How come a player in a Level 7 car is beating my times in a level 26 car?

Check the star rating of the car you are racing against, chances are it is higher than yours. For example, a 5 star car at level 7 is going to be much quicker than a 2 star car at level 26. 

To get a vehicle with a high star rating, purchase parts with trophies.

And while it is possible to beat higher level cars, the margin for error is much smaller. You'll really need to hug those corners and nitro at the right times. And don't forget to scout for better quality team members to boost your statistics.