- Americans saved an average of $989.72 a year on refinancing their car in 2020, the largest amount since 2016.
- 42 percent of successful refinancing applications saw annual savings of $1,000 or higher.
- With an average interest rate of 10.5 percent on their existing loans, the average interest on the refinanced loan was 5 percent — the greatest interest rate reduction in eight years.
Pandemic Economy Drove Demand for Auto Loan Refinancing
- 16 percent more Americans applied to refinance their auto loans in 2020 than in 2019.
- As many as 17 percent more borrowers successfully refinanced their car loans in 2020, compared to 2019.
- On average, Americans who applied to refinance their auto loans did so only 14.5 months into their existing loan — the shortest time on record.
- In 2020, the Federal Reserve’s interest rate, which influences auto rates, was below 0.1 percent throughout most of the year; it’s the lowest it’s been in nearly a decade.
Demand for Auto Loan Refinancing Witnessed Across the Country
- 38 out of 50 states saw more refinancing loans approved in 2020 than in the year before, Washington (+56 percent), Arizona (+47 percent), and Oregon (+44 percent) leading the charge.
- Nearly all states registered more refinancing applications. Only Alabama (-4.9 percent), Minnesota (-1.3 percent), South Carolina (-1.1 percent), and Wyoming (-0.5 percent) did not see an increase in applications in 2020.
- Borrowers in North Dakota and Hawaii enjoyed savings of more than $1,300 a year on their refinanced auto loans — these states had the highest average annual savings in the U.S.
For borrowers hoping to refinance their auto loans in 2021, the forecast is positive. “2021 is shaping up to be another year for record savings,” said Vice President of Business Development at RateGenius Scott Markland. “Interest in better, more attractive terms for collateral-backed loans such as mortgage refinancing and auto refinancing, with the help of historically low fed rates, has increased. This trend is likely to continue throughout 2021 and is one noteworthy for consumers as well as lenders looking to serve consumer demand.”
To review the full report with visuals, which features additional takeaways, including vehicle make and model statistics, visit RateGenius: State of Auto Refinance: 2021 Report.