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Spending too much on your car loan? These cities offered the best auto refinance savings last year.
2020 was a tough year. The COVID-19 pandemic flipped life upside down and dealt a major blow to the economy, leading to historically low interest rates. To maximize savings during a difficult time, many people refinanced their auto loans to drastically cut their monthly payments.
For instance, according to the RateGenius State of Auto Refinance Report, 16% more Americans applied to refinance their auto loans in 2020 than in 2019. On top of that, 38 out of 50 states experienced more refinance loan approvals. And the average credit score of a refinance applicant actually dropped a few points to 657.
The numbers show that refinancing activity was high last year — but what cities experienced the best savings? RateGenius analyzed last year’s lending data and compiled a top 10 list of cities with the highest refinance loan savings.
Before we run through the list, let’s quickly walk through what refinancing is and who qualifies.
Refinancing your car loan is pretty straightforward. If you have an outstanding car loan, you can apply for a new loan with better terms. Your refinance loan pays off and replaces your existing loan.
Why refinance? The typical reason is to secure a lower interest rate. Your credit score could have improved since you bought your car — or maybe market rates dropped. Whatever the case may be, the ultimate goal is easing your financial burden and saving you money.
Getting approved for an auto refinance loan isn’t as complicated as you might think. Lenders review several factors that you can evaluate before applying to see if you qualify, including:
But, to many people’s surprise, your refinance savings aren’t solely determined by your financial profile. Your rate is also influenced by competition between car dealers and sellers, competition between consumer lenders, and your state’s (and even city’s) economic environment and health.
Now that we’re on the same page, let’s take a look at the best cities for auto loan refinance savings. You can also skip ahead to review our table summarizing our data right here.
The table below lists additional information about each city, including the average rates before and after refinancing as well as the average auto loan balance.
Questions about our research? Reach us at pr@rategenius.com.
While these cities offer drivers the most auto refinance savings, you’re not out of luck if you live elsewhere. Across all cities, approved refinance applicants cut their interest rate from 10.5% to 5% on average. That translates to average annual savings of $989.72 — no matter where you live.
Read more: State of Auto Refinance report methodology
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