RateGenius, a U.S.-based fintech company with a proprietary consumer-lending platform, announced on Tuesday its annual study revealed the current state of the auto refinance market for 2021, finding that savings are at a historical high and interest rates are the lowest they’ve been in years, with the current state of the economy driving demand in 2020 leading into 2021.
According to RateGenius, the report provides an analysis of over half a million anonymized customer auto loan refinance applications from 2019-2020, examining interest rates, savings, credit scores, and debt-to-income ratios by vehicle type and geographical region. The report’s findings include:
Current Savings Are The Highest On Record
- Americans saved an average of $989.72 a year on refinancing their car in 2020, the largest amount since 2016.
- 42% of successful refinancing applications saw annual savings of $1,000 or higher.
- With an average interest rate of 10.5% on their existing loans, the average interest on the refinanced loan was 5% — the greatest interest rate reduction in eight years.
Pandemic Economy Drove Demand for Auto Loan Refinancing
- 16% more Americans applied to refinance their auto loans in 2020 than in 2019.
- As many as 17% 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% 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%), Arizona (+47%), and Oregon (+44%) leading the charge.
- Nearly all states registered more refinancing applications. Only Alabama (-4.9%), Minnesota (-1.3%), South Carolina (-1.1%), and Wyoming (-0.5%) did not see an increase in applications in 2020.
- Borrowers in North Dakota and Hawaii enjoyed savings of over $1,300 a year on their refinanced auto loans — these states had the highest average annual savings in the U.S.
Speaking about the report’s result, RateGenius CEO, Chris Speltz, added:
“Last year was a difficult one for consumers across the country. While it’s not surprising that borrowers who refinanced saved money on their auto loans and lessened their overall debt burden, what our analysis found was that changes in consumer behavior as a result of the pandemic — such as fewer miles driven and choosing to purchase used cars over new — had an overall positive impact on vehicle collateral values, loan approvals, and savings in 2020.”
Founded in 1999, RateGenius describes itself as a technology company that has created a proprietary, web-based platform that has assisted hundreds of thousands of consumers nationwide in refinancing auto loans to more favorable terms.
“By utilizing its network of more than 150 lenders, RateGenius has successfully facilitated more than 385,000 loans worth more than $8.5 billion. The company’s proprietary LOS (loan origination system), educational content, and customer-experience-focused business approach have been instrumental in its success.”