New Survey: Americans Lack Basic Knowledge of Their Auto Loan Interest Rate
Capital One Survey Reveals Majority of Americans Don't Know Auto
Loan Interest Rate, Unaware of Auto Loan Refinancing Options
MCLEAN, Va.--(BUSINESS WIRE)--Sept. 10, 2008--According to a new survey from Capital One Financial Corporation (NYSE:COF), a surprising number (61%) of Americans who currently have auto loans do not know the interest rate they are paying on their loan. In a challenging economy, when saving money is particularly important, many consumers may be paying more than necessary and could benefit from a lower interest rate and a lower monthly loan payment by refinancing.
"Simply put, a lower interest rate means lower monthly payments and long term savings," said Sanjiv Yajnik, President of Capital One Auto Finance. "By reducing the interest rate on an auto loan by a percentage point or two, consumers can save money on their monthly bills that can add up to a significant amount - hundreds or even thousands over the life of the loan. Knowing your current interest rate is the first step in determining if refinancing is a good option for you."
The survey shows that Americans are starting to look for small ways to save money in this challenging environment, such as reducing their latte intake (9%), quitting smoking (9%), or even limiting themselves to just window shopping (12%). But, surprisingly, most consumers have not considered auto loan refinancing, which would likely make a bigger impact on their bank account. In fact, nearly two-thirds (62%) of consumers surveyed said they did not know refinancing their auto loan may save them money.
"Finding ways to cut back on monthly spending is tough when the price of necessities keeps going up. For many consumers, refinancing their auto loan could free up enough money to buy an extra tank of gas, or a week of groceries," added Yajnik.
How much can consumers save by refinancing?
The amount of money consumers can save by refinancing their auto loan depends on many factors, including the current interest rate, loan balance and the individual's credit rating. With some of the lowest rates in the nation, Capital One Auto Finance currently offers auto refinancing rates for as little as 6.95 percent, which may be substantially lower than the interest rate many car owners currently pay. For many consumers, even a small reduction in their interest rate results in significant savings over the loan term. Consider a consumer who originally financed a 5-year, $25,000 auto loan one year ago at 9.95 percent APR.
-- If the APR was reduced by 3 percentage points: Today, that same consumer would save $1,423 over the remaining four years of the loan (or about $30 per month) simply by refinancing online at 6.95 percent APR if approved at www.capitalone.com/autoloans. -- If the APR was reduced by 2 percentage points: Today, that same consumer would save $954 over the remaining four years of the loan (or about $20 per month) by refinancing online at 7.95 percent APR if approved at www.capitalone.com/autoloans. -- If the APR was reduced by 1 percentage point: Today, that consumer would save $480 over the remaining four years of the loan (or about $10 per month) by refinancing online at 8.95 percent APR if approved at www.capitalone.com/autoloans.
How can consumers determine if refinancing their auto loan is right for them?
Capital One Auto Finance recommends that consumers consider the following criteria before deciding to refinance their auto loan.
-- Look out for prepayment penalties: Determine if your current auto loan has any penalties for paying off the loan early. This will impact how much you can save from refinancing. -- Check your credit score: Your interest rate will depend on your credit score. Get a free copy of your credit report at www.annualcreditreport.com and opt to see your credit score. Make sure your credit report is accurate and report any inaccuracies to one of the major credit bureaus. -- Beware of lender fees: Capital One Auto Finance charges no application, origination or early termination fees. If your lender charges any fees to process your loan, consider applying with a different lender. Learn More about Auto Loans and Refinancing
Capital One Auto Finance offers consumers a range of information and tools to educate themselves, including auto loan calculators, an auto buying guide and answers to frequently asked questions, available at www.capitalone.com/autoloans.
For the COAF Refinancing Survey, Braun Research was engaged to conduct 804 interviews with adult men and women in the continental United States who made the financial decisions for their households. All respondents were contacted at home using a random sample of households. Surveys were conducted by telephone from July 15th - July 20th, 2008. The margin of error for the study is plus or minus 3.5 percentage points. Interviews were monitored at random.
Sampling for this study was conducted using a representative sample of households across the United States. All interviews were conducted using a computer assisted telephone interviewing system. Statistical weights were designed from Census data available at www.uscensus.gov.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries collectively had $92.4 billion in deposits and $147.2 billion in managed loans outstanding as of June 30, 2008. Headquartered in McLean, VA, Capital One has 740 locations in New York, New Jersey, Connecticut, Texas, and Louisiana. It is a diversified bank whose principal subsidiaries, Capital One, N.A. and Capital One Bank (USA), N.A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.
CONTACT: Capital One Financial Corporation Steve Schooff, 972-295-1676 email@example.com SOURCE: Capital One Financial Corporation