Auto Refinance Rate Report: May 2021

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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

2023 Auto Refinance Rates See Today's Rates

May 2021 Auto Refinance Rates

📝 The current average auto refinance interest rate is 6.54%. This is an average across all loan terms (36 to 72 months) and all credit profiles for loans approved in the RateGenius network over the last 30 days.

Although auto refinance rates are inching upward, borrowers with credit scores above 750 can still take advantage of rates below 3% — even with lengthy 60- and 72-month terms. With a 700 credit score, you can get real close. Recent customers with 48-month loan terms were approved for 2.99%, but the average rates across all other loan terms hover just above 3%.

Even select subprime customers with 36-month loan terms have qualified for rates below 4% in the last 30 days. However, keep in mind that 36-month loan terms are not as popular, so few borrowers with credit scores below 640 may get approved for rates that low.

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.

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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.

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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:

The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
If you’re concerned about interest rates continuing to rise, then your best bet is to go on and apply for your auto refinance loan. But if you need a little more time, like if you’re in the process of improving your credit, there’s no reason to expect a huge spike in rates in the near future. In fact, last month we saw more lenders in our network lower rates, not raise them.

📢 RateGenius and AUTOPAY have agreed to merge, providing even more choice for consumers and offering the best lending rates and auto loan savings. Read more. 

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Report Methodology

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.

About The Author

Cristy S. Lynch

As a personal finance writer, she's covered the automotive industry and insurance for many years. She's written for Credit Karma, The Penny Hoarder, Clever Girl Finance, The Zebra, Bestow, and more.

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