Americans are paying far more than necessary on their auto loans, according to a recent Caribou analysis. The study estimates that drivers collectively overpay about $54 billion each year because many fail to shop around for the best loan rates, much like they would for a mortgage.
Refinancing offers real savings
Refinancing an existing auto loan can lower a borrower’s monthly payment through a reduced interest rate, a longer term, or a combination of both. Caribou’s data, drawn from loans funded between April 1 and June 30 2026, shows that the average monthly savings from refinancing range from $119 to $234, depending on vehicle type and fuel source.
Top‑saving states and loan sizes
Drivers in Louisiana, New Mexico and Washington enjoy the highest average monthly savings after refinancing. These states also carry some of the nation’s largest original loan balances, which means larger borrowers stand to save more when they secure a better rate.
Fuel type matters
Diesel vehicle owners see the greatest average monthly reduction—about $234—because diesel trucks and SUVs often have higher price tags and larger loan balances. Electric‑vehicle (EV) owners are not far behind, averaging $190 in monthly savings, up from $176 the previous year. Rising used‑EV values have improved borrowers’ loan‑to‑value ratios, putting them in a stronger position to refinance at lower rates.
Owners of gasoline‑powered cars and hybrid models still benefit, with average monthly savings of $156 and $119 respectively.
Vehicle style influences savings
Cars that typically carry larger loans also generate larger savings. Coupes—including popular sports models such as the Ford Mustang and Chevrolet Corvette—average $184 per month in savings. Pickup trucks, a staple of American roadways, average $183 per month, outpacing sedans, SUVs, vans, hatchbacks and wagons.
Generational trends
Gen Z borrowers (ages 18‑31) face a tougher financial backdrop, often juggling auto debt with student loans and housing costs. In Caribou’s Car Loan Sentiment Survey, 35 % of Gen Z respondents reported difficulty making a car payment on time in the past year—more than twice the rate of baby‑boomers (13 %). Despite these challenges, Gen Z achieved the steepest interest‑rate reductions, averaging a 5.34‑percentage‑point drop through refinancing.
Millennials enjoy the largest monthly payment relief, averaging $174 in savings. When asked how they would use an extra $150 each month, respondents cited paying down other debt, building emergency savings and covering everyday expenses such as groceries and gas.
Refinance market growth
Refinance dollar volume doubled between Q2 2024 and Q2 2026, reaching $4.4 billion in the most recent quarter, according to Experian. More drivers are recognizing that the rate signed at the dealership is not necessarily the best rate available today, and that a simple rate change can free up significant cash each month.
How to get started
Consumers interested in exploring potential savings can use Caribou’s interactive state‑savings tool, which provides average monthly savings for their area based on recent refinance activity. By comparing offers and selecting a lower‑rate loan, drivers can keep more of their hard‑earned money in their pockets.
While the overall trend points to growing awareness and action, the analysis underscores the importance of regular rate checks. Even a modest reduction in interest can translate into hundreds of dollars saved each month, reinforcing financial stability for families across the country.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
