Auto refinance volume climbs 40.7% YoY

Lenders are experiencing a surge in auto refinance volume across the credit spectrum as customers look to pay off their car loans faster or lower their rates and monthly payment amounts. Chase Auto , which began offering refinance in May 2025, has “set a new record in volume” every month, Head of Dealer Services Mike Douglas told Auto Finance News . Douglas did not provide refi volume specifics but said the bank is seeing two main types of customers choosing to refinance: Customers who can afford a higher monthly payment but would like to shorten their loan term and get a lower interest rate ; and Customers who need more cash and will get a lower rate and monthly payment simultaneously. “The actual lower payments are the key, and on top of it, getting a lower interest rate is a win-win,” he said. “The majority of refi out there are super prime and prime customers. … They’re making smart decisions.” [caption id="attachment_58359791" align="alignnone" width="1463"] (Courtesy/Experian)[/caption] In fact, auto refinance volume industrywide totaled $3.8 billion in the fourth quarter of 2025, up 40.7% year over year, according to Experian ’s State of the Auto Finance Market report, published March 5. Rate, payment relief More consumers are refinancing their auto loans due in part to lower auto interest rates spurred by the Federal Reserve ’s three rate cuts in late 2025 , Melinda Zabritski , head of automotive financial insights at Experian , told AFN . Most of the recent auto refinance activity came from consumers who financed in 2024 when rates ranged more toward 10%. However, consumers are also using refinancing to extend their loan terms, driving down monthly payment prices, Zabritski said. “That’s been part of what is driving such a large reduction in that monthly payment is a combination of those two things, saving 2% on rates and then effectively extending that term,” she said. “The driver is purely household economics . How much can you save on your monthly payment?” Consumers who refinanced in Q4 saved an average of $84 on their monthly payments, according to Experian. Auto refinance has made up “a larger portion of total auto originations in recent months,” Scott Serpico , executive and general manager of consumer lending at USAA , told AFN . The San Antonio-based lender did not break out refinance figures but saw “an uptick” in refinance volume year over year in 2025. USAA offers customers with off-lease vehicles the option to refinance and offers refinance on customers’ existing USAA loans as affordability levers, Serpico said. “It’s an opportunity for them to refinance to a lower payment, especially in a dropping rate environment,” he said. Credit union dominance Credit unions continued to be the most popular destination for refinancing in Q4 2025 and early 2026. Poughkeepsie, N.Y.-based Hudson Valley Credit Union ’s refinance volume so far in Q1 2026 rose 32% quarter over quarter, Dana Clark , senior vice president and director of consumer and indirect lending origination, told AFN . The lender, which has an auto loan portfolio of more than $1.3 billion, started offering refinance last year. The rise comes as Hudson Valley offers more education on refinance, and members seek “stronger overall loan packages,” Clark said. “We expect refinance activity to remain an important part of how we support affordability and long-term member value,” she said. [caption id="attachment_58359790" align="alignnone" width="1529"] (Courtesy/Experian)[/caption] Credit unions continued to hold the majority of market share in refinance in Q4, at 64.8%, flat from 64.6% in Q4 2024, but down from Q3, according to Experian. Customers who refinanced with credit unions also saw the highest average monthly payment savings at about $99. Warren, Ohio-based 7 17 Credit Union ’s refinance volume ticked up YoY in late 2025, Johna Scherzer , vice president of lending, told AFN . The lender is running a promotion to drop members’ rates to 3.99% if they refinance, she said. “Members are looking to lower their rates, increase monthly affordability and take advantage of the rate environment,” Scherzer said. “We’re seeing steady demand as a result.” 717 did not provide specific refinance figures; however, it financed more than 12,000 vehicles in 2025 and has assets of more than $2 billion, Scherzer said. Future rate cuts could spur growth Refinance volume will continue to grow in 2026, especially if another Fed rate cut comes, Chase’s Douglas said, noting that more large banks are entering refinance and growing their volume. “If there’s another rate cut, that will spur people to think about, ‘Hey, do I have the best interest rate?’” he said. Derivatives marketplace CME Group ’s FedWatch tool, which tracks the probability of cuts at Federal Open Market Committee meetings using Fed Funds futures, lists a 61.3% chance of the Fed making one or more cuts by Dec. 9. Refinance is a cyclical business that is “very rate dependent [and] car-value dependent,” Global Lending Services ’ Chief Executive Steve Thibodeau told AFN . The Mauldin, S.C.-based lender’s auto refinance volume doubled YoY in 2025 to about $300 million and is projected to increase to approximately $500 million, he said. If rates and pricing stabilize, lenders should be able to continue growing their volume, Thibodeau said. “You need rates to be flat and car values to be good and then refinance becomes a nice, viable [option],” he said. “We’ve seen the refinance business pick up quite a bit over the last year, and we’ll look to continue to grow that as well.” — Additional reporting by Amanda Harris Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. Register by March 27 for early-bird savings. To see event agendas and register, visit autofinance.live .

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