RateGenius, a US-based fintech company with its own consumer lending platform, announced on Tuesday that its annual study revealed the current state of the auto refinancing market for 2021, finding savings to be historically high and interest rates the lowest they years ago, with the current state of the economy boosting demand in 2020 leading to 2021.
According to RateGenius, the report provides an analysis of more than half a million anonymized auto loan refinancing applications by customers from 2019-2020, examining interest rates, savings, credit scores and debt-to-income ratios by vehicle type and geographic region. The report’s findings include:
Current savings are the highest ever recorded
- Americans saved on average $ 989.72 a year after refinancing their car in 2020, the highest amount since 2016.
- 42% of successful refinancing applications resulted in annual savings of $ 1,000 or higher.
- With an average interest rate of 10.5% on their existing loans, the average interest rate on the refinanced loan was 5% – the largest rate cut in eight years.
Pandemic economy sparked demand for car loan refinancing
- In 2020, 16% more Americans applied to refinance their auto loans than in 2019.
- As many as 17% more borrowers have successfully refinanced their car loan in 2020, compared to 2019.
- On average, Americans who wanted to refinance their car loan only spent 14.5 months in their existing loan – the shortest time ever.
- In 2020, the Federal Reserve’s interest rate, which affects car rates, was below 0.1% for most of the year; it is the lowest in nearly a decade.
Ask about auto loan refinancing around the country
- In 38 of the 50 states, more refinancing loans were approved in 2020 than in the previous year, Washington (+ 56%), Arizona (+ 47%), and Oregon (+ 44%) leads the attack.
- Almost all states registered more refinancing applications. Nothing but Alabama (-4.9%), Minnesota (-1.3%), south carolina (-1.1%), and Wyoming (-0.5%) saw no increase in the number of applications in 2020.
- Borrowers in North Dakota and Hawaii enjoyed savings of more than $ 1,300 a year on their refinanced auto loans – these states had the highest average annual savings in the US.
Speaking of the result of the report, RateGenius CEO, Chris Speltz, added:
“Last year was a difficult year for consumers across the country. While it’s not surprising that refinanced borrowers saved money on their car loans and reduced their overall indebtedness, our analysis found that changes in consumer behavior due to the pandemic – such as fewer miles driven and choosing to buy used cars new – had a 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 its own web-based platform that has assisted hundreds of thousands of consumers across the country to refinance car loans on more favorable terms.
“Using its network of over 150 lenders, RateGenius has successfully provided more than 385,000 loans worth more than $ 8.5 billionThe proprietary LOS (Loan Generation System), educational content and customer-driven business approach have contributed to the company’s success. “