There has never been a more expensive time to own and operate a car.

In January of this year, the average new car cost $49,191 (1), and that's after prices hit an all-time record (2) in December 2025.

Meanwhile, the days of buying a new car for less than $20,000 may be gone forever, says Kelley Blue Book (3). The last vehicle that sold below that point was the Mitsubishi Mirage, which was cancelled in late 2024 and has since sold out at dealerships.

Add in gas prices and insurance costs and it's no wonder that many vehicle owners are struggling. But as car owners look for ways to save, a growing number are refinancing their loans and saving significant amounts of money in the process.

In the first quarter of 2026, roughly 111,000 car owners opted to refinance (4) , with the average monthly savings working out to $81 per month. The typical interest rates on loans have gone down by 2.24%. Sometimes, it's a lot more.

Kayla Barkdull, a 39-year-old manager at a Las Vegas bar, was one of the lucky ones. When she bought her 2019 Volkswagen Atlas in 2023, she was saddled with an 11.8 APR loan. That meant making monthly payments of $641.

After a failed attempt to refinance a year ago, she tried once more this month and was able to secure a 5.7% rate from Navy Federal Credit Union.

"I cried when I got approved," she told The Wall Street Journal (5). Barkdull also opted for a loan with a shorter time period, which she said would save her almost $2,000 in interest payments.

The average original rate for an auto loan this year is 10.3%, but people who refinance are averaging 8.1%. Many banks are using that gap to lure in new customers. JPMorgan Chase went so far as to relaunch its consumer auto-refinancing refinancing a year ago (6).

If you're thinking of refinancing your auto loan, it will help โ€” as it often does โ€” to have a good credit score. You'll also want to have a car that has retained its value. If your loan is more than the current value of the vehicle, you're less likely to find a bank that will be willing to offer a refinance.

Beyond high interest rates on vehicles, it's just plain expensive to buy a car these days. Cox Automotive's Vehicle Affordability Index measures the number of weeks of income an average family would need to purchase a vehicle. As of the end of May, that number stood at 34.9 (7).

That's convincing people to hang onto their vehicles longer, especially if their car or truck is paid off. Cox estimates that 15.8 million vehicles will be sold this year, a 2.9% decline from 2025.

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Kelley Blue Book (1), (2), (3); The Wall Street Journal (4), (5); Chase Auto Finance (6); Cox Automotive (7).

This article originally appeared on Moneywise.com under the title: More than 100K car owners refinanced their loans in Q1 2026, cutting rates by 2.24% and saving an average of $81 a month

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.