by Aidan Kang, CFA
Senior Writer
UPDATED: October 13, 2022

You’ve heard rumors that CarMax approves auto loans for applicants with bad credit, so you want to try your luck. However, you can’t risk another hard pull hurting your credit score. 

Before submitting your documents to CarMax for pre-qualification, accurately assess your chances of approval. 

Yes, the company has flexible guidelines. But haphazardly applying for auto loans with minimal preparation only puts your credit at risk.

If you find the CarMax credit requirements and loan approval criteria confusing, don’t worry. This guide gives you a good starting point.

Our team checked official CarMax sources and independent review sites, perused multiple customer feedback, and reached out to CarMax loan specialists to gather first-hand insights into its loan approval process. You’ll have a firm grasp of whether CarMax will finance your dream car or not.

Stick with us until the end. Otherwise, you’ll tank your credit score applying for auto loan policies with stringent requirements.

Let’s dive into getting CarMax auto loans despite bad credit records!

How CarMax Auto Finance Works

CarMax is a widely known used car dealership with more than 200 stores across the country. 

The company boasts that its inventory consists of 50,000+ high-quality vehicles, and you can even take your preferred vehicle out for 24-hour test drives.

Can You Get a CarMax Car Loan With Bad Credit?

CarMax has steep prices, but customers keep returning to their stores because they offer the easiest bad credit loans on the market. 

The company doesn’t even care whether you recently got a car repossessed. At CarMax, credit scores don’t mean much. 

Yes, their underwriting team reviews credit reports, but they’ll go to lengths to generate a mutually beneficial policy despite your situation. Just make sure to be upfront with your agent.

Also, if the CarMax in-house auto finance team can’t accommodate your application, they’ll refer you to a lender that can. The company partners with multiple commercial and third-party lenders.

How to Apply for a Loan From CarMax Auto Finance

You can get your first car loan from CarMax in six easy steps.

Step 1: Research Online

With 200+ shops across the country, you’d save a lot of time and energy searching their online database first. Just go to their website and type in the make and model of the car you want. 

Note: You might spot some listings with a Coming Soon tag. This label indicates that the vehicle’s not with CarMax yet, but you can hit the Notify Me button to get updates once the listing goes live.

Step 2: Contact the Dealer

Once you’ve narrowed down your choices, get each listing’s address. If you don’t want to drive out to dealers in a different state or city, you can opt to have the car shipped. 

However, prepare yourself for steep shipping fees. Depending on the car’s point of origin, two-way shipping could set you back by several thousands of dollars.

Step 3: Check the Unit

CarMax lets customers test drive their vehicles for 24 hours before making a final decision, so inspect units to your heart’s content. However, test driving multiple vehicles might come with some hidden fees.

Step 4: Submit Your Loan Application

Once you’ve made a decision, inform your agent that you wish to take out a car loan. Accomplish the application form and submit the following:

  • Valid driver’s license
  • Proof of income
  • Proof of phone
  • Proof of residence
  • Address variance
  • Proof of insurance

Step 5: Place a Down Payment

Next, your agent will ask for a down payment. But before sending the money, ensure that a lender has already approved your loan application. Also, ask for an invoice or receipt.

Step 6: Finalize the Paperwork

Wait for your CarMax salesperson to contact you so that you can finalize the paperwork. Afterwhich, the dealership will finally release your vehicle.

CarMax Auto Finance: Pros and Cons

Do you find yourself on the fence about CarMax Auto Loans? To help you reach an objective, informed decision, we made a brief comparison of the advantages and disadvantages of financing your car under them.


  • Bad Credit Loans: CarMax goes above and beyond to provide car loans, regardless of your credit score. It automatically connects clients with its extensive database of lenders.
  • Multiple Lender Options: If CarMax can’t finance your preferred vehicle, it will refer you to one of its partner lenders. You’ll get to work with various commercial banks and third-party lenders.
  • Customizable Policies: Applicants with Fair to Good ratings can qualify for better rates by customizing their policies. If you want lower monthly payments, extend your loan term. On the other hand, opting for larger down payments minimizes your APR. 
  • Extensive Inventory of Used Cars: CarMax features an extensive inventory of high-quality used vehicles. Most of these have less than 10,000 miles on the clock.


  • Sleazy Agents: Stay wary of sleazy agents. Familiarize yourself with the company’s lending policies and guidelines to ensure that you get the best deals. Also, avoid agents coercing you into lower down payments and longer terms without a cosigner.
  • High-Interest Rates: Applicants with bad credit scores can expect to get the highest APR available. Remember: lenders are taking a significant risk by financing your car. They need to compensate for their potential losses with higher policy interest rates.
  • Pricey Vehicles: CarMax has an extensive inventory, but it also has overpriced vehicles. You’ll find that most cars on CarMax sell 10% to 20% less on other platforms like Craigslist or Facebook Marketplace.
  • Hidden Fees: Double-check your invoice reports and receipts to ensure that you’re not overpaying CarMax. Some sleazy agents might bombard you with surprise fees.

The Importance of Credit Scores When Buying a Car

Unless you’re working with a lender specializing in bad credit clients, your loan’s approval heavily depends on your credit score. 

Credit scores serve as universal creditworthiness ratings. Lenders, commercial banks, and other financial institutions check them before approving auto loans, credit cards, and bank accounts, among other banking products.

Of course, dealers offering in-house financing options also follow credit scores. No matter how gung ho your sales agent might sound, they can’t do anything if their underwriting deems you incapable of making their monthly payments.

Using Auto Loans to Build Credit Scores

Getting a new auto loan lowers your credit score temporarily, especially if you don’t maintain a low credit utilization rate.

Even if you don’t qualify for a loan, the hard pull during the pre-approval process compromises your creditworthiness. In the worst case, multiple loan inquiries could leave a permanent record in your credit history.

However, this doesn’t mean that you should avoid car loans altogether. Yes, opening new loan accounts hurts credit scores, but they also serve as tools to help good payers build credit in the long run.

Never miss your payment date. If possible, set up your debit card to send funds automatically so that you don’t forget about your due. 

Once you’ve established yourself as a responsible, financially capable debtor, lenders might eventually give you better ratings.

Other Tips to Build Your Credit Score Before Buying a Car

Are you unhappy with your auto loan options? Again, clients that demonstrate creditworthiness get the best rates. 

Business Insider even reports that loan applicants with scores upward of 781 can minimize their policy’s APR down to just 3.66%.

If you don’t mind delaying your new car, focus on building your credit score instead by:

Paying Off Your Bad Debt

Eliminate the idea that all debt is bad. Abusing credit cards and spending money you don’t have compromises your financial health, but utilizing loan policies and credit lines stands as the most surefire way to build credit.

Maintaining a Low Credit Utilization Ratio (CUR)

Your CUR reflects your reliance on credit. To improve your credit rating, you need to maintain a low CUR and prove that your monthly earnings don’t exceed your expenses.

Most experts suggest a 30% CUR. However, if you wish to improve your score quickly, avoid spending more than 10% of your credit limit. 

Keeping All Your Credit Cards Active

Never cancel your credit cards, even if you don’t owe anything on them. Doing so leaves a permanent record on your credit history, which would take years to rectify.

Instead, keep your credit cards open. Use at least 1% of your credit limit every month, cover your bills within three weeks of making purchases, and pay your annual maintenance fees.

Avoiding Late Payments

Don’t miss even one due date. If you don’t have sufficient funds to cover your entire billing statement, at least make the minimum payments.

Verifying Your Credit Reports

Check your credit reports at least every quarter. Double-check the reports if they contain updated, verified information and report erroneous data right away.

Alternative Used Car Loans for Bad Credit Scores

If you don’t like the policy your CarMax salesperson offered, look into other bad credit car loan lenders like:


Although LendingTree specializes in bad credit loans, applicants with good credit ratings should also look into its products. Their APR can go as low as 3% to 4% for three-year loan policies.

Also, the company boasts stringent privacy policies. You’ll get explicit reports and contracts detailing which entities and individuals have access to your data.

Auto Credit Express

Similar to CarMax, Auto Credit Express will connect you to a reputable lender willing to finance your vehicle. However, they require applicants to make at least $1,500.

Also, the company has one of the quickest qualification procedures on the market. You can check for pre-approval online and receive an accurate rating in less than a minute.

If you need bad credit loans fast, try You’ll get a check for your brand-new or used vehicle within 24 hours of qualifying for a loan.

However, note that their application forms ask for a lot of details. Make sure to set aside at least an hour for filling out the paperwork. prides itself on its speedy application process. Although they have stringent eligibility requirements, qualified applicants can get approved in less than 24 hours.

Getting a CarMax Auto Loan

Overall, when applying for auto loans at CarMax, credit scores don’t impact your chances of approval as much as credit history. 

Just make sure you don’t have multiple outstanding debts at the time of application. Otherwise, even CarMax might have trouble partnering you with a financial institution willing to finance your vehicle.

Also, prepare yourself for heftier interest rates and down payment requirements. Sure, CarMax can help you get an auto loan with a poor FICO score, but you’ll likely have to put down 20% of the car’s sale value and agree to a 12% to 20% APR.

If you don’t mind these caveats, go for a CarMax auto loan. 

However, if you don’t want to pay that much on interest rates, reach out to commercial banking institutions that might finance your preferred vehicle. Of course, you might have to bump your credit rating first.