Auto Loan Refinancing Surges As Falling Rates Drive Consumer Savings
By CU Today Staff —
NEW YORK--Auto loan refinancing is gaining momentum as falling interest rates and persistent affordability pressures prompt more consumers to seek lower monthly payments, according to reporting by PYMNTS, which cited new data from Experian.
PYMNTS reported that about 111,000 consumers refinanced their auto loans during the first quarter, nearly double the number recorded during the same period two years earlier. The publication, citing Experian, said refinance rates have declined more quickly than rates for new vehicle purchases since the Federal Reserve began cutting interest rates in 2024, making refinancing increasingly attractive.
Drivers who refinanced during the first quarter lowered their interest rates by an average of 2.24 percentage points, compared with an average reduction of just 0.47 percentage points two years earlier, according to PYMNTS. The publication also cited Edmunds analyst Ian Drury, who said consumers are searching for ways to reduce expenses amid broader cost pressures, while PenFed Credit Union's Stephanie Roberts said greater awareness through credit score apps is encouraging borrowers to explore refinancing options.
PYMNTS also highlighted previous LendingTree research, reported by CNBC, showing borrowers who refinanced their auto loans saved an average of $142 per month and $1,346 over the life of the loan. More than 60% of consumers surveyed said they had either refinanced or considered refinancing, with Millennials and men the most likely groups to have completed a refinance.
The publication added that borrowers who have improved their credit scores stand the best chance of securing lower rates and should compare multiple offers before refinancing. PYMNTS also pointed to comments from auto refinance platform Caribou, which said rising vehicle ownership costs continue to drive refinancing demand and that customers achieved the company's lowest average post-refinance annual percentage rate since the second quarter of 2023.
Originally reported by CU Today.