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  • Nicholas Hinrichsen

Refinanced a mortgage? How to refinance your auto loan!

Updated: Aug 13

If you read our recent article on 'How much car dealers make, how to get thousands back', you will know that dealers generate most of their profit on financing and protection products.


You could almost argue: dealers sell cars in order to create an opportunity to sell the much higher margin products, such as financing and protection plans.


Table of contents

  1. How much do dealers earn on a car sale?

  2. Why request a refund on your protection plan?

  3. What percentage of mortgages are refinanced?

  4. So why are we not refinancing car loans?

  5. How to refinance your auto loan and save thousands of dollars

How much do dealers earn on a car sale?


We analyzed the financial statements of some of the largest publicly listed automotive groups and found the following:

  1. Gross profit per car of the most profitable group exceeds $4,539

  2. Thereof, more than $2,367 came from selling high margin financing and protection products

  3. Customers can recapture a large portion of these $2,367 through refinancing their auto loan and through requesting a refund on their protection plan

Why request a refund on your protection plan?

  1. A lot of the protection plans dealers sell you don't actually cover your needs

  2. If you request a refund, you lower your loan balance

  3. If you lower your loan balance, you qualify for refinancing

  4. If you refinance, you lower your monthly payment and interest expense


Furthermore and as discussed in our blog 'The best way to lower your rate? Make your payments!', disciplined borrowers who improve their credit qualify for better loan rates. If done right, refinancing is a virtuous cycle!


What percentage of mortgages are refinanced?


Although refinancing is very common practice with mortgages, it is not yet common for auto loans:

  • In 2016, 39% of all mortgage applications were to refinance existing mortgages.

  • In 2019, that same percentage grew to 47%!

In other words, out of the millions of mortgage applications, one in two homeowners were able to lower their monthly payments through refinancing.

Yet, the data looks very different for auto loans. Although people refinance mortgages every day, only 5% of car loans are currently being refinanced.


Effectively, car owners are leaving money on the table and are not taking advantage of their improved credit scores to lower their interest rates and monthly car payments

So why are we not refinancing car loans?


There are lots of different reasons and we found the biggest one is simply that many car owners do not think it’s worth the effort. Although you could be reclaiming up to $2,367, if you translate the benefits into monthly payments over the term of your loan, you will find that you 'only' save up to $40 a month.

Traditional lenders do not offer refinancing online or via the phone. If you want to refinance your car loan, you have to visit a branch in person. Even more frustrating, car owners cannot know if it’s worthwhile unless and until they visit a branch: lenders typically don't publish their rate-sheets! Therefore, customers don't know how much they could be saving and in doubt, assume the worst.

In the hustle and bustle of modern life, finding the time to visit a branch is putting many borrowers off refinancing their auto loan. Visiting a physical store has simply become unrealistic and a comparably huge effort, particularly when you don't know with a high degree of certainty how much you could be saving.

How to refinance your auto loan and save thousands of dollars


WithClutch.com is a fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.


Contrary to the traditional lenders, we are a technology company that is fully focused on customer experience. We don't require you to visit a physical branch, not even a phone call.

Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.


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