2024 PenFed Auto Loan Review
PenFed auto loans at a glance
 | New auto loans | Used auto loans | Refinance auto loans |
| Starting annual percentage rate (APR) | 5.44% | 6.19% | 5.94% |
| Loan terms | 36 to 84 months | 36 to 84 months | 36 to 84 months |
| Loan amounts | Up to $150,000 | Up to $150,000 | Up to $150,000 |
| See Auto Loan Rates | See Auto Loan Rates | See Refinance Rates |
It’s true — picking out your new ride is a lot more fun than picking out your auto loan. Still, PenFed Credit Union does what it can to smooth out any bumps in the road. Between low average rates and exclusive auto rebates for members, there’s a lot to like about this credit union. The company offers:
- Large loans: Ready to buy the car of your dreams? Qualified borrowers could get up to $150,000 with a PenFed auto loan.
- 125% financing: You can borrow up to 25% over your vehicle’s worth to cover title transfers, taxes and customizations.
- A hassle-free experience: The loan application process is quick and can be done entirely online.
- Benefits abound: PenFed’s car-buying service could help you nab rebates and an APR discount.
- The best auto loans from a credit union: Joining a credit union can be a pain. But unlike some, PenFed is open to anyone with a U.S. tax ID number or Social Security number.
PenFed pros and cons
There’s a lot to sift through when applying for a car loan, but the more information you have, the better. Let’s break down what PenFed auto loans can offer.
| Pros | Cons |
|---|---|
Membership perks and competitive rates Can borrow more than the vehicle’s value Refinancing available | Membership required Lowest rates are reserved for those who use PenFed’s car-buying service Minimum loan amounts only disclosed for 61- to 84-month terms |
If you want a car loan with perks, look no further. Powered by TrueCar, PenFed’s car-buying service can help you find the best deals on new and used cars in your area. If you’ve been a PenFed member for at least 60 days, you’ll also gain access to members-only cash incentives on certain makes and models.
Once you use the service to buy through a certified dealer, you could qualify for other bonus benefits. For instance, you could get up to $1,000 of your deductible reimbursed after an insurance claim.
But pump the brakes — only members can take advantage of PenFed loans. Luckily, all you need to do to join is open a savings account with a $5 deposit. Also, while PenFed boasts low auto loan and refinance rates, you must use its car-buying service to get its lowest APRs.
A closer look at PenFed auto loans
Pentagon Federal Credit Union, or PenFed, has nearly three million members, making it the third-largest credit union in the United States. You don’t need to be a government employee to join PenFed, although it does extend benefits that cater to government and military personnel.
Aside from auto loans and auto refinancing, PenFed offers other related products, including:
GAP insurance: If your vehicle is stolen or declared a total loss, you could be on the hook for a hefty out-of-pocket expense if you owe more on your loan than what the vehicle is worth (otherwise known as an upside-down car loan). For $449, you can add GAP insurance to cover this difference.
Vehicle protection: Similar to an extended warranty, PenFed’s vehicle protection can give you some financial cushion for unexpected repairs. It may also reimburse you for your rental while your car is repaired during a covered event. Prices for vehicle protection range from $1,245 to $2,995.
Debt protection: You could get your loan balance canceled, penalty-free, with PenFed’s debt protection program in the event of death, disability or unemployment. Plans range from $0.88 a month per $1,000 of your loan balance to $2.10 a month per $1,000.
How to get an auto loan with PenFed
Getting a car loan with PenFed is straightforward but knowing what to expect in advance could help quell some of your preapplication jitters.
Check your credit (and your budget)
Your credit score can make or break your ability to get an affordable car loan, no matter which lender you choose. Get your free credit score to see what APRs you might be eligible for. Then, use our auto loan calculator to review how a new car could impact your budget.
Get preapproved
At this stage, you don’t need to know exactly what car you should buy, but you will need to know how much you’d like to borrow. Getting a preapproved car loan doesn’t impact your credit and is a low-stakes way of checking your eligibility.
PenFed’s preapproval process is entirely online. Here, you’ll provide basic information about yourself, the car you might be buying and your income.
Shop for a car
After checking your eligibility and how much car you can afford, it’s time to go car shopping. Because PenFed offers so many savings opportunities through its car-buying service, you may want to start there.
Join and apply
If you aren’t already a PenFed member, you can formally apply for your loan and for membership at the same time. You will also need to open a savings account with a deposit of $5 or more.
The loan application process is similar to preapproval, but you will have to provide more detailed information about your finances. At this point, PenFed will also run a hard credit pull and may ask for documents like bank statements and W-2s.
Refinancing with PenFed follows a similar process as above. However, the questions on your application will vary, based on what you need (it also offers cash-out auto refinancing as well as car title loans).
How PenFed auto loans compare
You might find PenFed is a great fit, but you’ll never know unless you compare lenders. Here’s how PenFed stacks up against some of its competitors. Note that this information applies to new car loans.
| PenFed | Bank of America | Digital Federal Credit Union (DCU) | |
|---|---|---|---|
| Starting APR | 5.44% | 5.99% | 6.74% (with discounts) |
| Loan terms | 36 to 84 months | Up to 72 months | 36 to 84 months |
| Loan amounts | Up to $150,000 | Starting at $7,500 ($8,000 in Minnesota) | Not specified |
| Minimum credit score | Not specified | Not specified | Not specified |
As illustrated, PenFed tends to offer some of the lowest car loan rates. However, its maximum loan term is shorter than some of its competitors, which could be less than ideal.
Read our full reviews of Bank of America auto loans and Digital Federal Credit Union (DCU) auto loans.
Is a PenFed auto loan right for you?
PenFed adheres to the old adage, “Membership has its benefits.” PenFed auto loan rates are competitive, and you may enjoy flexible terms, member benefits and an online experience.
If you’re not interested in joining a credit union, though, PenFed won’t make sense. You might also have better options if you don’t want to use its car-buying service. In any case, choosing a lender isn’t a decision to take lightly. Take some time and compare loans to find the one that’s best for you.
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.