People Re-Financing Auto Loans Are Saving Money!

For millions of Americans carrying an auto loan, refinancing could be worth a closer look. New data suggests borrowers who qualify for a better deal are finding some substantial monthly savings.

According to F&I and Showroom, citing the latest Auto Refinance Trends Report from auto refinancing provider Caribou, customers who refinanced their vehicle loans to reduce their payments during the second quarter of 2026 saved an average of $162 per month. The average refinance loan balance was $34,378.

That $162 monthly reduction works out to $1,944 over the course of a year, although individual results will vary considerably. Caribou’s data covers customers whose refinance loans were funded between April 1 and June 30, 2026, who had an existing auto loan appearing on their credit report and selected a refinancing offer designed to lower their monthly payment. Caribou notes that savings can result from a lower interest rate, a longer loan term, or a combination of the two, and savings are not guaranteed.

Loan term appears to make a significant difference. F&I and Showroom reports that borrowers refinancing into 84-month loans saw the largest average monthly payment reduction at $183. Those with 72-month loans saved an average of $157 per month, while borrowers refinancing with 60-month terms saved $141.

There is an important distinction here for consumers. A lower monthly payment does not necessarily mean a lower total cost of borrowing. Extending a loan over a longer period can reduce the payment while potentially increasing the amount of interest paid over the life of the loan. Consumers considering refinancing should compare not only the new monthly payment but also the interest rate, remaining term and total amount they will ultimately repay.

Credit scores also played a major role in the refinancing results. Caribou says borrowers in the fair-credit category, with scores ranging from 580 to 669, experienced the largest average reduction in annual percentage rates, at approximately 6.18 percentage points during the second quarter. Their monthly savings, however, varied more than those of borrowers in higher credit tiers. Excellent-credit borrowers averaged about $170 per month in savings, while very-good-credit borrowers saved about $163.

The type of vehicle being refinanced also made a difference. According to the report, owners of vehicles that typically carry larger loan balances generally experienced the biggest payment reductions. Coupe owners averaged savings of $184 per month, while pickup owners were close behind at $183. SUV borrowers averaged approximately $159 per month.

The differences were even more pronounced when vehicles were broken down by powertrain. Diesel vehicle borrowers recorded the largest savings, averaging approximately $233 per month, which Caribou attributes in part to their higher outstanding loan balances. Electric vehicle owners saved an average of $190 monthly, up from $176 per month a year earlier. Gasoline-powered vehicle borrowers averaged roughly $156 in second-quarter savings, while hybrid owners saw smaller reductions.

Caribou CEO Simon Goodall says the company estimates Americans overpay by $54 billion annually on their auto loans and believes more consumers are beginning to recognize the potential benefits of refinancing.

There is a good takeaway here, especially for people who financed a vehicle when interest rates were higher or whose credit has improved since they purchased their vehicle: It costs nothing to find out what refinancing options may be available. Unless there are extreme circumstance, I don’t generally recommend extending a loan longer. The best course of action if you can lower the interest rate is to shorten the term.

Just remember that the lowest payment is not automatically the best loan. Compare the APR, number of payments remaining and total finance cost before signing anything. Shaving $100 or $200 off the monthly payment feels good, but the real goal should be making sure the new loan leaves more money in your pocket when everything is said and done.