2023 PenFed Auto Loan Review
- Expertise: Personal finance, financial planning, credit scores, savings, auto loans, education
Education: University of Texas at Austin
Katie Lowery is a deputy editor at LendingTree, where she oversees personal finance, debt and auto loans content. She is passionate about educating and empowering consumers to make informed financial decisions.
Before joining LendingTree, Katie spent more than a decade as a developmental and copy editor, where she edited content in a variety of fields, including finance, business, economics, science and education. She was the sole editor on multiple award-winning books.
Katie earned a bachelor’s degree in education from the University of Texas at Austin. She still lives in the Austin area with her family and enjoys collecting record albums and knitting.
- Expertise: Personal finance
- Education: The Pennsylvania State University
Pearly Huang is the copy chief for LendingTree and its family of brands, which includes CompareCards, DepositAccounts, MagnifyMoney, Student Loan Hero and ValuePenguin. As copy chief, Pearly oversees the copy editing and fact-checking process for all personal finance content that is published on LendingTree and its brands.
Prior to joining LendingTree, Pearly worked at the copy and research desks at several major publishing companies such as American Express Publishing, TIME Inc., Condé Nast and Hearst. She also has extensive freelance experience working at digital media brands, such as the Huffington Post and Vox Media.
Pearly got her start in hyperlocal journalism, where she was a reporter for Time Out New York, Patch.com and The Huffington Post.
Pearly’s formal education includes a B.A. in journalism and a B.A. in English studies from The Pennsylvania State University.
PenFed auto loans at a glance
 | New auto loans | Used auto loans | Refinance auto loans |
|---|---|---|---|
| Starting rates | 5.24% | 6.04% | 5.19% |
| Loan terms | 36-84 months | 36-84 months | 36-84 months |
| Loan amounts | $500-$150,000 | $500-$150,000 | $500-$150,000 |
| See auto loan rates | See auto loan rates | See 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.
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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.
| Pros | Cons |
|---|---|
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 |
In addition to originating auto loans, this lender also offers a 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.
| PenFed | Bank of America | DCU | |
|---|---|---|---|
| Starting APR | 5.24% | 6.29% | 5.74% |
| Terms | 36-84 months | Up to 72 months | Up to 84 months |
| Amount | $500-$150,000 | Starting at $7,500 ($8,000 in Minnesota) | Not specified |
| Min. credit score | Not specified | Not specified | Not 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.