The number of consumers who refinanced their auto loan in the first quarter nearly doubled compared to the same period two years earlier, The Wall Street Journal (WSJ) reported Wednesday (June 24).
During the first quarter, the number reached about 111,000, according to the report, which cited data from Experian.
The surge in refinancing has resulted from auto refinance rates falling faster than rates for vehicle purchases since the Federal Reserve began cutting interest rates in 2024, the report said.
In the first quarter, drivers found that they reduced their interest rates by 2.24 percentage points when they refinanced. Two years earlier, drivers found a decrease of only 0.47 points, per the report.
Other factors are also driving interest in refinancing. Edmunds automotive analyst Ian Drury told WSJ that people are looking for ways to save when so many other costs are outside of their control. Stephanie Roberts, director of auto lending product strategy at PenFed Credit Union, said that credit score apps are teaching consumers that refinancing is an option.
CNBC reported June 1 that LendingTree found in November that Americans who refinanced their auto loan saved an average of $142 a month and $1,346 over the life of the loan.
The report added that consumers who improved their credit score recently have the best chance of getting a lower rate if they refinance. It also suggested that consumers shop around and get as many as five quotes before signing a refinance agreement.
In the report cited by CNBC, LendingTree said that it found that more than 60% of consumers had either refinanced or considered refinancing their auto loan. The consumers most likely to have refinanced an auto loan were millennials, at 41%, and men, at 36%, the company found.
Auto refinance platform Caribou said in April that more American drivers were turning to auto refinancing as a solution to the rising costs of car ownership. The company said the average monthly payment for a new vehicle hit a record high in the first quarter.
Caribou said that the average post-refinance APR achieved by its customers in the first quarter was the lowest since the second quarter of 2023.
