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Borrowers in these states saved more than $1,200 a year after refinancing their auto loan.
2021 was a record-setting year for auto refinance savings. The COVID-19 pandemic continued its negative impact on the economy last year. As a result, historically low interest rates remained in place. Average U.S. auto loan rates fell, allowing some borrowers to refinance their car loans and save over $1,000 per year.
For instance, according to the RateGenius State of Auto Refinance Report, borrowers nationwide saved an average of $1,158 per year after refinancing — an increase of 16% compared to 2020. And the average interest rate reduction was 7% — the highest difference since 2013.
Average auto refinance savings varied from state to state. We analyzed last year’s lending data to create a top-10 list of states with the highest average savings.
Before we jump into the list, let’s take a quick look at what auto refinancing is and how to qualify.
When you refinance your car loan, you take out a new loan — with your current lender or a new lender — to replace your existing loan. While reasons for refinancing vary, it’s often done to secure a lower interest rate or better repayment terms. Simply put, a lower rate helps you save money.
Refinancing can be beneficial if your credit score has improved or interest rates have dropped since taking out an auto loan. In those scenarios, you’ll likely have a better chance of qualifying for a lower rate.
Since rates vary by lender, make sure you shop around to get the best deal. When you submit your refinance application, a lender will often consider these factors, among others, to determine whether you qualify for refinancing:
While improving your finances could lead to a lower interest rate, keep in mind that regional factors, like the health of your state’s economy, competition, and local lending laws, can impact the rate you receive.
Now that we’ve covered the potential benefits of auto loan refinancing, let’s dive into the list of top 10 states for auto refinance savings.
If you don’t live in one of the states listed above, don’t feel left out. There’s no need to pack your bags and relocate. You can save money refinancing wherever you live. Remember, borrowers across the U.S. who refinanced their auto loans last year reduced their interest rate by 7%. And the average annual savings was $1,158.
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