And it was the easiest part of the purchase.
One of the things I hate about buying a car is financing. Talking to my bank, checking my credit score (ugh), filling out forms (double ugh), sifting through finance rates, loan terms and more can be frustrating and confusing.
But, I needed a car.
Hello, Auto Navigator
I’ve been a fan of Capital One Cafes for a while (half price Peets coffee with your Capital One card!), and a fan of my Capital One credit card, so I decided to give the company’s Auto Navigator a shot.
I downloaded the app and boom, I was on my way. Frankly, it was so fast and easy it’s almost hard to remember all the steps. But the highlights are really clear.
How Auto Navigator Works
I filled out some basic information and Capital One pre-approved a loan limit before I began shopping. This gave me the confidence that I could be flexible and not stuck negotiating small points to get to a set monthly payment or price. And, it was not a ‘hard’ credit approval which dings your credit score; if I changed my mind or went with another lender my credit would be unaffected.
I was able to weigh the terms of different loan lengths; in the app I could see and adjust the downpayment, trade in value, price of the car, interest rate and loan length of 4 year, 5 year or 7 year loan (shudder!) and pick the one that was the best fit for me. 7 year loans are the max that Capital One will finance, but 4 or 5 are best; longer loans will have you owing money on a car that is worth less than your loan is—which is financially unhealthy.
You Can Shop for a Car in the Auto Navigator App, Too
Then I could shop from the cars in the Auto Navigator database. There are a number of filters for different types of cars, price, features, etc, and I could set a distance from home. I liked that I could shop with a dealer that wasn’t close to home—I’m willing to drive a ways to get the car at the price I want. As it turned out, we drove to a dealer about an hour away, so I was glad to have my financing lined up; it wouldn’t be convenient to come back to process loan paperwork.
Luckily for us, the car we were eyeing was at a dealer in the Auto Navigator database. So, we went to take a test drive.
Even when negotiating the purchase at the dealership I could adjust the terms of the loan on my Auto Navigator app, changing the downpayment, price and loan length to see the interest rate and monthly payment. This is so great when you’re in a negotiation; the power of the sale is literally in your hands.
You Still Have to Sit with the Finance Person at the Dealership
But, the hard part is done; there’s no sweating and anxiety to know if you’re approved for the loan and there’s no pressure while you’re trapped in their office to make changes to the deal. You know clearly know your terms.
Once we agreed on the car and price, we headed to the finance office. I let the salesman know that we would be using Capital One for our financing. He offered that the dealership may have a lower finance rate, and of course, I’m up for the lowest rate possible. But once in the finance office it turned out that the dealer couldn’t beat the interest rate that Capital One offered, which was fine — it’s what I was expecting to pay.
Buyer Beware Caveats—Yes, There Are Some!
From there the dealership finished the loan process by completing my credit report and printing out all the paperwork for me to sign. One buyer beware note: Make SURE the dealer processes the loan terms you selected; our dealership tried to process a 6 year loan which had a higher interest rate. We insisted they re-work the paperwork with the loan terms I found on the Auto Navigator app, and they did.
Also be aware that not all dealers participate in Auto Navigator, so if you find a car that isn’t in their database you can’t use the app for this purchase – though you can visit your Capital One branch to ask about a traditional loan. Auto Navigator’s pre-approval looks for a minimum income and a minimum credit score (generally good to excellent). And, the Auto Navigator pre-approval doesn’t mean you are fully approved. You still have to go through the loan approval process.
How the Dealer Gets Paid
And yes, they do! Dealers have a point-share agreement with the finance companies they accept. That means the loan company or bank will give them a point or a share of the interest fees you pay for processing the loan. So even if you’re not financing through the dealership, the dealer gets paid if they are in the Auto Navigator database.
I all, it was the simplest transaction we’ve ever had. In the past we have financed with the dealership and while the rate was good—usually better than the bank’s— it took forever. This time the loan approval process was a breeze. That the dealer had to print out literally dozens of pieces of paperwork, and reprint most of them because I found mistakes on almost every single one, well, that’s not Capital One’s fault.
But maybe it’s their opportunity to make that part better, too.