Do you want to buy a CarMax car? CarMax preapproval is a special financing option that CarMax provides for its customers. CarMax preapproval offers an opportunity to get the best interest rates possible on your purchase.
However, there are some things that you need to know before getting CarMax preapproved for your next car purchase.
We will look at what is involved in the process of CarMax preapproval; how does it affect your credit score and why should you care; whether or not it is harder or easier to get approved through CarMax vs. traditional banks, and lastly, the pros and cons of buying cars from CarMax with CarMax approval.
Should You Get CarMax Preapproval?
You may be wondering whether you should first get pre-approved for a loan before visiting CarMax to shop for cars. The answer is “yes.” Unless you are planning to pay cash for a car, a pre-approval is recommended.
To illustrate the importance of this step, here’s an example: You’re offered a $30,000 car loan by CAF, and you have your heart set on that exact model. In addition:
- You want to reserve the right to visit other dealerships to look at different models because you don’t want to lose that option. After all, it’s not very often that you buy a new car.
- You’ve heard about Carmax’s 72-hour return policy so that even if you decide not to buy with them after looking at their inventory, no one will know but you.
Is Carmax Preapproval Accurate?
CarMax Auto Finance provides pre-approved offers to interested car shoppers free of charge and at any time. This means that even if you check your credit scores with a different lender before checking CarMax’s pre-approval status, they will not be affected by it.
The only two significant things that can affect this pre-approval are:
- You did not follow through on the loan approval process (i.e., no documents were submitted).
- You changed your address or phone number in an attempt to trick them into thinking you’re someone else who would qualify for financing when you don’t actually do.
If either of these is true for you, then don’t expect CAF to approve your offer. It is also helpful to know what credit score is needed to buy a car at CarMax so you can compare with other dealers.
In terms of accuracy, yes; we can say that this preapproval is 100% accurate, which means that once you submit the necessary documents for verification if you’re eligible to get a loan and CarMax accepts your application for financing, then CAF will offer to finance your car no matter where else you may have shopped.
How to Get a CarMax Preapproval
The process of CarMax preapproval takes less than ten minutes. To get your CarMax preapproved offer, you’ll need to enter in some personal information in the CarMax pre approval application such as:
- Your Income and Assets (i.e., what’s on your last pay stub or bank statement).
- Personal information about yourself, including name, address, date of birth, and social security number.
After this is entered into the system, CarMax will verify any past derogatory marks on your credit report that would disqualify you from financing with them. Such examples may have been caused by a previous bankruptcy, for example.
The good news? This process does not affect one’s credit score at all! CarMax’s preapproval should not be affected if the previous issues were addressed successfully.
Does CarMax Accept Unemployment as Income?
If you have unemployment income from collecting unemployment insurance benefits, CarMax will accept this as income. Even if your credit is not in great shape, or you have a bankruptcy on it, CarMax can still approve financing. Even with these blemishes on the report, they can offer pre-approved offers that do not require any down payment at all.
There’s no need to feel like their options are limited when shopping for cars with CarMax preapproval.
Does a CarMax Preapproval Affect Your Credit?
A preapproval from CarMax is not a loan, so CarMax preapproval will not affect your credit score.
If CarMax approves you for financing, the decision to get approved is based on:
- The creditworthiness of an applicant’s income and assets.
- The risk associated with extending or providing credit in general (i.e., how likely are they to repay their debt).
- How long it has been since any derogatory marks have appeared on someone’s credit report without being repaid successfully.
Note that if CarMax denies your finance application, then CAF may still make inquiries into one’s current financial life to verify other information such as occupation and salary history. However, these inquiries do not result in harm to one’s credit scores.
There are also ways how to repair your credit yourself should you fall short.
CarMax preapproval does not affect credit scores, but CarMax preapproval is still essential in making a car purchase.
Is a CarMax Preapproval a Soft Credit Pull?
When CarMax preapproves someone for financing, CarMax does not run a credit check on the applicant. It’s considered a CarMax pre-approval no credit check pull. CAF runs a “soft” inquiry into one’s financial history when pre-approved by CarMax.
This means that even if you check your credit scores with another lender before checking CarMax’s pre-approval status, they will not be affected by it.
The Benefits of CarMax Pre-Approved Financing
As you can see, CarMax auto finance offers many benefits to those who have previously been denied financing and want the opportunity for some relief with their new financial life; such as:
- Quick Approvals
- No Application Fees
- Fast Delivery of Automobiles (within 72 hours)
Additional benefits of a preapproval from CarMax:
CarMax preapproval does not affect one’s credit score. CarMax preapproved financing is a great way to help people who may have less than perfect credit history and cannot qualify for traditional car loans because of that. CarMax offers fast approvals, with delivery as soon as 72 hours after their approval of the application in most cases! CarMax also offers no application fees or down payments required, which can save you time and money when buying your next new vehicle.
The Disadvantages of a Preapproval from CarMax for a Car
One of CarMax’s preapproval disadvantages for a car is that they only offer management of CarMax trade-ins. CAF does not provide any financing options with other non-CarMax dealerships, limiting the number of places you can go to purchase your next vehicle.
- Additionally, people have complained about how CarMax’s preapproved offers don’t allow them to negotiate on the price or pay off their existing loans as traditional auto loan lenders do.
Therefore, if you want to buy a used car from CarMax and want to negotiate, it might be better to consider going through another lender such as USAA or Bank of America to get all these benefits together into one package.
If you need a car for short-term consider car rental companies that don’t require a credit card to rent.
How Do I Know What CarMax Pre-Approved Loan I Am Qualified For?
The CarMax preapproval process is relatively simple. The applicant will have to provide their personal information such as name, address, date of birth, and social security number for CarMax to run a soft inquiry on them with CAF’s system.
The preapproved loan amount offered is considered fair because CarMax will base it on how much the applicant can afford based on their salary and other income information they provide and what type of vehicle is being bought.
To figure out a CarMax preapproved loan amount, CarMax first looks at an applicant’s gross monthly income (before taxes) to determine how much they can afford to spend on a car. CarMax will then take the gross monthly income and multiply it by 12 to determine their yearly earnings, which is used as a benchmark for determining CarMax’s preapproved loan amount.
What if I am Denied a Preapproval from Carmax?
If CAF cannot approve someone, then they will give them some options for assistance. CAF will either send them on an information tour where they’ll be educated on how they might want to pay off past derogatory marks so that they could become eligible for better lending terms, or they will provide them with a list of CarMax preapproved lenders who can give the applicant better rates and terms.
Some of the educational information CAF might recommend would be to:
- Pay down any balances on your credit cards.
- Pay off the balance of a car loan above CarMax’s maximum limit for trade-in value (which ranges between $4000 and $8000).
There are additional ways how to get pre-approved for a car loan when you have bad credit that are simple. Additionally, CarMax preapproved lenders may be able to offer the applicant a better interest rate or terms than CarMax can as well.
Not all CarMax preapproved lenders will offer this service, so it’s best to do some research before applying for any loan through them (or any other lender). Don’t forget to study the hacks how to improve your credit score quick.
Or if you prefer, you can lease; even a used vehicle. There are many pros and cons of leasing a used vehicle that may be a good alternative if you can’t get pre-approved through CarMax.
CarMax Financing vs. Banks
If you are wondering which has better terms for financing a car at CarMax, CarMax financing, or a bank, then you’re not alone. CarMax preapproval is easy and quick, while the traditional process can be long and drawn out with tons of paperwork to fill out to qualify for an auto loan.
Which is better depends on whom you ask.
- CarMax offers fast approvals, which usually take less than a day and CarMax preapproval is also the only way to trade in your car at CarMax.
- On the other hand, banks offer more rates than CarMax and financing options for non-CarMax dealerships, which may be nice if you want to check out different places before deciding where to purchase your next vehicle.
- The interest rates between CarMax and Banks vary, but CarMax preapproval offers the lowest rates on their CarMax loans.
The type of credit you have also impacts what the interest rate will be as well. CarMax’s financing process is easier for people with bad credit because they don’t run a hard inquiry when approving someone, which lowers their risk and helps them get financing. CarMax preapproval is also a good option for people with no credit or bad credit because of the lack of hard inquiry and higher rates on other lenders.
CarMax Financing vs. Credit Unions
We covered some of the preapproval financing differences above between Banks and CarMax. Doing an analysis on CarMax Financing vs. Credit Unions, CarMax preapproval is still a good option for people with bad credit or no credit as CarMax doesn’t run any hard inquiries to approve the applicant.
The only downside of CarMax financing versus credit unions would be that CarMax car loans have higher rates. Typically, with credit unions, you have to be a member to borrow from them, but CarMax preapproval is for anyone who wants to apply and get financed.
However, credit unions are located everywhere which makes joining easy.
Credit Unions will also do a hard pull on your credit to determine whether or not you will get approved; CarMax preapproval is a soft inquiry that has lower risk and may be an easier route for getting financing.
What are Alternatives for a CarMax Preapproval?
Some alternatives for CarMax preapproval might be the type of CarMax car loan you want to finance, or if you have better credit than a CarMax preapproved customer.
If you are not approved for financing because of your poor credit history, then CAF will usually recommend that applicants speak with one of their CarMax preapproved lenders and see what they can offer. You can also start to budget paycheck to paycheck to help prepare for an auto loan payment.
FAQs
What is the Best Credit Score to Purchase a Car?
The best credit score to purchase a CarMax car is around 700. CarMax preapproval will allow people with 600+ credit scores the best chance at getting financing through CarMax without having to pay higher interest rates than someone who has better credit.
What Types of Cars Can You Get Approved for CarMax?
You can get approved for CarMax preapproval on any CarMax car, but some vehicles, such as the Cadillac ATS or Audi S-Line, are only available for CarMax financing.
What is a CarMax Preapproved Lender?
A CarMax preapproved lender is someone who agrees to finance your vehicle through CarMax and helps you get approved with their CarMax preapproval. CarMax financing is a process that CarMax uses to finance their own cars and has lower rates than traditional car insurance lenders.
CarMax Preapproval Summary
CarMax preapproval is a quick and easy process for CarMax customers. CarMax preapproval also has lower rates than traditional lenders like banks, credit unions, or other CarMax financing options, making it an attractive option if you’re looking to get approved quickly with the lowest interest rate possible.
The only downside of CarMax preapprovals is that they have higher rates than most other auto loans on the market; however, this may be worth it considering how fast and easy getting your approval will be.
