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2020 wasn’t all bad. Borrowers in these states saved over $1,000 a year after refinancing their car loans.
It’s unanimously understood that 2020 was a weird year. The pressures of a global pandemic put a beating on our economy and strained our finances. Naturally, this prompted many to look for ways of reducing their expenses as incomes fluctuated and stagnated.
The RateGenius State of Auto Refinance report found that refinancing auto loans proved to be a popular solution for saving money. 46 states saw an increase in refinance applications in 2020, with 16% more Americans applying to refinance a car loan in 2020 compared to 2019.
The savings weren’t insignificant, either. Successful applicants across the U.S. saved an average of $989.72 per year by refinancing an auto loan, the largest amount of savings since 2016. In fact, 42% of successful applicants saved an annual $1,000 or higher after refinancing.
Before we dive into the top 10 states that saw the most savings after refinancing an auto loan, it’s important to understand the benefits of auto refinance and how to qualify for refinancing.
During an auto loan refinance, your new lender pays off the original loan in full before replacing it with a new loan — one with a lower interest rate and better payment terms.
One of the ideal times to consider an auto loan refinance is after you’ve improved your credit score. It’s also worth considering a refinance if the Federal Reserve reduces its interest rate — as it did in 2020 — which impacts the interest rate for car loans.
Qualifying for a refinanced car loan is similar to taking out your original auto loan. You should begin by shopping around and comparing offers from different lenders, who take into account your:
Generally, if you made improvements to your overall finances, income, and paid down some outstanding debt since you first took out an auto loan, chances are high that you’d qualify for an auto loan refinance. In fact, 17% more applicants successfully refinanced a car loan in 2020 compared to the previous year.
Despite the many valid worries of 2020, Americans in 10 U.S. states managed to reduce their auto loan payments and interest rates by refinancing, keeping a few extra bucks in their pockets (or reinvested in a surplus of toilet paper).
The table below lists the complete information for the top 10 states for auto refinance savings in 2020, according to the RateGenius State of Auto Refinance report.
You don’t need to move to one of the top 10 states for auto refinance savings to refinance your car loan. Those who refinanced in 2020 reduced their interest rate by an average of 5.5% nationwide, reducing the average interest rate of existing loans from 10.5% to 5%.
No matter where you live, refinancing an auto loan often leads to savings that keep more of your money in your pocket.
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