Capital One Auto Loan: In-Depth Review
A Capital One auto loan could be secured at almost any franchised dealership for competitive rates. Capital One offers an advanced phone app, a 24/7 customer service line and other conveniences that come with a large financial institution. The biggest downside is that you can only get a firm auto loan offer at the dealership, not before. And if you’re looking to buy from a private seller or a dealership not within the Capital One network, you’ll need to look for financing elsewhere.
How Capital One Auto Finance works
To get a Capital One auto loan, you’ll need to apply for financing at a partner dealership. More than 12,000 of the 16,682 franchise car dealerships in the U.S. partner with Capital One, so it shouldn’t be difficult to find a participating dealer near you.
It is possible to prequalify online for a Capital One auto loan and get an idea for what rate and terms you might receive, but it’s not a final offer until you fill out a full application at the dealer. We’ll talk more about the application process, below.
|Capital One Auto Loans at a Glance|
|New and used auto loans||Refinance auto loans|
|Rates as low as||3.39%||4.07%|
|Loan terms||36–84 months||24–72 months|
|Amount financed||$4,000+||Maximum of $50,000|
|Availability||U.S., excluding Alaska and Hawaii|
|Income requirements||A minimum monthly income of at least $1,500 to $1,800, depending on credit qualifications.|
Credit score requirements
Capital One declined to share its minimum credit score requirements but a spokesperson said the company works with a large range of credit profiles and strongly considers your income as part of your ability to repay the auto loan.
Like other auto lenders, Capital One isn’t just looking at your credit score and income. Other things it takes into consideration include the amount financed, the terms and the loan-to-value (LTV) ratio. In fact, you may be able to significantly improve the interest rate you receive by putting a 20% down payment on your vehicle, so your LTV is less than or equal to 80%.
Capital One Auto Navigator program
If you want to get an idea of what auto loan terms you may qualify for, you could apply for a prequalification online through Capital One’s Auto Navigator program where you may also browse cars for sale from partner dealers in your area.
Prequalification vs. preapproval
An auto loan prequalification is when a lender presents a potential car financing offer without doing a hard pull on your credit. The resulting offer is a “soft” offer, so financing isn’t guaranteed and your auto loan terms could change after you do the final application at a dealership. Other lenders provide auto loan preapprovals in which they do a hard credit pull and give a firm offer that’s not likely to change much, if at all, once you get to the dealership.
Here’s what you’ll need to prequalify for a Capital One auto loan:
- Single or joint application: Decide whether you want to apply alone or with a cosigner.
- Contact details: Your name, email, phone number.
- Residential details: Your address, length of time spent living there, whether you rent or own and your monthly housing expenses.
- Employment information: Employer name and address and your length of employment.
- Annual income: How much you make in one year before taxes are taken out.
The fine print of a Capital One auto loan
In order to qualify for a Capital One auto loan, you must be 18 or older and have a valid address within the contiguous 48 states. The car you want to buy must be a 2010 model or newer and have fewer than 120,000 miles. (There may be exceptions for vehicles as old as 2008 with up to 150,000 miles.) The vehicle you want to refinance must be seven years old or newer, have an established resale value and cannot be currently financed through Capital One.
Depending on your approval, the amount you finance may exceed the sales price of the vehicle and may include:
The pros and cons of Capital One Auto Finance
Capital One auto loan rates are competitive with other lenders and in fact, borrowers of all credit tiers can receive some of the lowest offered rates from lenders on the LendingTree platform. However, it’s always a good idea to compare offers by applying to more than one bank, credit union or online lender. You could fill out a single online form at LendingTree and receive up to five auto loan offers from lenders, depending on your creditworthiness.
Pros of a Capital One auto loan
Easy prequalification: Prequalification can be done online and doesn’t affect your credit score.
Flexible terms: Capital One offers a wide range of terms to fit your needs.
No lender fees: While Capital One does not charge any fees, keep in mind that the dealer might. Dealer fees may include document fees and dealer preparation fees, and delivery charges. Those fees may affect your APR if they drive up your loan amount.
Convenience: Capital One offers consumer bank accounts, credit cards and other services. You could potentially do all your banking and borrowing in the same place.
No early payoff penalty: Capital One doesn’t charge a penalty if you pay your auto loan off early.
Cons of a Capital One auto loan
Dealer restrictions: If the dealer you want to buy from is not a Capital One partner, you’d need to choose a different dealer or a different lender.
Vehicle restrictions: In most cases, you may only finance a 2010 or newer vehicle with less than 120,000 miles. You can’t buy or refinance an Oldsmobile, Daewoo, Saab, Suzuki or Isuzu with a Capital One auto loan.
Personal use only: You can’t finance a business vehicle here.
No specialty vehicle financing: Capital One also doesn’t finance boats, RVs, ATVs or motorcycles.
No private transaction or lease buy-out financing. If you’re looking to buy a car from a person rather than a business or you want to buy a car you’ve been leasing, you’ll need to look for another lender.
How to apply to Capital One Auto Finance
If you’re buying a new or used car, here are the steps you’ll need to take to finalize the financing.
Step 1: Get prequalified and preapproved.
You could prequalify through the Capital One Auto Loan Navigator program and still apply for preapproval with another lender. Getting preapproved with another lender may help you get a better deal on your Capital One rate.
Step 2: Search for vehicles.
You can search for vehicles on the Capital One website that are being sold by partner dealerships near you. It’s the easiest way to make sure you can use a Capital One auto loan on the car you want, but it’s not the only way to shop online for a vehicle.
Step 3: Visit the dealer.
Once you’ve selected a vehicle – or three – you’d like to test drive, head on over to the dealership and take your prequalification certificate with you. Kick some tires and decide on which car you’d like.
Step 4: Do a credit application.
Once you’ve worked out a deal on the car’s price and the value of your trade-in, if you have one, fill out a credit application and let the dealer run it by their network of lenders, including Capital One and possibly other banks, credit unions and financing companies.This will result in a hard inquiry on your credit.
Step 5: Finalize your financing.
If the dealer comes back with a financing offer that isn’t as good as your preapproval, then go with your preapproval. Dealers can and often do raise customer APRs, which is why having a firm offer is so important. When you’re satisfied with your loan offer, sign a contract with the dealer and you’re done.
How to refinance with Capital One
The process of refinancing your auto loan is simpler than buying a new or used car:
Step 1: Prequalify
Fill out a prequalification form online. Like an auto loan prequalification, a refinance prequalification does not affect your credit.
Step 2: Select an offer
Choose from the presented offers and finish the full credit application. This does involve a hard credit pull.
Step 3: Transfer title
Capital One will take care of paying off your old loan, but it may be up to you to transfer your title and take care of other details of setting up your new loan.
Capital One does not charge an application fee and does not have any penalty for early payoff. However, expect to pay a title transfer fee that is required by your state. You and your vehicle must also meet the following requirements:
- Your current loan must not be serviced by Capital One Auto Finance.
- Your current lender must be an FDIC- or NCUA-insured financial institution.
- Vehicles must be 7 years old or newer and have an established resale value.
How Capital One Auto Finance compares to other lenders
Capital One has some of the best auto loan rates in 2020, but not the absolute lowest. Credit unions often claim that spot, but you’ll need to meet membership and other criteria in order to qualify for their lowest rates. Capital One has competitive rates across different credit tiers on the LendingTree platform, which is why it’s a good one to add to your comparison shopping list. Customer reviews are largely positive from auto loan borrowers.
Yes, comparing rates may involve a hard credit pull. But a hard credit pull will be done at some point anyway in your auto loan process. Applying to multiple lenders doesn’t impact your credit any more than a single application, as long as you do all applications within a 14-day window. Some credit-scoring methods may allow up to 45 days.