Refinancing your car at the right time is a great way to get lower interest rates or new loan terms that are better suited to your current financial situation. If you’ve decided to refinance, it’s advisable to shop around since lenders offer different rates and terms. One established and reputable bank that you can check out is Capital One. In fact, it’s one of the largest auto loan providers in the U.S. Read on to learn more about Capital One auto refinancing.
Auto Refinancing With Capital One
Founded in 1994, Capital One is of the largest banks in the country. Apart from offering financing for new and used cars, the bank also provides refinancing for existing car loans. Refinancing your vehicle through Capital One comes with multiple benefits:
- You can pre-qualify for refinancing through Capital One with a soft credit check, which means that your credit score won’t be negatively affected
- The online application process is easy and streamlined
- You won’t be charged an application fee
- Capital One doesn’t include any prepayment penalties in their car loans
What Does Refinancing Mean?
Refinancing means that you take out a new loan to replace and pay off your old car loan. The new loan provides you with new financing terms, which are better suited to you than those of the previous loan. According to Capital One’s website, their customers save on average $75 per month by refinancing their car loans.
When Should You Refinance Your Loan?
You should only refinance when the time is right. You’ll also need to check whether your current car loan includes prepayment penalties. If so, you’ll first need to calculate whether you’ll still be saving money after you’ve paid off the penalties. Here are a few situations where refinancing may be a good idea:
Your Credit Score Has Improved
If you took out your initial loan when your credit score wasn’t that great, but you now have better credit, refinancing your car loan will provide you with more favorable terms. Buyers with good or excellent credit, which is typically 661 and above, may qualify for rates that range from about 2.4% to 5.58%.
You Cannot Afford Your Monthly Payments
Things change. Sometimes buyers lose their jobs or need to free up their funds for other responsibilities. If you’re in a position where you find that you cannot afford your monthly car loan payments anymore, you should consider refinancing your car. By doing so, you can negotiate a longer loan term with lower monthly payments.
Consumer Loan Rates Have Dropped
Another good time to consider refinancing your auto loan is when U.S. consumer loan rates are lower than when you bought the vehicle. Refinancing your vehicle when loan rates are more favorable will mean lower interest rates on your vehicle and an overall smaller auto car loan.
Your Current Loan Is Through a Dealership
Financing your car through a dealership is convenient when you buy a vehicle. However, this type of financing typically comes with higher rates. Since a dealer acts as a middleman between you and a lender, they mark up a lender’s rate and pocket the difference. For example, a bank may offer you an interest rate of 7% and the dealership will add 2% for themselves, which will push up your interest rate to 9%. Refinancing your car with Capital One, or another lender, can provide you with a lower interest rate.
You Want To Lower Your APR
Although the interest rate on your car loan and the annual percentage rate (APR) are linked, they are not the same thing. Whereas the interest rate is the percentage you’ll pay each year to borrow money, the APR includes the interest rate plus other fees and costs involved in taking out the loan, such as broker fees and closing costs. As such, the APR is a more accurate reflection of how much you’re paying for a loan. If you’re looking to lower your APR, refinancing may be the way to go.
How Do I Refinance My Car With Capital One?
Refinancing your car with Capital One is straightforward and easy. The various steps you need to take are clearly laid out on their website. Here are the steps:
1. Get Pre-Qualified
The first step in the Capital One auto refinance process is to check whether you qualify for a new loan. You simply select the “Get Pre-Qualified” tab, and the prompts thereafter are easy to follow. What’s more, the pre-qualification process won’t hurt your credit score.
As stated on the website, you need the following to be in place to pre-qualify:
- You have to apply for a loan of at least $4,000
- Your vehicle can’t be older than 10 years and must have less than 120,000 miles on it
- You need to be up to date on payments with your current loan
- You can only refinance through Capital One if the bank isn’t your current lender
2. Apply for Refinancing
Once you’ve completed the pre-qualifying process, which should only take a few minutes, you can start applying for a new loan. You simply need to select the offer that suits you the best and can then finish your credit application online. You won’t be charged any application fees. During this process, however, your credit score will take a knock since the bank will post an inquiry to your consumer credit report.
3. Finalize Your Loan Application
The final step of the application process involves e-signing your contract, submitting the necessary documentation, and supplying your existing lender’s details. In addition, you also have to supply Capital One with the title transfer documents. Once you have completed these steps, the customer service team will start to process your application.
Refinancing your vehicle through Capital One is a painless and straightforward process because their online Auto Navigator is easy to access and use. Since Capital One is a large and well-established bank, you can be assured of professional service and competitive rates.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.