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RateGenius Publishes Annual Report Revealing the Current State of The Car Refinancing Industry For 2021

By Auto Tech Outlook | Tuesday, February 16, 2021

RateGenius Publishes Annual Report Revealing the Current State of The Car Refinancing Industry For 2021

The study analyzes over half a million confidential client car loan applications from 2019 to 2020, analyzing interest rates, savings, credit ratings, and debt-to-income ratios by vehicle form and geographic area.

FREMONT, CA: RateGenius, a Fintech firm with a proprietary consumer loan app, published its annual report revealing the current state of the car refinancing industry for 2021, finding that deposits are historically high and that interest rates are the lowest they have been in years, with the current state of the economy-boosting demand in 2020 heading to 2021.

“For borrowers hoping to refinance their auto loans in 2021, the forecast is positive. 2021 is shaping up to be another year for record savings,” says Scott Markland, Vice President of Business Development, RateGenius. Interest in better, more attractive terms for collateral-backed loans such as mortgage refinancing and auto refinancing, with the help of historically low fed rates, has increased. This trend is likely to continue throughout 2021 and is one noteworthy for consumers as well as lenders looking to serve consumer demand.”

The study analyzes over half a million confidential client car loan applications from 2019 to 2020, analyzing interest rates, savings, credit ratings, and debt-to-income ratios by vehicle form and geographic area.

The conclusions of the study include:

Current Savings Are the Highest on Record

Americans saved a total of 989.72 dollars a year to refinance their vehicles in 2020, the highest since 2016. Forty-two percent of active refinancing applicants had annual savings of 1,000 dollars or more. For an overall interest rate of 10.5 percent on their current debt, the refinanced loan’s average interest rate was 5 percent of the highest interest rate cut in eight years.

Pandemic Economy Drove Demand for Auto Loan Refinancing

In 2020, 16 percent more Americans applied to refinance their car loans than in 2019. As many as 17 percent more homeowners actively refinanced their car loans in 2020 relative to 2019. On average, Americans who tried to refinance their car loans were just 14.5 months out from their current loan—the shortest time ever. In 2020, the Federal Reserves’ interest rate, which determines the car rate, was below 0.1 percent for much of the year, the lowest in a decade.

Demand for Auto Loan Refinancing Witnessed Across the Country

38 out of 50 states had more refinancing loans accepted in 2020 than in the previous year, with Washington (+56%), Arizona (+47%), and Oregon (+44%) leading the charge. Almost all states have registered further applicants for refinancing. Just Alabama (-4.9 percent), Minnesota (-1.3 percent), South Carolina (-1.1 percent), and Wyoming (-0.5 percent) did not see any growth in applications in 2020. Borrowers in North Dakota and Hawaii had savings of more than $1,300 a year on their refinanced car loans—they had the highest overall annual savings in the U.S.

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