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Low interest rates and a desire to cut expenses encouraged owners of these 10 vehicles to refinance.
Over the past year, the COVID-19 pandemic wreaked havoc across the globe, but illness wasn’t its only impact. Economic instability led many to look for ways of saving money and lowering expenses.
The State of Auto Refinance: 2021 Report compiled by RateGenius found that 2020 wasn’t all doom and gloom. Americans took advantage of low interest rates to refinance their car loans, saving an average of $989.72 annually. Borrowers were also eager to refinance, doing so only 14.5 months after taking out their original auto loan — the shortest period ever.
Perhaps unsurprisingly, seven of the most refinanced vehicles in 2020 were top sellers. But before we dive into the list of the most refinanced vehicles, let’s discuss why and how so many borrowers sought auto loan refinances.
When you refinance your car loan, you replace your original loan with a new one — ideally one with a lower interest rate or better term. By refinancing, you stop paying the lender of your original loan and begin paying your new lender (who pays off your original loan in your stead).
In 2020, the average interest rate reduction for every refinanced auto loan was 5.5%.Refinancing is especially beneficial for those borrowers who have improved their credit score since taking out their initial loan, or those who unintentionally fell prey to predatory lending practices.
Qualifying for auto loan refinancing is similar to taking out your original loan. Begin by shopping around for a lender that meets your criteria and offers competitive rates and reasonable loan terms.
You may want to consider refinancing if you’ve improved your:
Finance companies also consider your:
Refinancing your auto loan is also a good idea if lenders are offering lower interest rates than usual — which is exactly what happened in 2020 as a result of the Federal Reserve lowering its interest rate.
If you’ve played your cards right, your refinanced auto loan should have a lower interest rate and more favorable terms than the original.
Sales of new vehicles fell by 15% in 2020. Still, they didn’t dry up entirely. Pickup trucks made up 20.1% of new vehicles sold in 2020.
Following that trend, the State of Auto Refinance Report demonstrates that 21% of all auto loans refinanced in 2020 were for pickup trucks, with America’s three most iconic trucks representing almost 10% of all refinanced loans.
However, pickups weren’t the most popular vehicle purchase. SUVs and crossovers dominated the market with 50% of new auto sales in 2020. SUVs also topped the chart for most refinances in 2020, as 35% of refinanced loans were for sport utility vehicles.
Sedans represented 22% of refinanced car loans, with hatchbacks representing 18%.
Borrowers eager to slash their expenses or take advantage of ultra-low interest rates applied for refinancing across the U.S. Surprisingly, not a single vehicle with the worst credit score ranked among the top 10 of the most refinanced autos in 2020. Let’s look at which vehicles did.
The list of top 10 most refinanced vehicles in 2020 is based on fully-funded loans — those that progressed entirely through the refinance process from application to acceptance and funding. In addition, drivers of these two vehicles also applied for refinancing, though the number of fully-funded loans didn’t add up enough to score in the top 10.
In September 2021, the Federal Reserve announced it would keep interest rates near zero for the foreseeable future. Whether you’re driving the Flintmobile, one of the top 10 most refinanced cars in 2020, or anything in between, consider refinancing your auto loan to cut your expenses and keep more money in your pocket.
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