Shopping for a car can be like riding a roller coaster–exhilarating and frightening. It may take a little work, but once you’ve found the jackpot, your car purchase is set.
Researching different auto financing companies and their auto loan rates, loan terms, and loan offers can be extremely overwhelming.
It’s taxing digging through your personal finance records to go through the prequalification process and then the loan application process.
But what if you could eliminate some of that confusion? We may have a solution with a Capital One Auto Loan.
How Do Capital One Auto Loans Work?
Right off the bat, the biggest advantage of using Capital One Auto Finance is the type of credit inquiry on your credit report.
Capital One does a soft pull, meaning they will not inquire for a hard inquiry, dinging your credit when you’re just shopping around for a personal loan.
That means qualifying for a Capital One car loan credit application won’t impact your credit score.
When you’re ready to get started with Capital One Auto, place in your personal information like your name, social security number, employer, address, and phone number and its Navigator tool will show you all the offer terms.
Additionally, you can search their database for the car you want through their approved participating dealerships. Once you’ve found your car, take your offer to the dealership to complete the process.
Keep in mind that snagging a pre-approval does not automatically guarantee approval for financing. Additionally, your final terms will depend on the hard credit inquiry performed by the participating dealer.
At this point, you can choose to use either the Capital One Auto Finance option or whatever the company your particular dealership has to offer.
The Capital One Auto Navigator will also help you determine your baseline interest rate before you head to the dealership. This way, you’ll have a solid idea of what interest rate you’ll get.
It also helps you estimate your monthly payment, so you’ll know in advance what works best for your budget.
Keep in mind Capital One Auto does not do lease buyouts or cash-out refinancing. Here’s a quick bullet list of auto loan terms:
- Loan amount: $4,000 to $50,000. (Refinance options start at $7,500)
- Vehicle Age: Must be 7 years old or newer. Only new and used cars, SUVS, light trucks and minivans for personal use.
- Minimum monthly income: $1,500 – $1,800, depending on your credit score. They typically lend to those landing in the “Excellent” credit category
- Quotes are Good For: Auto quotes last for 30 days
- Application Fees: No application fees but late fees may apply
- Flexible loan terms: you can pay off your loan in 3, 5, or more years
How Much Can You Borrow?
Using Capital One Auto, you can choose to apply for either a joint or a single loan. This will help cover the costs of a new or used vehicle.
With new car loans, you can borrow between $4,000 and $50,000 from Capital One to finance the vehicle.
If you decide to purchase a used car, the vehicle must be no more than 7 years old and has to have fewer than 120,000 miles. Be sure to factor in the trade-in value of your former car if this case applies to you.
There are a few states in which the vehicle year can be 10-12 years old.
What Is the APR?
When it comes to a Capital One car loan, the best rates you will find are 3.59% for vehicle purchases. Of course, this percentage is reserved only for those who have excellent credit.
Remember that auto loan lenders set their credentials, but if you have a credit score above 720, you should get the best interest rates available.
If your credit is not in that range, then the chances are excellent that your credit score will be higher.
For example, if you’re in rebuilding mode for your credit, you’ll probably see a rate between 8.2% and 11.2%.
If you’re not sure where you fall, use Capital One’s calculator on their site to get a good idea of where you stand.
What Fees Does Capital One Charge?
There are a few fees when it comes to using Capital One Auto Finance as your lender.
First, Capital One charges a loan origination fee. Then, if you’re late on your payments, there are penalties and fees you’ll incur.
However, there are no penalties or charges for prepayment with your Capital One Auto loan.
If you can, select a lender that does not charge you anything for paying early. This can help offset or even eliminate interest costs if you can repay your loan early.
The Pros and Cons of Capital One Loans
Here are the benefits and drawbacks of using Capital One Auto Finance:
- Get pre-qualified without taking a hit on your credit. Capital One Auto allows you to complete a brief application to determine your auto loan eligibility. Since it is a soft credit hit, it won’t do any damage to your credit.
- Capital One Auto Finance provides a quick financing calculator on its site. If you do not want to mess with an application, you can fill in the calculator to get a good idea of your potential car payment before you apply for a new loan or refinance.
- Capital One’s Auto Navigator lets you view vehicles and rates before you buy them. It helps aid you in the car-buying experience from beginning to end.
- Compare rates based on the type of car you want. You can find the best deals and prices available as you shop for your preferred vehicle.
- Remember that even though you’re pre-qualified, you’re not necessarily approved. Getting an offer from Capital One does not mean you have the approval to buy the vehicle you want.
- You can only use your Capital One Auto Finance offer at specific dealerships. Not all dealers will accept your offer from Capital One. Additionally, you can’t use the offer to pay for a private party transaction.
- Auto Navigator will only show you vehicles close to you. As a result, your options are limited to what’s nearby.
- You could run into higher costs with Capital One. The company offers 72-month loans, which will cost you more over the long-term.
- Not available in all states. They are not available in Alaska and Hawaii.
- Excluded makes/models such as Oldsmobile, Daewoo, Saab, Suzuki and Isuzu vehicles.
- Excludes camper vans, RVs, salvage- and branded-title vehicles.
- Excludes any and all lease buyouts.
Is a Capital One Finance the Best Choice for You?
When it comes to finding the best auto loan option, Capital One Auto is hard to beat.
The company partners with more than 12,000 dealerships, meaning you shouldn’t have any trouble finding the vehicle you want. As an added bonus, you can view personalized rates and monthly payments when you pre-qualify.
However, remember that those numbers can change when you get to the dealership. The participating dealerships will pull your credit. Plus, you’ll have sales tax and registration fees to contend with.
On the other hand, if you need more flexibility, you may want to look for another loan provider.
This is especially true if you’re going to purchase your vehicle from an individual or from a dealership Capital One does not partner with. In that case, you’ll need to look for a different loan provider altogether.