Americans unknowingly overpay $54 billion every year on car loans. See which drivers are defying the odds

Garun .Prdt // Shutterstock

Americans unknowingly overpay $54 billion every year on car loans. See which drivers are defying the odds

Americans overpay an estimated $54 billion a year on their car loans, according to an analysis from Caribou. Most drivers don’t shop around for auto loan rates the way they would for a mortgage, and that often means they pay more than they need to. Refinancing an auto loan gives drivers a chance to lower their monthly car payment through a lower rate, extended term, or both.

Caribou’s data on car refinance loans shows which drivers are saving the most, by state, fuel type, vehicle style, and generation.

States with the biggest refinance paydays

Some of the biggest refinancing wins are concentrated in a handful of states, and loan size is a key reason. Consumers who start with larger loans tend to see larger savings when they refinance. Drivers from Louisiana, New Mexico, and Washington post the highest average monthly savings after refinancing. These states also carry some of the highest average original loan balances in the country. Drivers can use an interactive state savings tool to see how much customers in their area are saving on average.

Caribou

Diesel and EV drivers pull ahead

Across fuel types, diesel vehicle owners see the highest savings, averaging $234 a month by refinancing. Diesel vehicles tend to carry higher price tags and larger loan balances, which may explain why their owners see larger gains from refinancing.

EV owners saved an average of $190 a month by refinancing, up from $176 the year before. Used EV values have also climbed, up more than 5% since the start of 2026, according to Recurrent, which could be giving EV owners a better starting position when they refinance. As a car’s value rises relative to what’s still owed on it, the loan-to-value (LTV) ratio drops, and a lower LTV generally puts a borrower in a stronger position to refinance into a better rate. With used EV values climbing, EV owners refinancing today may be doing so from a more favorable LTV position than they were a year ago.

By comparison, gas and hybrid vehicle owners still see meaningful savings, averaging $156 and $119 a month, respectively.

Coupes and trucks see the strongest savings

Vehicle body styles that tend to carry higher loan balances also usually see the strongest savings from refinancing. Coupes, including popular sports cars like the Ford Mustang and Chevrolet Corvette, average $184 a month in savings. Pickup trucks, one of the most commonly financed vehicle types in the U.S., average $183 a month. Both outpace sedans, SUVs, vans, hatchbacks, and wagons.

Caribou

Gen Z wins on rate, millennials win on payment

Gen Z borrowers (ages 18-31) are refinancing against a difficult backdrop. Many are carrying auto debt alongside student loans and housing costs. In Caribou’s Car Loan Sentiment Survey, 35% of Gen Z respondents said they’d struggled to make a car payment on time in the past year, more than twice the rate of baby boomers (13%).

Despite that pressure, Gen Z sees the steepest interest rate reductions of any generation, averaging 5.34 percentage points by refinancing. Younger drivers often finance their first car with limited credit history, which can mean a higher starting rate. After establishing a payment history and building their credit, these drivers are often able to unlock lower auto loan rates.

Millennials are experiencing the biggest monthly payment savings of any generation, averaging $174 a month. Extra breathing room in the monthly budget is a welcome sign for many millennials who are also managing competing financial priorities, from young children to aging parents. In the Car Loan Sentiment Survey, when asked what they’d do with an extra $150 back in their pockets each month, millennials’ top three answers were paying down other debt, building emergency savings, and covering everyday expenses like groceries and gas.

The common thread for drivers paying less: refinancing

The details differ from one driver to the next, but the outcome is the same. None of these drivers changed their car. They changed their rate. Refinance dollar volume grew 100% between Q2 2024 and Q2 2026, reaching $4.4 billion in Q2 2026, according to Experian. More drivers are catching on that a car loan signed at the dealership isn’t necessarily the best rate available today, and that it can pay off to check to see what they could save.

Methodology

Caribou’s analysis of annual auto loan overpayment combines Caribou’s data on average monthly refinance savings with TransUnion’s industry data on auto loans eligible for refinance.

Fuel type, vehicle style, generation, and national refinance trend data reflect consumers whose auto refinance loan was funded through Caribou between April 1, 2026, and June 30, 2026, who had an existing auto loan on their credit report, and who selected an offer to reduce their monthly payment. State-level loan data uses the same criteria over a longer window, July 1, 2025, through June 30, 2026. States with fewer than 100 funded loans have been excluded from this analysis.

This story was produced by Caribou and reviewed and distributed by Stacker.