Capital One’s first-time car buyer survey found that not only do first-time buyers not factor in the cost of maintenance and repairs, but the majority also has little idea how to navigate the auto finance process.
Sixty-three percent of Capital One Auto Finance’s seventh annual Rules of the Road Survey respondents said they thought they accurately calculated the true cost and expenses of buying a car, SubPrime Auto Finance News reports. But the study found that 47 percent said they did not factor into their calculations the cost of maintenance and repairs and 45 percent didn’t calculate registration and parking costs.
The survey found that 48 percent of the first-time car buyers who used a car loan to buy their vehicle have no idea what interest rate they received on their auto loan, even after signing the paperwork. Sixty-one percent researched different models and types of vehicles before making their purchase, but shockingly, only one-third said they checked their credit score before buying.
Capital One’s survey also found that 59 percent said they did not have a finance department member discuss multiple options or explain how auto financing works. Also, 54 percent said they didn’t realize they could go online to compare auto loan or lease options, and 57 percent didn’t know they could go online to apply for a car loan.
Only 20 percent researched auto financing options online and 18 percent researched different lenders online. Eighty-eight percent of first-time buyers who set a budget said they stuck to it when they bought their car.
“Armed with the right information, it is an excellent time to get a great deal, but it is important for first-time car buyers to take the time to think through additional auto expenses beyond the sticker price, understand exactly what a car loan is, calculate what they can afford, understand financing options, and not to be forgotten – know their credit score and how that score could affect the terms of their loan,” said Sanjiv Yajnik, president of Capital One Auto Finance.
Remember that the finance manager’s office is where the dealership makes most of its profit during the vehicle sale. By researching your auto loan options and knowing what your credit score is, you can save yourself a lot of money on your next car purchase. If you’re a first-time buyer, there is advice and tips on our site to help you navigate the auto loan process before you buy.