How refinancing a car loan can help drivers save money
According to an auto loan industry report, drivers can save an average of $100 to $200 a month by refinancing their auto loan. And you might save money without having to wait until interest rates eventually drop.
Fox – 26 Houston
- Ford and General Motors have received federal approval to establish a new bank in Utah.
- The new bank will primarily provide car financing for its respective car brands.
- Almost half of new car buyers choose a loan term longer than 72 months.
Customers shopping at Ford and General Motors dealerships may find it easier to get car loans from a new bank that the automaker has won a charter to establish.
The Federal Deposit Insurance Corporation announced in a Jan. 22 press release that its board of directors approved Ford and GM’s request to form new financial institutions to be known as Ford Credit Bank and GM Financial Bank.
The FDIC said each financial institution would be licensed in Utah and propose a business model “focused on providing auto financing products nationwide primarily through the purchase of retail installment sales contracts from independent Ford dealers.”
The agency said funding for the new bank “will primarily consist of personal savings accounts and term deposits obtained through the bank’s website and mobile application.”
The companies have been given 12 months by the FDIC to form a new bank. Otherwise, the authorization will expire.
What does that mean for car buyers?
Car buyers shopping at Ford and GM will now have another financing option at a time when new cars are more expensive than ever.
Loans from the new bank will be available for new and used vehicles purchased directly from Ford and GM dealers.
The launch of the new business lending institution comes as nearly 50% of all new car buyers choose a loan with a term of 72 months or longer, according to the latest Lending Tree poll.
According to the poll, 47.5% of Americans with auto loans have terms of 72 months or more, and 7.6% of them have terms of 84 months or more.
As new car prices continue to rise, long-term loans are becoming more common. Last year, the average price of a new car in the United States rose to a record level, nearly $50,000.
The White House is trying to address Americans’ mounting auto debt. President Donald Trump’s signature bill, known as the “One Big Beautiful Bill,” would allow Americans to deduct up to $10,000 a year in interest on new auto models made domestically from their federal tax returns.
Many drivers are behind on their car loans.
Nearly 30% of recent new car buyers are behind on their trade-in loan payments, according to new data released Jan. 15 by Edmunds.com.
The group said 29.3% of trade-in values used to buy new cars were underwater in the fourth quarter of 2025, meaning owners owed more on their existing cars than they were worth at the time of trade-in. Mr Edmunds said the figure represented the highest share of underwater car buyers recorded by the company since the first quarter of 2021, when the group announced that 31.9% of trade-ins had negative trade-in capital.
