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2022 PenFed Auto Loan Review

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PenFed auto loans at a glance

New auto loansUsed auto loansRefinance auto loans
Starting rates5.24%-7.04%6.04%-6.54%5.24%-7.04%
Loan terms36-84 months36-72 months36-84 months
Loan amounts$500-$150,000$500-$150,000$500-$150,000
See auto loan ratesSee auto loan ratesSee refinance rates

Getting an auto loan may not be the most exciting part of the car-buying experience, but PenFed Credit Union wants to help you take a joyride down the highway. It offers competitive rates and loan flexibility to help get you in the driver’s seat. Keep reading to determine if a PenFed auto loan is right for you.

  • Lots of money, or very little: PenFed provides plenty of flexibility with loan amounts as low as $500 and up to $150,000 for new or used cars, and even for refinanced vehicles.
  • Hassle? No hassle here: The loan application process is quick and can be done 100% online. Preapproval can take just a few minutes, so you know what you can afford in no time.
  • Even lower rates possible: If members use PenFed’s car-buying service, they can get even lower rates for new or used cars. And, as with any loan, the better your credit score, the better the interest rate you can get.
  • Best for credit union benefits: An auto loan with PenFed is best for car buyers looking for all the benefits of a credit union with nationwide availability. Credit unions often offer lower loan rates, but you’ll have to become a member to qualify.

 

PenFed pros and cons

There is a lot of information to sift through when applying for a car loan, but the more information you have, the better a decision you can make. So let’s break down — no pun intended — what PenFed auto loans can offer.

ProsCons

  Flexible loan options for new and used cars

  Competitive rates

  Low minimum loan amount

  Easy online application process

  Membership is required

  In order to receive a rate discount, you must use PenFed’s car buying service

  Longer term loans have a higher minimum amount

PenFed’s auto loan rates drop from 5.24% to 4.44% for new cars and from 6.04% to 5.84% for used if you use their car-buying service. PenFed partners with TrueCar, which helps you locate the vehicle you want to buy, then puts you in touch with a dealer that has that car in stock. In addition to offering lower rates, this service gives established members (more than 60 days) access to exclusive manufacturer offers on new or used cars from certified dealers.

To get those rates, of course, you must be a member. All credit unions require that their clients are members, but at PenFed, it’s only $5 to join and is open to anyone with a U.S. tax ID number or Social Security number. To be eligible for PenFed’s lowest rates, you’ll have to use their car-buying service, which may limit you to certain vehicles and dealers.

A closer look at PenFed auto loans

PenFed, formally known as the Pentagon Federal Credit Union, is the second-largest federal credit union in the U.S. — serving all 50 states — and has 2.8 million members worldwide.

PenFed’s offerings go beyond the auto loan, however. It also offers GAP protection (if your loan is higher than the value of your car), extended warranties to pick up where the manufacturer’s policy drops off and debt protection, which may protect you in event of unplanned financial hardship.

To qualify for refinancing with PenFed, a new car must be model year 2021 or newer, while a used car must have at least 7,501 miles or have the official status of being pre-owned. One thing to note is that PenFed does not refinance its own loans.

How to get a loan with PenFed

If you already have a car picked out or you’re refinancing, you can apply for a loan with PenFed online. If you’re not already a member, there’s a membership application section of the auto loan paperwork, so you apply for membership and a car loan at the same time.

If you’re at the start of your car-buying journey, you’ve got some options. You don’t have to be a member to be preapproved or to look at vehicles within their network. But, if you are a PenFed member for at least 60 days before you buy a car, you can access exclusive rebates to the tune of $500 to $2,000, depending on the automaker.

Once you shake hands with the seller, you’ll need to finish the loan paperwork. You or the dealer can contact PenFed for the right papers and sign on the dotted line. With your financing finalized, you’re set to ride off into the sunset.

How PenFed auto loans compare

It’s always best to compare lenders when searching for an auto loan that best fits your needs. Here’s how PenFed stacks up against competitors for a new car if you don’t use its car-buying service. Note that Digital Federal Credit Union (DCU) also requires you to be a member for a loan to be finalized.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

PenFedBank of AmericaDCU
Starting APR5.24%4.99%4.49%
Terms36-84 monthsUp to 72 monthsUp to 84 months
Amount$500-$150,000Starting at $7,500 ($8,000 in Minnesota)Not specified
Min. credit scoreNot specifiedNot specifiedNot specified

Is a PenFed loan right for you?

PenFed adheres to the old adage, “Membership has its benefits.” With membership at PenFed Credit Union, you may enjoy their flexible loan terms, low interest rates and 100% online preapproval and application experience.

PenFed is an even better option if you are interested in its car-buying service, which is offered in partnership with TrueCar and offers a starting APR of 4.44%. An auto loan from PenFed Credit Union may be best for shoppers who want to take advantage of its membership benefits.

Frequently asked questions

As with any loan originator, the better your credit score, the better the rate you will receive. PenFed does not publicize a minimum required credit score, but generally, most auto loan lenders reserve their best rates for borrowers with a credit score above 660. You can check your score here for free, and if your credit needs a little work, there are plenty of lenders that offer bad-credit auto loans.

A PenFed preapproval is good for 60 to 90 days.

This information is unavailable on PenFed’s website, but the industry standard is that cars that are older than eight to 10 years or that have more than 100,000 to 150,000 miles on their odometer have to be financed through a personal loan or a classic car loan. For further inquiries, PenFed’s main phone number is 1-800-247-5626.

 

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