Monthly car payments are surging, driving more borrowers to refinance their auto loans for relief, with some EV owners saving more than $200 a month.
The details: Caribou’s Q1 2026 Auto Finance Trends report shows new-car payments hit a record $773 a month in Q1 2026, with drivers who refinanced saving an average of $162 monthly as ownership costs continue to rise, highlighting several other notable finance trends.
The average original loan balance climbed to $45,146, up from $44,491 in Q4 2025, with Caribou seeing an 11% quarter-over-quarter increase in customers refinancing original 84-month loans in Q1.
Millennials saved an average of $175 a month after refinancing in Q1, up from $170 in Q4 2025, with 55% in the demographic saying that if they saved $150 on their car payment, they would use it for everyday expenses.
Gen Z customers, meanwhile, reduced their APR by an average of 5.05% in Q1, the steepest drop among age groups, signaling how much their credit has improved since their original purchase.
Why it matters: Caribou’s Q1 report also highlights some notable powertrain- and vehicle-specific refinancing trends.
EVs saw the biggest increase in refinance activity between Q4 2025 and Q1 2026, with EV owners saving an average of $209 a month after refinancing in Q1, compared with $156 for gas-vehicle owners.
Vans posted the biggest jump in monthly savings across all vehicle types in Q1, with owners saving an average of $175 a month after refinancing, up from $155 in Q4.
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What they’re saying: “Car ownership has always been a significant household expense, but the financial pressure around it has felt more acute at the start of 2026," said Simon Goodall, CEO of Caribou, per a press statement.
"Between record-level car prices and fuel prices now at a four-year high, our data shows that more drivers are taking action. Refinancing has become one of the most practical ways to find meaningful relief without having to change vehicles or upend their budget."
Bottom line: It’s not new that consumers are stretched financially, but this level of refi activity and savings serves as a good reminder that finance strategy, solid lender relationships, and payment-focused messaging remain key to keeping buyers in market and deals on track.
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