PenFed Auto Loan Review

(July 2024)


In This Article

Our Verdict


Are you in search of an auto loan that not only offers a competitive interest rate but also provides access to a substantial loan amount? If so, choose PenFed. This credit union provides you with the advantage of competitive and cost-effective financing options for both new and used cars and trucks. As a borrower, you enjoy the flexibility of loan amounts up to $150,000. This amount caters to a wide range of vehicle preferences and budgets.

PenFed also comes with a unique offering of up to 125% financing, giving you the potential to cover any extra costs associated with the vehicle you’re purchasing. If you seek efficiency and convenience during the pre-approval process, you might want to choose this lender. The process only takes minutes, and you’re done with your pre-qualification.

Whether you’re seeking to finance a new, or used car, or you’re refinancing, make sure you check the terms and weigh your options. Call PenFed’s customer care for clarifications, to make informed decisions about your purchase.

You can reach PenFed through their Contact Page and fill out the contact form or call the following number: +1-800-247-5626.


  • Provides better-than-average rates.
  • Offers cash-back from selected manufacturers.
  • Offers high loan maximum.
  • Adds coverage and protection options.
  • Allows online loan application.
  • Offers access to loans nationwide. 
  • Charges no origination fee.
  • Allows you to change your payment due date.
  • Has a mobile app for transactions.
  • Allows car refinancing.


  • Can only get the lowest rates through car-buying service.
  • Requires credit union membership for loan application.
  • Comes with stricter vehicle restrictions for longer terms.
  • Does not openly disclose the minimum credit score requirement.
  • Discloses minimum loan amounts only for 61 to 84-month terms.

Who Penfed Is Best For


PenFed auto loan might be your perfect match if you’re an individual who:

  • Have PenFed Credit Union Membership: Bear in mind that you must be a member of PenFed to access loans. Also, note that the PenFed auto loan is a product of the Pentagon Federal Credit Union.
  • Seek competitive Rates: PenFed auto loan stands out for offering the best-than-average rates, making it an exceptional choice for you who prioritize a financing option that comes with competitive interest rates.
  • Desire High Loan Amount: With loan amounts extending up to $150,000, you have access to loan amounts for the purchase of higher-priced automobiles—should you need one.
  • Need Additional Financing: PenFed allows you to cover additional costs associated with your vehicle purchase. This is made available for up to 125% financing sets.
  • Prioritize Pre-Approval: If you value the importance of knowing your loan eligibility and terms before heading to the dealership, then choose PenFed. The pre-approval process is often within minutes.

Who PenFed Isn’t Right For

PenFed auto loan might not be your perfect match if you’re an individual who:

  • Have Low Credit Scores: To qualify for more favorable terms, you must have good to excellent credit scores. Keep in mind that PenFed primarily serves borrowers with a credit history ranging from good to excellent, emphasizing the importance of a strong credit profile for optimal eligibility.
  • Seek 100% Online Experience: If you prefer a 100% online lending experience without the need for branch visits or in-person interaction, this might not be the place for you. Bear in mind that PenFed is a credit union with physical offices in different locations.
  • Have Unstable Income: Just like other lenders, PenFed demands that you have stable and consistent income source(s). So, if you don’t meet this criterion, you might have to look somewhere else.
  • Have Issues With Membership Requirements: If you find membership requirements and verification process tiring, don’t choose PenFed. You must be a registered member of the union before you can have access to loans.

What PenFed Offers

PenFed auto loan comes with a range of rewards and benefits, including:

New and Used Car Financing

When you apply for a loan with PenFed, you have access to a variety of options for both new and used vehicles. This expansive range of options gives you the flexibility to choose the type of car that aligns perfectly with your needs and budget.

Discounts for PenFed Members

Note that the union offers additional benefits or discounts for its members, including lower interest rates or special promotions. Speaking of interest rates, you stand to receive a 1.50% APR discount on new and used car loans provided you belong to the union.

No Application or Processing Fees

PenFed helps you to cut down costs by not charging application or processing fees. This allows you to make informed financial decisions without worrying yourself over unnecessary fees eating into your budget.

No Pre-Payment Fee

Unlike most lenders, PenFed doesn’t charge you any fees to pay off your loan early. This feature allows you to accelerate your loan repayment without incurring financial penalties, fostering a cost-effective lending experience.

Military and Affiliation Benefits

You can leverage PenFed’s military and affiliation benefits if you qualify. If you’re a military member or somehow affiliated with PenFed, you may partake in special rates or promotions.

Online Application and Account Management

You can apply for auto loans from the comfort of your home. The union also provides you with an online account where you can manage your borrowed funds.

Pre-Approval Options

PenFed’s pre-approval options allow you to gain a comprehensive understanding of your loan eligibility and associated terms well before embarking on your vehicle purchase.

Better-Than-Average Interest Rates

With PenFed, you have access to manageable interest rates on car loans. While specific rates may differ based on reasons such as creditworthiness, loan terms, and vehicle types, PenFed is well-known for its commitment to transparency and fairness in loaning.

Flexible Loan Terms

With this lender, you have flexible loan terms, allowing you to choose a repayment period that suits your financial preferences, with terms extending up to 84 months.

PenFed Details


Loan Options

PenFed offers financing for new, used, refinance, cash-out refinance, and lease buyout, which you get to choose from.

Eligibility for Loan Eligibility

PenFed membership is required if you’re applying for a car loan. Membership is typically open to individuals who meet certain criteria, such as military affiliation, employment, or association with eligible organizations.


When you buy a new or used car from one of PenFed’s partner manufacturers, such as Audi or Dodge, you can earn a cash bonus.

Mobile App

You can make payments, view statements, and manage your profile through the PenFed mobile app which is available on App Store and Google Play.

Guaranteed Asset Protection (GAP)

36 Months 48 Months 60 Months 72 Months 84 Months
New Car Buying Service

Model Year 2023 or newer & never tilted

New Car Purchase

Model Year 2023 or newer & never tilted

Used Car Buying Service
Pre-owned vehicles or vehicles with over 7,501 miles
Used Auto Purchase
Pre-owned vehicles or vehicles with over 7,501 miles

You should know that GAP waives the difference between what the insurance company paid and the loan amount if the loan amount is higher.

GAP Benefits

  • Cost for GAP coverage: $449.
  • For new or used vehicles: The highest eligible loan amount is $100,000.
  • The maximum loan term is 84 months.
  • The maximum covered GAP loss is $50,000.

Vehicle Protection

PenFed offers a vehicle protection plan where you supplement your manufacturer’s warranty, providing services such as towing, rental reimbursement, and roadside assistance, as well as reducing repair costs after your warranty expires.

Features and Benefits

  • $0 deductible.
  • Includes 24-hour roadside assistance.
  • Expanded coverage for vehicles with high mileage (over 100,000)
  • Reduces out-of-pocket expenses for unexpected repairs.
  • Rental car reimbursement in the event of mechanical breakdown of a covered component.
  • 60 Day Free Lock.

Debt Protection

Should you encounter unplanned events such as death, disability, or involuntary unemployment, PenFed’s Debt protection program helps you to cancel your loan balance or monthly loan payments without penalty or added interest.

The table below gives you a breakdown of how the program works:

Premium Advanced Basic
Loss of life
Involuntary unemployment
$2.10/mo per $1000 of loan balance
$1.2/mo per $1000 of loan balance
$0.88/mo per $1000 of loan balance
Note: You can cancel your subscription to this program anytime you wish, and you get a refund of any fees already paid provided you do so within the first 30 days.

Where PenFed Stands Out


Military Affiliation Program

If you’re an individual associated with the military, PenFed offers an exclusive loan program known as the Military Affiliation Program, providing you with access to occasional discounts and unique financial benefits.

Online Application and Pre-Approval

With PenFed’s user-friendly online application system, you can apply for auto loans from the convenience of your home. The lender also gives you the option for pre-approval to help you get clarity on the loan eligibility and terms in advance.


PenFed is known for its transparency in its loan rates and terms. Unlike most lenders, PenFed displays its loan rates on its official website. This allows you to review and understand the costs associated with your auto loans, fostering trust and clarity in the lending process. PenFed’s customer support is also on standby to provide answers to your questions.

Flexible Loan Terms

PenFed provides flexible loan terms, allowing you to choose from a range of repayment periods, including extended terms of up to 84 months.

Wide Range of Vehicles Covered

With PenFed, you have access to extensive auto loan offerings for both new and used vehicles ranging from trucks to SUVs and many more, to accommodate a broad spectrum of borrowers and their preferences.

No Prepayment Penalties

PenFed typically does not charge prepayment penalties, giving you the flexibility to pay off your car loans ahead of schedule without incurring additional fees.

Membership Benefits

As a member of the union, you stand to enjoy some benefits such as access to a variety of financial products, exclusive discounts, and personalized customer service.

Manageable Interest Rates

PenFed helps you save money over the life of the loan by offering manageable interest rates on auto loans compared to other lenders.

Where PenFed Falls Short

Limited Branch Network

If you prefer in-person banking services, PenFed falls short in that regard because the union does not have an extensive physical branch presence like most traditional banks or lenders.

Strict Membership Criteria

While membership is open for everyone, the eligibility criteria come with restrictions, and can limit your access to the credit union’s products and services.

Stringent Credit Requirements

If you have poor or less-than-perfect credit (not minding PenFed’s favorable terms) you may find it challenging to qualify for the most favorable terms.

How to Qualify for PenFed

To qualify for a PenFed car loan, you typically need to meet the following eligibility criteria:

  • Be a U.S. citizen or have permanent residency.
  • Provide details about the vehicle you want to finance including its make, model, year, and mileage.
  • Tender your proof of income to demonstrate your ability to repay the loan.
  • Undergo the auto loan application process.
  • Maintain a credit score of at least 670.
  • Join PenFed by completing the membership application.

How to Apply for PenFed

PenFed offers auto loan applications online. Here are the steps you need to follow to fund your car purchase:

  • Send in your application online. This typically involves the provision of 3 key data such as your desired vehicle, your loan terms, and a little info about yourself.
  • Next, is the approval stage. At this point, you’re required to review your preapproval offer, submit your ID and address verification, and then receive your loan approval.
  • The final step is to finalize your loan approval process. At this point, you choose your optional vehicle protection and sign your loan agreement. Congrats, you’re now a car owner.

Bear in mind that there’s an option for prequalification. If you’re already a member, sign into your account and PenFed will automatically fill in part of the application for you. But, if you’re not yet a member, it’s not a big deal. You can apply for the prequalification while PenFed creates your membership during the application. Again, you must have a membership with PenFed to obtain a loan from them.

Alternatives to PenFed

Consumers Credit Union

Consumers Credit Union has its base in Illinois, offering auto loan services at competitive rates for both new and used cars. Loan rates for new cars from 2018 till date provide terms up to 84 months along with 7.89% APR. While used car rates (2011-2017) come with terms up to 84 months and 9.89% APR.
The minimum time it takes to receive a loan is typically one day, except on rare occasions where there are unforeseen circumstances. You also access the minimum accepted loan-to-value ratio which is 125%. To access an auto loan from this lender, you need to become a member so you can participate in the membership privileges.

Capital One

As a prominent financial institution, Capital One extends the opportunity for you to access auto loans as an integral component of its comprehensive suite of financial products and services. You get financing options for both new and used vehicles, the availability of an online application, plus competitive interest rates. This lender also has a dealership network, and pre-approval options, thereby allowing you to get a convenient and effective shipping experience.

Alliance Credit Union

This credit union provides you with a full range of lending options intended to align with your lifestyle and save you some bucks. You don’t have to wait for so long to apply as the entire process is quick and easy. You have the option to choose from new or used vehicles.
You can apply for the Alliance Credit Union auto loan online, by fax, by telephone, or in person—depending on what works for you. Optimize your payment experience by taking advantage of the automatic payment options, ensuring added convenience and seamless management of your payments.

Customer Reviews

It is evident from customers’ ratings on Trustpilot that PenFed’s auto loan service is excellent. With a 4.4 out of 5-star rating garnered from over 1,444 reviews, customers demonstrate PenFed’s excellent service delivery. On the other side of the coin, issues like poor refinancing services and the use of technology hold a minor percentage in the review.

However, Better Business Bureau has a different opinion about PenFed. With over 200 reviews from customers, PenFed has a rating of 1.16 out of every 5 stars.

These insights emerge from a diverse range of positive and negative feedback, creating a mosaic of opinions. You should always thoroughly scrutinize reviews before committing to a loan application. You want to choose the loan that best aligns with your needs and budget.

Pro Tips

  • Consider joining PenFed early to become a member before applying for the loan to streamline the application process.
  • Read the membership eligibility criteria to know if you’re comfortable with them.
  • Take advantage of PenFed’s pre-approval option so you can know your loan eligibility and terms before visiting the dealership which empowers you during negotiations.
  • Negotiate with dealers so you can cut down on some extra costs.
  • Compare various loan terms to know what aligns with your budget and financial goals.
  • Review membership benefits.
  • Prepare necessary documentation ahead of time. 


In this wide-ranging examination of PenFed auto financing, you explored the details of these offerings precisely for you seeking a car loan. This union stands out as a competitive and flexible financing option for individuals who meet the membership criteria. By offering flexible loan terms, and a user-friendly online application process, PenFed strives to meet the diverse needs of its members.

If you’re looking for a car loan that comes with the absence of prepayment penalties, seek the flexibility to manage your loan, and enjoy seasonal discounts, military affiliation, and competitive interest rates, PenFed provides an appealing opportunity.

As with many financial decisions, carefully review the latest terms, check your current circumstances, and explore the wealth of resources PenFed provides to make informed choices in your car financing journey.

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