Here's a story that should make your blood boil.
A short seller report by Gotham City Research just exposed something ugly about Carvana—the company that revolutionized car buying with vending machines and slick marketing. Turns out, behind the scenes, they're running a lending operation that charges people 22% interest on car loans.
Let me say that again: twenty-two percent. On a depreciating asset. For five years.
The lender is called Bridgecrest, and most people have never heard of it. That's by design.
How the Scam Works
Here's the setup: you go to Carvana to buy a used car. Their whole pitch is convenience—no dealers, no haggling, cars delivered to your door. It's a great experience.
Then comes the financing. If you've got good credit, you get a loan from a normal bank at a normal rate. But if your credit is damaged—maybe you missed some payments, maybe you had a medical debt, maybe you just got unlucky—Carvana steers you to Bridgecrest.
Bridgecrest approves you. You're thrilled. You get the car. Life is good.
Then you look at the loan terms. 22% APR. On a $25,000 car. Over five years, you'll pay more than $40,000 total. You're paying nearly double the price of the car just in interest.
And if the car is used—which it is, because this is Carvana—it's going to depreciate. Fast. Which means you'll be underwater on the loan almost immediately.
The Real Kicker
A former car dealer posted on Reddit about the one time they encountered a Bridgecrest customer. The guy was driving a 2012 Chevy Impala with 150,000 miles and three accidents on the Carfax. A car that's worth maybe $4,000 on a good day.
He owed $15,800 to Bridgecrest.
Let that sink in. Nearly $16,000 owed on a $4,000 car. That's not a loan. That's a trap.
The dealer tried to help the guy refinance. He called Bridgecrest to get a payoff quote—standard procedure. Bridgecrest confirmed the amount verbally, but refused to provide a written payoff statement. They wouldn't email it. They wouldn't fax it. Nothing.
Why? Because they don't want you to refinance. They want you stuck in that 22% loan for as long as possible, paying interest every month while your car turns into a $500 junk heap.
The Carvana Connection
So what does this have to do with Carvana? Everything.
Bridgecrest is owned by DriveTime, which is owned by the same people who own Carvana. It's the same corporate family. Carvana just keeps it quiet because Bridgecrest's business model is, to put it mildly, not great for the brand.
Carvana sells you the car. Bridgecrest finances it at predatory rates. Both companies make money. You get screwed.
And here's the part that matters for investors: Gotham City Research alleges that Carvana's earnings are overstated by more than $1 billion because of how they account for these related-party transactions. Basically, they're claiming Carvana is using Bridgecrest to juice their numbers.
Is This Even Legal?
That's the question everyone should be asking. Charging 22% interest isn't illegal. It's legal in most states, unfortunately. Payday lenders and subprime auto lenders do it all the time.
But is it ethical? Absolutely not.
And is it sustainable? Also no. Because the only people taking out 22% car loans are people who can't afford them. Which means default rates are going to be brutal. Which means Bridgecrest—and by extension, Carvana—are sitting on a ticking time bomb.
What This Means for You
If you're thinking about buying a car from Carvana: read the fine print. If they try to set you up with Bridgecrest financing, walk away. Go to a credit union. Go to your local bank. Hell, ask your neighbor for a loan. Anything is better than 22%.
If you already have a Bridgecrest loan: refinance immediately. Call every credit union in your area. Many of them specialize in refinancing subprime auto loans. Even if your credit isn't perfect, you can probably get a rate under 10%. That could save you thousands.
And if you own Carvana stock—which has dropped from $490 to $369 in the last few days—you need to ask yourself if this is a company you want to own. Because lending money at 22% to people who can't afford it is not a long-term business model. It's a short-term cash grab that ends badly.
The Bigger Picture
This isn't just a Carvana problem. This is a subprime auto lending problem. There are billions of dollars in loans out there to people who are one missed paycheck away from default. And when the economy slows down—which it always does—those defaults are going to spike.
Companies like Bridgecrest are betting they can collect enough interest before that happens. But if you're the person stuck with the loan, you're not a customer. You're collateral damage.
If they can't explain why they're charging 22%, they're hiding something. And what they're hiding is that they're making money off people who can't afford to fight back.
