The Federal Reserve has finally put an end to a long period of rising interest rates. That has some Americans willing to shop for a new car for the first time in years (though many are waiting out the election first). But what about the people who bought a car when interest rates were historically high?
According to a new study, more than seven in 10 want to refinance.
Credit reporting firm TransUnion surveyed 1,002 drivers who borrowed to buy a new car during the 24 months ending in September. They found a stunning 76% interested in refinancing.
Sixty-five percent agreed that their current car payment “is a strain on their personal finances.”
The average monthly park payments peaked at $795 in December 2022, according to Kelley Blue Book parent company Cox Automotive.
Unsurprisingly, those early in their careers felt the sting of high payments most. Eighty-three percent of members of Generation Z and 72% of Millennials agreed, according to the study.
TransUnion didn’t say what parameters it used for the generations in this study. In past studies, it has defined Gen Z as those born between 1995 and 2012, and Millennials as those born between 1980 and 1994.
Eighty-three percent of Gen Z drivers and 78% of Millennials would consider refinancing.
Many will likely find a lower rate if they do, though they might benefit from waiting. The Fed cut rates by half a point (or 50 basis points) in September. Cox Automotive economists tell us that the cut will take months to fully reach borrowers — rates fell by just 15 basis points in September, though it finally became easier to qualify for a new loan.
Another cut is likely coming. Lending executives, meeting for a conference this week, largely agreed that they expect another quarter-point cut at the Fed’s November meeting.
