New Survey Reveals High Awareness of Auto Refinancing, but Few Taking Advantage of Benefits

Thousands of respondents to CarFinance survey split evenly on most important re-fi benefits: loan pay-off, lower monthly payment and reducing interest rate

IRVINE, CA--July 31, 2012: In spite of its benefits and high awareness -- and an advantageous lending climate - few are taking advantage of auto refinancing, according to a new snapshot survey from Car Finance, a website dedicated to providing lending to below-prime consumers, and a resource for consumers seeking auto financing information. The survey, which was conducted online among over 2,000 consumers[1], also revealed that when it comes to the benefits of refinancing, consumers are evenly split on what is most important: loan pay off, lower monthly payment and reducing interest rate.

"This survey reveals that even with relatively high awareness of auto refinancing, the average consumer is not taking advantage of an opportunity that can save hundreds of dollars a month," said CarFinance.com CEO Jim Landy. "Although we have seen a surge of car owners successfully refinancing their auto loans at CarFinance.com, the results of this survey indicate that the benefit of auto loan refinancing continues to be one of the best kept secrets in our post-recession economy."

Survey Highlights

Consumers Evenly Split on Auto Refinancing Benefits

When asked what would be more important if they were to refinance an auto loan, survey respondents were almost evenly split, with wanting to 'pay off loan sooner because their credit position has improved' (34%) squeaking by the desire 'to have extra cash in hand by lowering monthly payments' (33%), and wanting the fairness of having access to the low interest rates everyone else has (33%).

High Awareness, but Few Taking Advantage of Auto Refinance

The survey also revealed that nearly two-thirds of respondents were aware that auto loan refinancing is possible.

But, surprisingly, even though refinancing an auto loan is much simpler than refinancing a home mortgage -- and approval rates are higher - only 12% reported they had actually refinanced their auto loan.

Auto Refinancing: Simple Process That Can Save Hundreds of Dollars

To refinance an auto loan, car owners simply have to fill out an application for an opportunity to get approved at a lower interest rate. Refinancing can also be done relatively quickly, easily, securely and privately online -- and can significantly reduce monthly auto payments. For example: a $30,000 new car loan originated in late 2008 with a 72-month term could have a $600 monthly payment. Today, as many consumers are holding on to their cars for longer periods, they have an opportunity to refinance the balance and reduce monthly payments -- in this instance, by $200 per month or more.[2]

"Car buyers from a few years ago may now qualify for rates that are significantly lower than their current rate and it is a more friendly lending climate today, for example below-prime approvals were up 24-plus percent in July[3],"continued Landy. "Yet many Americans are trapped in car loans they financed during the recession, when interest rates were much higher than they are today. And, as the survey indicates, for many, that just feels unfair -- after all, why should they pay 19% interest, if they can qualify for 10%?"

Empowering the tens of millions of credit-challenged consumers who have previously had few auto loan options is the mission of CarFinance.com, which makes new and used auto loans, and refinancing simple secure and private for the below-prime credit sector.

CarFinance.com is led by the team that built Triad Financial, one of the largest non-prime U.S. auto finance companies, and is headquartered in Irvine, California.

[1] Survey methodology: Survey of 2,011 U.S. Consumers aged 18+, conducted electronically from June 20-July 19, 2012.
[2] The monthly payment for a $30,000 auto loan for 72 months at 13% interest is $602.22. After 36 payments, the balance would be $17,873. A new 72 month loan at 13% interest would have monthly payments of $358.78, a reduction of $243.44 per month.
[3] According to CNW Research cited in an article from F&I and Showroom on July 24, 2012 - Uptick in Subprime Auto Loan Approvals
[4] Example is a $25,000 loan for 72 months at 19% APR with a monthly payment of $584.42. At 10% APR the monthly payment is $463.15.