More drivers are staying in their current cars. Why they should consider revisiting their original loan.
With and inflation squeezing household budgets, more Americans are holding on to their car for longer. Findings from of 2,000 U.S. auto loan holders suggest that this decision to stay put raises the financial stakes on loans most borrowers have never revisited. Only 29% of borrowers have ever checked whether they qualify for a lower rate, yet 85% agree that saving $150 a month on their car loan would make life significantly easier. broke down why drivers should revisit their original auto loan.
High car prices compel drivers to stay put
The , a record high according to Bureau of Transportation Statistics data. This is up from nearly 10 years in 2006.
Caribou鈥檚 survey data tracks closely with what the broader auto market shows. Nearly two-thirds (65%) of auto loan holders say they鈥檝e noticed new car prices rise over the past year. Among that group, the single most common response鈥攂y a wide margin鈥攊s to keep their current vehicle longer, cited by 41%. Buying a used car instead came in second at 17%.
This 鈥渟tay put鈥 decision is reinforced by another factor: Most of these borrowers bought new. Sixty-two percent of survey respondents purchased a new vehicle at their most recent transaction, meaning they鈥檙e more likely to keep their car for longer. With new cars averaging $50,000, it鈥檚 no surprise why owners see this as a long-term financial commitment.
Older generations are also more likely to hold on to their cars. Among Baby Boomers who noticed vehicle price increases, 58% say they鈥檒l keep their current car longer鈥攖he highest response of any generation and nearly double the share of Gen Z. Gen X came in at 49%. These are also the generations most likely to have paid down a meaningful portion of their loan, making their current car an asset worth preserving.
Prime credit borrowers follow a similar pattern. Among those with scores of 800鈥850, 52% plan to keep their vehicle longer in response to rising prices. They鈥檙e also the borrowers most likely to qualify for better loan terms through refinancing.
Keeping a car longer raises the stakes on the original loan
For the growing number of drivers keeping their cars longer, the terms of the loan they took out鈥攑ossibly in a different rate environment and under pressure at a dealership鈥攂ecome more consequential over time. Most borrowers didn鈥檛 accept their original terms under favorable conditions. Forty-four percent of respondents felt moderately to very pressured during the financing process, and about 1 in 4 believe they did not get the best deal.
High car prices have also led more borrowers to take on longer loan terms to keep monthly payments affordable. According to Edmunds, , now accounting for nearly 1 in 4 new-car financing agreements. But a longer term means more months of exposure to whatever rate was locked in at signing.
Payment strain raises the stakes even further. Nearly 1 in 3 borrowers struggled to make their car payment on time in the past year. And 23% currently owe more than $30,000 on their loan, meaning they鈥檒l be carrying this balance for years. The question is at what rate. Over half (53%) of borrowers took out their current loan one to four years ago, during a postpandemic, high-rate environment. Auto loan , peaking in early-mid 2024. These same borrowers could see meaningful savings based on .
As vehicles age, drivers need a stronger safety net
For a borrower already managing a tight car payment, an unplanned engine, transmission, or brake repair is a genuine financial threat. According to a recent , the single most common unexpected expense Americans reported in the past year was a major vehicle repair or replacement鈥攃ited by 30% of adults, ahead of both home repairs and medical expenses.
When asked what they鈥檇 do saving $150 a month on their car payment, 56% of borrowers said they鈥檇 build emergency savings. For someone holding onto a vehicle longer, this buffer is what keeps an unexpected repair bill from derailing their budget. Drivers should also consider other protections designed for extended ownership, such as a vehicle service contract (VSC), which helps cover certain mechanical repairs after the manufacturer鈥檚 warranty expires, and guaranteed asset protection (GAP) coverage that can pay the difference if a car is totaled or stolen and the insurance payout is less than the remaining loan balance.
The original deal doesn鈥檛 have to be the final one
Car owners may be staying put, but they don鈥檛 have to carry their original loan terms all the way through. Yet, only 29% of auto loan holders have ever checked whether they qualify for a lower rate. Among those who have refinanced, 95% succeeded in lowering their payment, their annual percentage rate (APR), or both. The challenge is that most borrowers closed the chapter on their car loan the day they drove off the lot.
But changes in the market suggest that these borrowers are starting to reconsider their original loan terms. More than half (56%) say they鈥檙e likely to consider in the next 12 months鈥攁 meaningful signal of intent. For the majority who haven鈥檛 checked yet, the window is open, and the longer the car stays in the driveway, the more that window is worth using.
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