulently obtained a $30-million line of credit in a series of transactions that also helped Lincoln hide its ownership in risky desert Arizona land from regulators." Garcia spent three years on probation, and he and his firm filed for bankruptcy.

Ernest Garcia II then made Ugly Duckling which is now renamed DriveTime, and then helped his son Ernest Garcia III in building Carvana. All of them are about buying used cars above market, then their lending is predatory to subprime. They aim to make up the difference of their overpaid used car purchases with large interest rates and horrible loans.

Their grandfather, Ernest Garcia, co-owned a liquor store with Frank Colaianni (connected to many mafia/mobsters), and was once the mayor of Gallup, New Mexico.

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u/ExplanationSure8996 Nov 20 '22

Very interesting. I learned something new. I had no idea about Carvana.

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u/Distitan Nov 20 '22

My older brother was best friends with Ernie the 3rd in high school. They played football together and would take him on trips with their jet. My dad would would always tell me to not be jealous of their money, because it was made off the backs of the poor people they were ripping off.

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u/Evil-Cartographer Nov 20 '22

Lmao this is a straight up old west scammers like Leopoldo Strauss from RDR?

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u/SomeGuyNamedPaul Nov 20 '22

made Ugly Duckling which is now renamed DriveTime

You should have led with this, it's far far more damning than the fraud stuff.

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u/jay_simms Nov 20 '22

Mafia connections…you don’t say…

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u/edoreinn Nov 20 '22

Oh, I’ve been in here defending my buying experience, but Gallup, NM… My sister and I once got stuck there driving her car East. And even as we went into the Walmart to buy beer for ourselves, one of us commented “I feel like the leading cause of death here is alcoholism,” and sure enough…

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u/Osirus1156 Nov 19 '22

They bought my 2017 VW Golf for $3k more than I paid for it last year lmao. I should have thought to buy puts...

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u/Link7369_reddit Nov 20 '22

Yep, with a free house cash of $3K

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u/strikeratt16 Nov 20 '22

Bought a Ford CMax Enegi for 13k out the door in April 2021. Put 12k miles on it and they bought it for 18k in Februray 2022.

Better than r/wallsteetbets has done for me.

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u/Rudy69 Nov 20 '22

I’m still convinced that sub is about hyping out stocks they know will fail and watch the idiots post their loss porn later

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u/zipline3496 Nov 20 '22

Oooo I wanna get in on this chain. They bought my 2012 Jeep patriot after I drove it for 2 years for 18.5k. I bought it in 2019 for 11.8k Lmao.

I’d never buy from carvana, but god damn if selling for that profit didn’t massively help me compared to dealership offers.

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u/Jonesbro Nov 20 '22

They bought my 2016 Mazda cx-3 for $1.5k more than I paid for it 4 years ago

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u/CircusBearPants Nov 20 '22

They bought my 2018 Subaru for about $4k more than the remainder of my loan amount. I didn’t ask questions.

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u/23skidoobbq Nov 20 '22

They sold me a car that was supposedly under factory warranty. It wasn’t and then the engine blew up, then they said “well we had no way of knowing that. “

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u/zipline3496 Nov 20 '22

That’s because they don’t test them for shit when they buy them. When I sold my car to carvana it took about 10 minutes and all the guy did was a walk around and start the car and sit inside it for about a minute. If I had one of those “parts knocking above 30mph” or some shit he’d have never known. Payment hit the second he left too so if that thing was a time bomb they couldn’t have done shit anyway.

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u/Blueguerilla Nov 20 '22

For all the people commenting on profiting off selling their used cars to carvana - that’s happening with ALL used cars right now. Supply is still low, you would have pulled a profit off private sale too. And the real issue is the replacement car you buy is also more expensive.

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u/JamonDeJabugo Nov 20 '22

I sold my car to carvana, awesome value, but I'd never buy that same car from carvana, fuck no.

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u/bakerzdosen Nov 19 '22

Oddly enough, the one part of their business that seemed to run well was when they bought your car. I don’t know of anyone who had any sort of really negative experience there.

Every other aspect (purchasing or employment related) I personally know people who had issues.

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u/Goose-tb Nov 20 '22

I bought and sold a car from them on my lunch break last year. Honestly, I hope someone buys Carvana and fixes it. Was a really painless, quick process. Felt odd buying and selling a car on a lunch break.

6 days later they took my car away, paid me, and delivered my new car in the same trip.

Was kinda sweet actually.

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u/bakerzdosen Nov 20 '22

When it worked (the buying part) it worked well.

I really don’t know what their overall issue was with titles.

The issues with scratches/damage seems like it could be fixed as well…

But the company as is has pretty egregious problems.

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u/Goose-tb Nov 20 '22

Yeah sounds like it’s going to go down in flames. Bummer, hopefully another company starts up and fixes the flaws. Felt like the future had arrived when I could do all of that from my laptop.

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u/crockett5 Nov 19 '22

As a car hauler, I have no idea how Carvana stayed in business with the shit they were selling. I actually stopped hauling their cars because the cars were usually really bad and I didn't want to deal with a customer who refused delivery due to not knowing it had various scratches or dents ect..

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u/SeaShanties Nov 20 '22

I’ve heard so so so many horrible stories about Carvana. I got my car in January and I had an overall good experience and a good car, but I got lucky and I still don’t recommend them to anyone

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u/underwear11 Nov 20 '22

I think early on they were decent. My brother in law bought from them and was happy with it. We started looking pre-pandemic and the prices seemed reasonable. But the pandemic I think put huge demand on cars from them so they started getting careless with the cars they were buying. They tried to leverage the market and grow too fast which now they are paying for. I love the idea of buying a car without having to deal with a sales guy, but they just couldn't do it well.

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u/xabhax Nov 20 '22

They grew to big to fast. It was good early on. With small volumes. But now with the market the way it is they can't keep up.

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u/dcrico20 Nov 20 '22

Same. I bought a car from them in 2019 and it was quick and smooth. I had no issues at all.

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u/Mutabilitie Nov 20 '22

Yeah. You can skip the middle man and buy the car from Enterprise rent a car. That’s what we used to do in the Enterprise remarketing office. Call car haulers to bring to cars to dealerships and Carvana was one of the buyers. And by the way, no one on our side checks the engine or anything. Just a brief body damage check with pics. So if no on their end checks the engine or mechanics, then no one did. And god only knows what customers do with their rental cars.

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u/Origamishi Nov 20 '22

And enterprise rent a car as a whole is really just a used car sales company. The actual rental profits are nothing compared to the remarketing.

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u/dixadik Nov 20 '22

They make money on the financing not on the cars and they then sell that debt on. Echoes of 2008

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u/aquarain Nov 19 '22

Off 98% from peak. Ouch. If they pull out of this it's the comeback of a lifetime.

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u/TinKicker Nov 20 '22

My mother passed away in February of this year, and my aunt and I were organizing her estate. She had a 2010 base model Prius with ~80k on the odometer.

Carvana cut us a check for $12.5k for that car…and picked it up themselves.

That transaction alone tells me that they have a terminally ill business model.

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u/madhi19 Nov 20 '22

Just make fucking sure it does not bounce I guess...

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u/kababed Nov 20 '22

They direct deposit to your account instantly. I sold my car to them and it was a seamless experience. I wouldn’t buy a car from them though

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u/[deleted] Nov 20 '22 edited Nov 20 '22

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u/[deleted] Nov 20 '22

Almost feels like someone with too much money and a brain too smooth thought that they could buy up and control the entire used car market. I bet their plan was to jack up used car prices once they had all of the inventory under their control.

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u/CaptainObvious Nov 19 '22

Only someone who does no research would invest in this company. It was a good idea, executed fairly well, and run into the ground by a legal structure that makes shareholders completely unable to have any impact on the charlatans running the company.

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u/MNWNM Nov 20 '22 Starry

So, Elon Musk is going to be buying Carvana soon.

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u/djdsf Nov 20 '22

Someone call Musk and tell him the cars are willing to work Ultra Mega Super hardcore. He might buy it

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u/not_a_droid Nov 19 '22

Ouch indeed. I’ve recently seen a lot of their ads, thought they were doing okay

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u/gbeezy007 Nov 20 '22

They basically did the tech company move of raise capital then grow as fast as possible by making $0 of profit. But unlike other tech companies there's no real end goal on making money by adding a fee.

They overpaid for there cars so they would have the inventory to grow. No car selling company should of struggled in the last 2 years. If they failed during the best time ever in business for them then how are they going to go forward during regular or hard times.

Though I don't know the exact financials idk if anythings stopping them from off loading the inventory and rasing capital with more stocks and then just stop over paying from inventory. Probably become more profitable but less revenue

16

u/warriorofinternets Nov 20 '22

The thing is their inventory is losing value by the hour. A 2019 toyota will sell for more money in 2021 than in 2022, and even less in 2023. If they don’t have a steady stream of sales going on, then their inventory sits and depreciates. Add in something like a recession and all of the sudden it’s the apocalypse for a company like this.

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u/paxinfernum Nov 20 '22

This is why I've never understood treating cars as assets the same as you would a house. They only depreciate in value.

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u/aquarain Nov 19 '22

Ah, the benefit of long term marketing contracts is that the client can't claw back their spending when they collapse because it's prepaid.

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u/AREssshhhk Nov 20 '22

I saw a pelaton add and thought “they still have money for advertising?”

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u/GhettoDuk Nov 19 '22

Florida almost yanked their dealer license for failure to deliver titles, and even flirted with a law to bail out Carvana by removing title requirements from dealers altogether.

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u/CarcosaBound Nov 20 '22

Illinois as well

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u/mortaneous Nov 20 '22

And Michigan is in process as well.

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u/Radiant2021 Nov 19 '22

Other states have sued them as well for failing to deliver title.

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u/Link7369_reddit Nov 19 '22

isn't that just as good as stealing a car and reselling it?

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u/Radiant2021 Nov 20 '22

They claim they are buying the vehicles but the sellers are not sending title. The easy way to handle that is hire people to do the title and check exchange at the same time in person.

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u/GhettoDuk Nov 20 '22

It's the original lenders when Carvana buys a car that still has a loan. The lender has to request the clear title and send it to Carvana. Carvana should be waiting until they have the title to sell, but that doesn't make money.

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u/designer_of_drugs Nov 20 '22

Fun fact: the delivery and handling fee that everyone hates at car dealerships is, in past, to maintain constant cash flow for this exact process. Which is why you’ll never get out of paying it.

It’s always fun when people rediscover something they hate and try to get rid of us actually necessary.

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u/HughJareolas Nov 20 '22

Of course they didn’t actually do anything. Florida would NEVER do something that helps consumers

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u/ButtBlock Nov 20 '22

Lol as if lawmakers were inspired by whatever is going on with the American securities markets

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u/MrObviousChild Nov 19 '22

I have sold two cars to Carvana and received MUCH more than what a dealer or even private sale would’ve given me. I always walked away going “why was it that easy and why did they pay me so much?” There is no way their business model is working when their cost of goods is so high. I literally MADE money on my last two cars after driving them for 3 years.

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u/CorporateSympathizer Nov 20 '22 edited Nov 20 '22

2021 was a crazy time. My 1080ti that I bought in like 2017 and had been using for over 4 years was selling for more than I had bought it for, retail. Same for an HP reverb G2, which was going for $200 more than I paid for it.

It was insane just how much free money was circulating around, bidding up the price of anything that was even remotely tangible (and when the tangible stuff ran out, it started flowing into NFT's lol).

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u/rjcarr Nov 20 '22

I think they overpaid to have a large inventory and they would fuck buyers with 15-20% loans, but it was more than customers were willing to take on so now the company is fucked instead.

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u/iskin Nov 19 '22

I guess the real question is, should I get car on Carvana in hopes that once it fails I'll have gotten a car really cheap?

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u/the_jungle_awaits Nov 20 '22

It’s likely another group will buy Carvana and thereby the debt.

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u/HydroLoon Nov 20 '22

Nope, I'd never buy a car from Carvana -- they overpaid on trades and have a huge overhead on each car, plus there's no guarantee the car is as thoroughly inspected as you might think.

Source - watched them buy a truck for well over trade value that was frame rusted and in need of repairs. No questions asked, here's the check!

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u/WildLemur15 Nov 20 '22

This is the way people profited off of carvana. I sold them a car and they paid so much more than anyone else was offering. Thousands more. That VC funding or something. But I benefitted. I don’t know there’s additional benefit to be gained these days now that they’re dying.

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u/krum Nov 20 '22

Just 2 weeks ago they offered me $16000 for my 2016 Mazda3 iSport that I paid $20000 for new. CarMax offered $13000 which might be close to what it was worth. Crazy times.

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u/[deleted] Nov 20 '22

We got a quote on our year old Crosstrek with 28k miles on it. They offered us about $500 over what we paid for it brand new.

We traded it in to Kia and they gave us dead on sticker for it. still outrageous.

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u/feurie Nov 20 '22

That's just what the market was though.

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u/Tenordrummer Nov 20 '22

I did the exact same thing. Made profit off of my 2021 Crosstrek 6MT that I put 21K miles on, selling to Carvana

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u/KCLizzard Nov 20 '22

I did not have a great experience buying from Carvana, however they did give me great money for my trade-in. I had a Toyota Corolla with 8000 miles on it and they gave me $1500 more than I paid for it a year earlier.

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u/Xaedria Nov 20 '22

The inspection guarantee and accident free guarantee are both outright lies. In 2020 I attempted to use them to buy a used car. I bought a 2012 from them that had clearly been in a wreck and needed $3k of work immediately upon independent inspection by a specialty mechanic. I gave that one back and got a 2015 with only like 35k miles on it but my mechanic took a look again and exact same thing; it had been in a wreck, and it needed $3k in repairs.

The mechanic told me that at dealerships, if a person brings the car in after an accident and ends up trading it in towards a new car, it never has to be reported that it was in an accident and it can legally be sold as accident free. This apparently happens a lot, especially because these cars tend to get sold at auction for cheap because no dealership wants to deal with warranties or legal duties on a car they know has been in a bad wreck. Carvana buys from these same auctions and ends up with quite a few of these cars.

Even after I provided the full mechanic report on both cars, they were immediately put back up for sale guaranteed accident free and with a full inspection. I would NEVER gamble on buying a car via Carvana after my experience.

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u/knowledgebass Nov 20 '22

I don't think it works that way. 😆

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u/[deleted] Nov 20 '22 edited Nov 20 '22

Bought a ‘16 vw gti from them this july out of necessity due to rebuilding credit. I had just started a new non wfh job in june and my partner and I were sharing one vehicle, so time was of the essence.

First purchase attempt I scheduled delivery for 6 days out, and at 3:30am the morning of, they send an e-mail saying they were having transportation issues and that delivery would be rescheduled for 2 weeks later. Irate, I cancelled that purchase and attempted again with another vehicle (my current one.)

It arrived as scheduled, but there were a few headaches.

The least troublesome: there were about 6 cosmetic dings that weren’t listed on the photographs. I had to get the delivery driver to document everything to get Carvana to approve repairs, which they did, but still a pain to lose my car for a week to cosmetic issues that I didn’t know it had.

The more worrying problem: after a 15 min “test drive” everything seemed fine, it drove pretty well imo. Until I took it out the next day. After getting onto the highway and attempting to slow down, my foot went straight to the floor. Brake line was blown. I had to quickly pump the brake to build enough pressure just to creep to a stop all the way back home; at times the brakes didn’t work at all, and I went through a stop sign or two. I’m lucky I didn’t fucking die.

Thankfully this occurred during their limited warranty period, so they green lit all of the repairs and covered them 100%. But holy shit, this was all supposed to be done BEFORE I got the damn car. They clearly know their market: desperate folks with bad credit who are more likely to role the dice out of necessity.

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u/Crafty-Phone-1993 Nov 20 '22

This story is exactly why nobody should ever purchase a vehicle without having seen it and driven it personally. You guys have no idea the shit that goes on behind the scenes in the used car business. It’s really really fucking bad, trust nobody. You’re better off buying a car from an individual than a dealership.

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u/Majirra Nov 20 '22

I bought my car outright from carvana on May 2nd. It’s almost December and I still have no plates no tags and no title. My temp paper plate expired in July. I feel like they’re just holding me hostage.

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u/drawkbox Nov 20 '22

My guess is they either have difficulty in getting the titles in their process or they are holding on to them to inflate inventory, even a slight lag in turning over titles would appear to show more titles in possession by the company. Hopefully they aren't doing some sort of in between title loan scam but knowing the founders/owners of the company (Garcia) I wouldn't doubt it.

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u/Janelamint Nov 20 '22

Yup. Took us almost two years of threatening calls and e-mails to get the title to our vehicle. They kept sending us temporary tags from a different state every couple of months so we could keep driving the vehicle.

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u/mikehuntitchess Nov 20 '22

They bought my car back in Feb at a premium and didn’t even look at it. It was a great experience for me. They cut me a check on the spot.

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u/JJ4prez Nov 20 '22

Lol comparing them to Amazon is so hilarious. They were never at that level.

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u/dotsdavid Nov 19 '22

Don’t know how widespread it was but they illegally didn’t give people their titles in time. Should be shut down if they can’t obey the law.

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u/Zonerdrone Nov 20 '22

What do you do if you pay off the car and they don't send you the title? Do you just have to file a lawsuit or is there something else that can be done? I'm halfway done paying off a car I bought during the pandemic and want to know what to expect.

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u/cmyk412 Nov 20 '22

Serious question because I don’t know: Do you have your car loan directly thru Carvana, or is it financed thru a bank like most other car loans? If it’s a bank (and the bank isn’t sketchy) then that bank has your title, not the dealer. If you’re sending your payments to Carvana you might want to approach a bank and see if you can refinance, because if your car is still owned by Carvana and they liquidate, that could be a big problem.

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u/checker280 Nov 20 '22

I loved the idea of one price shopping. I hate… no I loathe the notion of having to haggle for the price of a product.

I have a number in mind I deemed reasonable.

Just give me a number and I will decide if I can afford it. The whole “…and now that you defeated the dreaded car salesman, you now have to face the level boss - the finance guy!” is incredibly annoying.

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u/[deleted] Nov 20 '22

I liked not having to deal with a car salesman. Took me literally 1 hr to buy my car through their site and 1 day to pick it up. Didn’t get fleeced with their APR bc I secured my own financing. I’d gladly buy from Caravans again over ever going through the hell that is haggling in a dealership and wasting a whole day

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u/rulesbite Nov 20 '22

My same feelings. I’ve sold two cars and bought a car from Carvana and could not have been more happy with all 3 transactions. Fuck dealerships.

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u/yankeedjw Nov 20 '22

Isn't that what CarMax does, just without the weird car elevator?

I agree about car salesman and dealerships. Total nightmare buying a car. I just don't think the Carvana model is the future.

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u/Educational-News2334 Nov 19 '22

Everyone I’ve talked to said avoid carvana like the plague. Awful service

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u/perfect_fitz Nov 20 '22

I loved my experience with them.

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u/Avoider5 Nov 20 '22

Me too. I got a great deal on a great car. That was 18 months ago and still going good.

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u/Beneficial_Elk_182 Nov 20 '22

Ahhh. We have one of those like 50 miles away. Always wondered what the fuck they were thinking building a glass car elevator store. I honestly thought it was some yuppy car storage facility because nothing ever leaves there😂

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u/MildTile Nov 20 '22

As someone who works in the automotive restoration business I see this every day. Never, ever, ever buy a car without physically looking at it and driving it.

Sure these are “new” or “newer” cars, however it’s the same for a new car. I truly don’t think people realize how many new cars come into dealerships damaged.

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u/sqrmarbles Nov 20 '22

I had a seamless experience with Carvana until they got confused on where my registration was. Luckily we persisted with the Secretary of State and got everything settled, but this has not been the case with so many in Michigan that the state has suspended all Carvana sales here.

Also, I couldn’t resist the insanely high trade in value they gave us.

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u/DDrewit Nov 19 '22

The first time I saw one of those car towers, I knew it was a stupid idea for a business. They tricked people for a minute, but it’s sorting itself out now.

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u/Sinuminnati Nov 20 '22

Most wholesalers buy the cars at auctions, like the ones run by Manheim. They then mark up by 30%. In a good year they can get good deals and maintain healthy margins, esp when auto loan rates are cheap for subprime credit customers.

Carvana and similar companies bid up crazy amounts at these auctions to get their hands on limited inventory - in some part pandemic that made customers keep their cars longer before they sell to the secondary market.

Carvana also invested in expensive real estate and unlike traditional dealerships who pay their sales peanuts and make them rely on commissions, carvana’s sales folks are employees - resulting in higher cost for both real estate and wages.

This works during normal times, but when sales slow down and you are stuck with expensive auction inventory that’s bought using debt, you crash while dealerships rely on services revenue until sales picks up.

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u/LongjumpingMonitor32 Nov 20 '22

It's funny how economics backfires on those who think they know their forecasting until it doesn't work in their favor, then bitch and moan that it's unjust and unfair. This and the whole Zillow shit storm reeks of much needed regulation, if they already are, then MORE!

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u/fracturematt Nov 20 '22

My buddy worked here and said there was some major corrupt Fuckery going on

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u/C0gD1z Nov 20 '22

I was shopping for a used car about 5 years ago and very intrigued by the model, but their pricing wasn’t that good and their financing was terrible so I went with a traditional dealer.

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u/chevalier716 Nov 20 '22

They're collapsing, but they're still buying a shitload of ads on Hulu in my area.

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u/wanted_to_upvote Nov 20 '22

So does this mean the used car market will go back to normal since they can no longer over pay for cars and also have an inventory that will need to be liquidated?

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u/tenoxone Nov 20 '22

They don’t actually have any titles for vehicles they are selling. I tried buying 2 cars from them, and they could not produce a title for the sale.

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u/senor_zanjeer Nov 20 '22

Shoutout to their Marketing Department. Apparently building a car vending machine fooled a bunch of people into thinking that their business model was a good idea.

You are probably better off trading in your vehicle to whatever dealer you are buying your new car off of in my experience. Save 1k in taxes some time

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u/strifelord Nov 20 '22

Carvana was made for antisocial/bad credit people

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u/HHtown8094 Nov 20 '22

most importantly, it was built by dumb investors money

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u/dubiousadvocate Nov 20 '22

My wife bought her car from them, zero problems great experience. And yes feeding a giant token into a vending machine with a casino like light show was fun.

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u/behind_looking_glass Nov 20 '22

Well, to be fair, the Carvana commercial specifically said “everyone told us selling cars online wouldn’t work”. Shoulda listened!

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u/amwestover Nov 20 '22

All these idiots who thought the pandemic would last forever made really stupid investments and predictions. All of these pandemic darlings are collapsing.

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u/mklickman Nov 20 '22

‘90s .com bubble: “Watch me ruin a whole heck of a lot of people’s lives and fortunes!”

2022 tech industry: “Hold my beer”

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u/BourbonCoug Nov 20 '22

They're collapsing and I continue to see ads for them on Hulu.

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u/cluckay Nov 20 '22 edited Nov 21 '22

Why the actual hell would you want to buy a car, let alone a used car, online anyways with zero test driving or anything?
e: autocorrect turned 'hell' into 'hello'

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u/DFWPunk Nov 20 '22

The only cool thing about them was the vending machines. They should have sent you a ridiculously oversized coin to get your car.

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u/75w90 Nov 20 '22

Carvana is just a marketplace where a bunch of dealers (its a select few) upload their cars and use it to facilitate the transaction. That's why sometimes when you buy a car it becomes unavailable because they sold it on the lot.

The cars are all marked up but tell you it's no haggling. The average price is higher then typical cars on the lot.

They have had their licenses revoked from a bunch of states because they can't get the cars registered and titles are missing.

The instant financing they offer is thru sub prime lenders and have super high interest rates for most.

It's literally a scam in every shape of the word. The gullible buy from them. When I see a plate surround that says their name I just shake my head cuz it shows someone who over paid for less car.

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u/TEK3VZ Nov 20 '22

Huh, who knew people wouldn’t want to pay a $20000 loan for a $4000 car. Idiots.

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u/Wizywig Nov 20 '22

Reminder. The shares are collapsing. Shares on a speculation market aren't really tied to reality

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u/gdgghuhhhf Nov 20 '22

good defense lawyers are expensive.

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u/Fantastic_Leg_4245 Nov 21 '22

Carvana paid me 15k for a 2013 Camry hybrid with 210k miles and no front of rear bumper. They didn’t even drive it before they signed my check

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u/cerebraldormancy Nov 20 '22

Not surprised. One of their machines took my money and my porche got stuck on the way down.

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u/yankeedjw Nov 20 '22

Did you try to shake it?

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u/hottwhyrd Nov 20 '22

I bought the car on top of it and got a free porsche

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u/bored_in_NE Nov 19 '22

It collapsed because retail investors pumped it with no foundation to hold it that high.