FORT ATKINSON, Wis. (6/27/14)--Credit unions looking to educate consumers that switching their existing auto loans to a cooperative financial institution is a better deal may face an uphill battle, according to a new survey.
The survey, conducted by Fort Atkinson, Wis.-based RateWatch, a banking data and analytics service owned by TheStreet Inc., found that many consumers overlook or are not interested in refinancing their auto loans.
Among the findings:
- 27% of respondents did not know that refinancing their auto loan was an option;
- 59% of respondents knew that refinancing was an option, but chose not to refinance;
- Consumers age 30 to 44 were most likely to be aware of auto refinancing options, but only 20% had taken advantage of them; and
- Consumers who have owned their vehicle for five or more years were most likely to have known refinancing was an option and followed through with a refinance loan. More than half of those who have owned their vehicles for less than five years were not aware refinancing was an option.
"Auto-loan refinancing tends to be somewhat uncommon, and it's unfortunate since consumers can save thousands of dollars in the course of paying off their loan," said Ross Kenneth Urken, personal finance editor for TheStreet. "It's a technique more consumers need to recognize as beneficial to their finances."
The survey also revealed that consumers are paying off their loans with varying interest rates:
- Those who have owned their vehicle for two to five years are most likely to have an interest rate between 2% and 3%; and
- The percentage of respondents paying an interest rate between 1% and 2% is the same as the percentage of respondents paying an interest rate of 8% or greater, demonstrating the large range of available rates.