Why is Carvana's financing rate often higher than a bank?

Carvana earns money from financing by originating loans at rates that include a markup above what they could access from capital markets. They then sell many of these loans to investors. The spread between the rate they charge you and the rate at which they sell the loan is profit. Getting pre-approved through your own bank or credit union before shopping Carvana is the simplest way to avoid paying a higher rate than necessary.