PenFed Auto Loan Review

Credit unions are a great way to get auto financing with reasonable rates and agreeable application terms. While many credit unions are small, local operations, some operate nationally, offering loans to anyone who qualifies.

Pentagon Federal Credit Union, also known as PenFed, has been around for 90 years, and it offers auto loans with quick online prequalifications, special loans for refinancing, and rates as low as 3.89% (subject to change) when using its car-buying services.

The credit union has loan products for up to 125% of the vehicle’s value, and well-qualified buyers can borrow as much as $150,000. The company earns a spot in our overview of the best used auto loan providers, and you can learn more about it in our review of PenFed Credit Union.

PenFed works with car-buying services like TrueCar, and some of its best rates and incentives are only available for customers who buy through the service. There may also be members-only offers that are unavailable to people who haven’t held an account for at least 60 days. Finally, PenFed offers loans in all 50 states, and you can become a member with a $5 deposit into a new account.

About PenFed Credit Union

PenFed Credit Union is a Virginia-based institution that has been in business since 1935. While it is not a Better Business Bureau-accredited business, PenFed has accumulated many customer reviews, with many positive reflections on its customer service and rates. Unlike some credit unions that limit membership to certain groups of people, PenFed is open to anyone with a U.S. Social Security number, and loans are available across all 50 states.

One major upside for PenFed members over other credit unions is its high level of technology. It offers an online prequalification and application process, and members have a range of services available remotely. That’s a significant advantage over smaller credit unions, many of which don’t have the size and resources to support such robust online services.

Company Insights

While PenFed Credit Union isn’t accredited with the Better Business Bureau, the company earns an A+ grade with the organization for its responsiveness to complaints and inquiries.

Features and Benefits

PenFed’s size allows it to compete with large national banks, but its rates are often more competitive, especially for borrowers using its car-buying service. At the same time, its robust online platform makes the application and prequalification process quick and straightforward.
Loans for up to 125% of vehicle value available

• Large loans of up to $150,000 available for qualified buyers
• Online application and preapproval
• Available to anyone with a U.S. Social Security number
• Car-buying services in partnership with TrueCar
• Credit union membership is required to get an auto loan
• Incentives and rebates are available
• No discounts available for autopay monthly payments

PenFed Reviews: Editorial Rating

Trusted Company Reviews Rating Score for PenFed: 9.1

We rated PenFed highly for its strong membership benefits and robust online services, but there are some downsides to discuss. It’s not uncommon for credit unions to withhold loan products from non-members, but PenFed’s best rates are unavailable to anyone unwilling to use its car-buying services.

PenFed details much of its lending process online, but it doesn’t outline its minimum credit score requirements and other key information. That said, it offers a range of services and benefits that other credit unions can’t, and people who have been members for 60 days or longer may be eligible for further incentives and discounts.

Why We Like It

PenFed offers a range of loan products covering both new and used vehicles, and its refinancing options can drastically reduce interest rates for some borrowers. The ability to borrow more than the car’s value is a big benefit for some people, though it’s often not the best idea. Finally, PenFed’s member benefits make its loans a better value for many people, with GAP protection, vehicle warranties, and other services available.

What We Don’t Like

PenFed’s best rates are reserved for people who use its car-buying services, and you’ll have to be a member to gain access to the most desirable benefits and discounts. And, while it’s not uncommon among credit unions, PenFed requires that borrowers become members and open an account with a minimum deposit.

PenFed Rates and Terms

PenFed’s rates are competitive in all categories it services, and it offers a range of loan terms, from 36 to 84 months. The best rates are only available to people using its car-buying service, but in general, PenFed averages between 4.7 and 4.99% for auto loans. Qualified borrowers can access up to 125% of the vehicle’s value, and PenFed’s loans extend to $150,000 for some.

Additional Perks

PenFed is one of the rare lenders offering refinancing loans, and it also offers title loans in some situations. Its best benefits come when using TrueCar, its car-buying service partner, but members have access to a range of other benefits, including insurance deductible reimbursements.

PenFed Customer Reviews

Many people rave about PenFed’s loan application process, saying it was quick and easy, with more talking about its online services. Others talk about the convenience of having preapproved financing before starting the buying process, but that is not unique to PenFed. Many also say that PenFed’s customer service agents are quick, friendly, and knowledgeable, but they are also the primary source of most negative reviews.

Poor reviews focus on hiccups with customer service, with some saying it took too long to get an answer or that they were unhelpful in resolving problems. Others say the application process hit snags, with the credit union requiring additional documentation that ultimately caused the loan to be denied.

Who Is PenFed Best For?

PenFed is best for people who prefer an online-first experience. Its user interface is built around automation, which can be overwhelming for people not accustomed to a digital-only process. Customers must also use its car-buying service, TrueCar, to get the best rates, which is another online experience.

PenFed Vs Navy Federal Auto Loan

PenFed and Navy Federal are both popular auto lenders, but there are a few key differences between them. That said, it’s important not to focus too much on one aspect of the comparison, because one lender may be a better choice in other areas.

PenFed Credit Union Alternatives

PenFed is a top pick for low rates and member service, but membership requirements may not work for everyone. If you want unsecured loans, digital tools, or in-person banking without joining a credit union, these lenders are strong alternatives. Also, check out our overviews of the best cheap auto insurance companies and the best personal loans to help save more or discover more financing solutions.

• Upgrade: Competitive refinance options with fast, all-digital approvals.
• Lightstream: Same-day funding and flexible terms, but requires higher credit scores.
• Bank of America: In-person support nationwide plus discounts for existing customers.
• Capital One: Prequalification with no credit hit and online shopping convenience.

Frequently Asked Questions

Conclusion

This PenFed Auto Loan review highlights why Pentagon Federal Credit Union is a top choice for borrowers seeking flexible loan terms and fast online prequalification. With loan amounts up to $150,000 and up to 125% loan-to-value ratios, PenFed stands out from traditional banks and smaller credit unions.

Members benefit from quick application processing, competitive rates starting around 3.89% (subject to change), and access to PenFed’s TrueCar buying service. Though the best perks are reserved for members using partner tools or with at least 60 days of account history, PenFed’s strong online platform and national availability make it a solid option for many used and new car buyers. The company is featured in our overview of the best used auto loan providers. 

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Chris Teague