If you’ve been scrutinizing your budget lately, and considering ways to save money, your monthly car payment is probably an expense you’d be happy to shrink. Fortunately, there are options available to drivers seeking to rein in the cost of car ownership without letting go of their ride. Loan modification is one approach to a…
The average interest rate has climbed another 0.09% this month, but borrowers are saving more money refinancing their car loans compared to years before.
The monthly Auto Refinance Rate Report is an analysis of anonymized completed auto refinance applications and funded (closed) loans in our network of more than 150 lenders nationwide.
Current average interest rate
How can I get a good interest rate with a low credit score?
Remember: It’s not just your credit score that determines your interest rate when refinancing your car loan. Factors like your debt-to-income (DTI) ratio, loan-to-value (LTV) ratio, among others can help or hurt your application, too. An otherwise strong application, shorter loan term, or a down payment could potentially make up for a Poor credit score and get you a lower rate.
This is also why we (RateGenius nerds) are rate shopping enthusiasts. All lenders, banks, and credit unions have their own underwriting guidelines — which means they all weigh all of your application factors differently. You may get declined at one bank but approved at a credit union or get offered a much better rate elsewhere. Shop rates with multiple lenders, and pick the best offer for your wallet.
April 2021 Auto Refinance Rates, Savings, Debt
📝 The average overall auto refinance interest rate in April was 6.45% across all customers approved for refinancing. Among borrowers who completed the auto refinance process, the average auto refinance savings was $92 per month, and the average auto loan balance refinanced was $23,394.
Looking back to the beginning of the year, auto refinance interest rates haven’t changed too much. In fact, while the overall average interest rate is rising, customers with Excellent and Good credit continue to see their rates drop. Fair and Poor customers have had more fluctuation month to month, but April’s averages were still lower than January’s.
Now looking at monthly savings from refinancing, it’s looking great for borrowers in all credit tiers. The average auto refinance savings was $91.50 per month in April. This is $9.02 higher than the 2020 average in our State of Auto Refinance report. Nice.
This is where Fair and Poor borrowers can gloat. Both credit tiers are close to saving $100 a month (or $1,200 a year) after auto loan refinancing. On average, Fair and Poor borrowers are saving $97.50 and $98.50 per month, respectively — and borrowers with Poor credit are saving $10.48 more per month than in January.
Among our borrowers who completed the auto refinance process in the RateGenius lender network, auto loan debt has remained stable, though we can see it slowly trending upward. In April, the average overall refinance loan balance was the highest this year so far.
Borrowers with Poor, Fair, and Good credit scores all had higher car loan balances in April compared to March, but Excellent borrowers’ average auto loan debt dropped by $532.
Will Auto Refinance Rates Rise, Fall, or Stay the Same This Month?
There’s no reason to anticipate any major changes when it comes to auto refinance rates. We’re seeing an upward trend — a positive outlook on our economic recovery can do that — but the Federal Reserve has decided once again to leave the federal funds rate at record lows while the U.S. economy recovers.
In a statement released on April 28, the Fed wrote:
RateGenius analyzed data on customer applications for auto loan refinancing made between January 1, 2021 and May 9, 2021. This dataset included thousands of anonymized completed auto loan refinance applications across all 50 states. We analyzed interest rates, refinance savings, and auto loan debt across all credit tiers and loan terms (36 to 72 months). Interest rates are based on all applications approved across all states, credit scores, and loan terms. Savings and loan balance data only include funded (closed) loans.