MCLEAN, Va., June 2, 2005 /PRNewswire-FirstCall via COMTEX/ -- With interest rates on the rise and dealer purchase incentives declining, a new national survey from leading financial services provider Capital One (NYSE: COF) reveals that today's car buyers are steering their attention more sharply toward the financing arrangements for their vehicle purchases, including more loan shopping and budget planning, compared to last year's buyers.

"Today's car buyers are shopping smarter than ever before. They are more budget conscious and they recognize the important link between the various financial elements of buying a car and their ability to get the best value from their purchase," said Diana Don Colby, director of financial education at Capital One.

The survey of more than 1,000 recent and prospective auto buyers found that people preparing to buy a vehicle in the next year view the financial aspects -- such as their loan and purchase price -- as the most important elements of their buying experience. Almost half (49 percent) of consumers planning to buy in the coming year ranked financial issues as the most critical part of a satisfying car buying experience, up from one-third (32 percent) of those who bought in the last year.

A growing number of consumers are also using research and educational tools to help prepare for the car-buying process and ensure that they are getting the best deal possible. In fact, among those planning to purchase a vehicle in the next year, 57 percent say they will comparison shop for car loans through multiple financing sources before buying -- up from 37 percent of those who purchased in the last year. An additional 84 percent of people planning to buy in the coming year say they will develop a budget for their purchase, compared to 65 percent of buyers from the previous year.

"Doing your homework and establishing a budget have always been smart ideas, but with interest rates climbing, it's more important than ever," said Don Colby.

While many consumers realize that shopping for car loans can have great benefits, 20 percent of this year's car buyers say they have no plans to conduct any research on their car loan options prior to arriving at the dealership.

"People who overlook their car loans are making an expensive mistake," said Jack R. Nerad, editorial director of Kelley Blue Book's kbb.com. "The difference of just two percentage points on your APR can either save or cost you about $1,400 over the life of a five-year, $25,000 loan. There are some excellent resources available to help consumers shop for car loans, but many people don't know where to begin."

How Can Consumers Get The Best Deal?

Because education is the key to getting the best deal when buying a car, Capital One has teamed up with Kelley Blue Book to offer prospective car- buyers the following helpful tips.

• Set a realistic budget. Choose a vehicle that won't overextend you financially. A general rule of thumb is that no more than 15 percent to 20 percent of your total monthly budget should go toward all of your car-related expenses.


• Verify your credit record. Order a copy of your credit report to ensure it's accurate and in good shape. Correct any errors before applying for a loan.


• Comparison shop for loans. Check out credit unions, banks and online lenders to see what rates are available in the market, so that you know a competitive rate when you see one.


• Arrive with financing in your pocket. Having approved, no-obligation financing in hand gives you a competitive advantage when you go to buy, giving you the power of a cash buyer. If the dealer offers a better loan rate, you can take it with no penalty.


• Approach your purchase as three transactions. It's best to treat each part of the purchase separately: 1) financing; 2) trade-in; and 3) vehicle purchase. This will simplify the process and maximize your negotiating opportunities.


• Match length of loan to expected length of ownership. Select your loan term based on how long you plan to own the vehicle. Buyers who take out longer-term loans can find themselves "upside down" on their loan (owing more money on the car than it's worth in trade).


• Review your financing terms carefully. Make sure you know your interest rate, monthly payment, amount you are financing, the length of your loan and your trade-in value.

Survey Methodology

In collecting the data for this study, Braun Research conducted 1,004 telephone interviews with consumers who had purchased a new or used vehicle in the past 12 months, or who plan to purchase a new or used vehicle in the next 12 months. Interviews were conducted nationwide between the dates of April 14 and April 21, 2005 via telephone using an RDD (random-digit dial) sample. Interviews were conducted during the evening hours at respective local times to ensure that the most representative sample was assembled. Quotas were maintained for both age and gender. The margin of error for the sample is reliably calculated at 3.1%.

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation (http://www.capitalone.com) is a bank holding company whose principal subsidiaries, Capital One Bank, Capital One, F.S.B. and Capital One Auto Finance, Inc. offer a variety of consumer lending products. Capital One's subsidiaries collectively had 49.1 million accounts and $81.6 billion in managed loans outstanding as of March 31, 2005. Capital One is a Fortune 500 company and, through its subsidiaries, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

SOURCE: Capital One Financial Corporation

Diana Don Colby of Capital One, +1-703-720-2371, diana.don@capitalone.com; or Alison
Athay of APCO Worldwide, +1-206-239-0140, aathay@apcoworldwide.com, for Capital One