Does CarMax Lease Cars? [Complete Guide!]

Car leasing is a good way to get a car without paying the total cost upfront. It also gives you more flexibility because you can sell the car after the lease ends or extend the lease. CarMax is a well-known company that sells vetted second-hand cars, so today, I will explain if CarMax leases cars.

CarMax does not lease cars. CarMax only buys and sells used cars. The only option they offer, similar to a lease, is financing. CarMax financing and car financing are about 50% more expensive than leasing a car.

I asked CarMax customer support over live chat if they lease cars; here’s a screenshot:

*screenshot from CarMax live chat support

Below, I will explain how CarMax financing works. What the monthly payments look like. And how they compare to the cost of leasing a car. So you can decide whether to get a car financed with CarMax or lease a car with another car dealer.

How Does CarMax Financing Work [Compared to Leasing]?

CarMax offers financing where rather than paying for the full cost of the car upfront, you can pay a monthly fee, with an interest payment added. Here’s a summary and full rundown of how financing with CarMax compares to leasing a car.

In general, CarMax financing is about 50% more expensive per month and in total than leasing a car. It is also more expensive if you have a bad credit score. But, CarMax has very competitive financing rates and will even allow you to change your financing to another provider.

Below, I will provide some numbers as a guide so you can understand why leasing is a better option.

Interest is calculated annually but is added to the monthly repayments. The terminology used is Annual Percentage Rate (APR). In simple terms, the amount of interest you pay a year.

The amount of interest you pay depends on your credit score. If your credit score is worse, CarMax charges more, and if it’s better, they charge less. Here’s a table that shows how much interest you pay to finance a car with CarMax based on your credit score. 

Credit Score	Annual Percentage Rate (APR)	Monthly payments*
Excellent (800 FICO score)	4%	$571 per month
Very Good (740 to 799 FICO score)	6%	$594 per month
Good (670 to 739 FICO score)	9%	$630 per month
Fair (580 to 669 FICO score)	13%	$679 per month
Challenged (< 580 FICO score)	20%	$770 per month

*For this example, I’ve used a car valued at $25,000, with a down payment of $2,500 and a repayment term of 4 years (48 months). 

It is a good idea to play around with the numbers using CarMax’s tool, so you can see how much the repayments will be for different-priced cars. You can access the tool here.

Leasing a car also charges interest. In general, the amount of interest your pay also changes based on your credit score. The cost to lease a car also takes into consideration a car’s depreciation.

Generally, a car will lose 20% of its value after the first year, and after 4 years, it will be 50% of the value you paid for it brand new. Using a car valued at the same price as that used for the CarMax calculations, the repayments would be $308 per month.

Here’s a list of the numbers I used to arrive at this figure:

• Cost of the car: $25,000
• Depreciation: -50% after 4 years
• Length of the lease: 4 years (48 months)
• The resale value of the car after the lease ends: $12,500

Using the calculator provided on Bankrate.com, the cost of the monthly payments is $308 per month. Therefore, over the total time you have the car to finance it, it would cost about $27,405. Whereas, if you lease it, it would cost you $14,784.

So, if you lease a car, it’s about half the price overall. There are a few options at the end of a car lease. You can buy out the car and then sell it. You can extend the lease, buy out the lease and keep the car, transfer the lease, or trade in the car.

Is Leasing a Car Worth It

Buying a car is a reasonably large purchase and not something people do very often. There are various options, such as buying it outright, financing, and leasing a car. It takes a bit of calculating to figure out what the best option is, so here’s a summary of whether leasing a car is worth it.

Generally speaking, leasing a car is usually worth it. Car leasing is about 53% cheaper than financing a car. For a $25,000 car, rather than paying the entire cost of a car, you pay about $15,000. At the end of the lease, you can sell the car for $10,000. Therefore, it only costs $5,000, rather than the full $25,000.

There are a few more minor details that make leasing a car a little bit more restrictive. For example, some leases only allow you to drive the car a certain amount of miles. But, overall, it’s a far better option.

Does CarMax Approve Everyone

Getting approved for financing from CarMax involves a bit of paperwork, and a credit check is always performed. But, here’s whether it’s easy to get financing from CarMax and if they approve everyone for financing. 

CarMax does not approve every applicant. However, they state they have various financing options to suit all credit profiles. CarMax offers to finance customers who have a FICO credit score under 580. But, the lower your credit score, the higher the annual interest they charge. 

If you get financing from CarMax and then find a better financing option, such as from a bank, CarMax will allow you to change the financing. It’s a service they offer called a 3-day payoff program. 

Essentially the other company providing the financing will buy out the existing financing and then provide you with a better interest rate. Also, CarMax does not charge any penalties for doing this.