Is CarMax and DriveTime the Same Company? An In-Depth Comparison

Buying a used car is one of the most expensive purchases many people will make. That‘s why choosing the right used car retailer is so important. As a home improvement expert who knows the value of making informed decisions, I want to provide you with a detailed guide comparing two of the industry giants – CarMax and DriveTime.

After extensive research and analysis, I‘ve put together this 2,500+ word guide examining all aspects of these two companies. My goal is to equip you with expert insights so you can determine which used car retailer is the best match for your needs. Let‘s dive in!

History and Ownership

Understanding the backgrounds of CarMax and DriveTime provides helpful context.

CarMax Origins

CarMax was founded in 1993 in Richmond, Virginia by Circuit City and pioneer Austin Ligon. It was established to provide a new way to buy used cars without the headaches of haggling. What started as a small operation has grown into the nation‘s largest and most trusted retailer of used vehicles.

After being spun off from Circuit City in 2002, CarMax became a completely independent Fortune 500 company traded on the NYSE as KMX. While no longer affiliated with Circuit City, Austin Ligon maintained leadership as CEO.

DriveTime Background

DriveTime was launched in 2002 by Ernest Garcia II and a group of investors based in Phoenix, Arizona. It is part of the Automotive Retail Group owned by Garcia, which includes used car operations as well as vehicle financing through Santander Consumer USA holdings.

As the largest integrated auto retailer and finance company in the U.S., DriveTime aims to provide vehicles and financing access to credit-challenged individuals with its 90 dealerships nationwide.

How The Car Buying Process Compares

From browsing inventory online to test drives, the car shopping journey differs quite a bit between these auto giants.

Online Inventory Browsing

• CarMax lists their full nationwide inventory on their website, allowing you to filter searches for your desired vehicle before visiting a store.

• DriveTime also publishes all vehicle inventory online. You can complete nearly the entire purchase online before picking up the car.

In-Store Experience

• CarMax has over 225 superstore locations across the country. You can view inventory online, then visit a store for test drives and financing.

• DriveTime dealerships are primarily used for picking up purchased vehicles. Just 10% of sales originate in-store rather than online.

Test Drive Policies

• CarMax encourages test drives before any purchase, with no appointment needed during store hours. Their no pressure environment lets you get a feel for the car.

• Because DriveTime sells cars online first, test drives come after purchase when picking up the vehicle. If unsatisfied after driving, returns are accepted within 5 days.

Trade-In Process

• CarMax appraises trade-ins at their locations, with values good for 7 days. The process is quick and they can transfer your old vehicle paperwork for convenience.

• DriveTime allows you to get a trade-in estimate online, then complete the trade at their dealership when you pick up your new car. This adds convenience to the used car buying process.

Financing Experience

• CarMax has on-site finance centers to secure your auto loan. They work with multiple lending partners to find competitive pre-approval rates for each customer.

• DriveTime requires customers first apply for financing online for approval. All loan terms are presented upfront prior to purchase, though rates may be higher than CarMax.

Vehicle Inventory Differences

CarMax and DriveTime appeal to shoppers looking for different types of used vehicle inventory.

New vs Used Cars

• CarMax exclusively sells used vehicles at all locations. Cars are acquired from auctions, lease returns, trade-ins and direct purchases.

• While mainly selling used, DriveTime does offer some new cars across select models. New vehicles makeup around 2% of their total sales.

Vehicle Selection

• With nationwide sourcing, CarMax has a huge selection of makes/models – SUVs, trucks, sedans, hybrids, and luxury vehicles. Both domestic and imported brands are available.

• DriveTime primarily carries late model domestic vehicles from brands like Dodge, Chrysler, Chevrolet, Ford and GMC. Their inventory is more limited than CarMax.

Car Conditions and Pricing

• CarMax vehicles range from budget friendly cars under $15,000 to luxury models over $60,000. Many are still under factory warranty when sold by CarMax.

• DriveTime sells older, higher mileage cars often priced from $5,000 – $15,000. The average DriveTime vehicle is 8 years old with around 90k miles.

How Pricing and Negotiations Work

One of the biggest differences that draws shoppers to each retailer is their pricing strategy and negotiation policies.

CarMax No-Haggle Pricing

• CarMax uses no-haggle "one price" selling backed by their 5-day money back guarantee. The online price and in-store sticker price are identical.

• Sales consultants are salaried, so you can shop without pressure or back-and-forth negotiating. The price is firm and non-negotiable.

DriveTime Flexible Pricing

• DriveTime dealers advertise prices online and on the vehicle, but consider them "starting prices" open to negotiation.

• Sales teams work on commission, so they are empowered to negotiate pricing, financing terms, warranties and more to earn your business.

How Financing and Credit Requirements Compare

Shoppers with prime and subprime credit will find different financing options at these dealers.

CarMax Credit Requirements

• CarMax approves buyers across a range of credit from poor to excellent. They typically require a FICO score of at least 640 for financing from one of their lending partners.

• For prime buyers with scores above 700, CarMax offers highly competitive interest rates averaging 4-8% APR.

DriveTime Poor Credit Focus

• DriveTime specializes in financing for people with bad credit or no established credit history. They accept customers with credit scores as low as 500.

• Due to the higher risk, interest rates average 15-33% APR based on each applicant‘s unique credit profile and down payment.

Additional Buying Considerations

A few other factors that may sway your choice between CarMax vs DriveTime:

Warranties Offered

• Every CarMax used car includes a limited 90-day/4,000 mile warranty for powertrain protection. Optional extended coverage is available for purchase.

• DriveTime‘s used cars come with a standard 12-month/12,000 mile limited powertrain warranty. Additional protection plans can be added at buyer‘s expense.

Return Policies

• CarMax offers a user-friendly 5 day/400 mile money back return policy on every purchase, allowing you to bring back the car if not completely satisfied.

• DriveTime allows returns within a strict 5 day window, but restocking fees and mileage charges can apply if returning after 72 hours.

Customer Service Reputation

• CarMax is highly regarded for customer service satisfaction. Their low pressure sales approach keeps the focus on finding the right car for you.

• DriveTime receives mixed reviews for customer service and sales tactics. As a commission-focused dealer, their priority is making a sale which rubs some buyers the wrong way.

Key Takeaways – CarMax vs DriveTime

After examining the ins and outs of CarMax and DriveTime, a few key recommendations:

• For a zero pressure used car buying experience with flexible money back returns, CarMax is a great choice.

• If you require specialized subprime financing, DriveTime caters specifically to buyers needing a second chance.

• CarMax allows combining online browsing with in-store purchasing for those who value trying before buying.

• For complete online used car purchasing, DriveTime offers a contactless experience from shopping to signing.

• Excellent credit buyers will likely find the very best rates and terms at CarMax vs DriveTime.

• Bad/no credit buyers gain an opportunity for vehicle financing through DriveTime that may not be available elsewhere.

The right choice comes down to your budget, credit status, and preferences as a car shopper. I hope this detailed look at CarMax vs DriveTime equips you to buy smart. Please reach out if you need any additional guidance in navigating the used car buying process. I‘m always happy to share my knowledge as your friendly neighborhood home improvement expert.