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PenFed Credit Union auto loans review

Interest rates as low as 4.59% on new cars with TrueCar — but only for established members.’s rating: 4.3 / 5.0


Bottom line: Credit unions often offer car loan rates lower than traditional banks — and PenFed membership isn’t as restrictive as others. It also offers financing for new and used cars in addition to refinancing. But while its rates start low, most people can’t qualify for the starting APR. Read our full review or get our 30-second take.

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Min. Loan Amount


Max. Loan Amount

Starting at 4.59%



Min. Loan Amount$500
Max. Loan Amount$100,000
APRStarting at 4.59%
Interest Rate TypeFixed
RequirementsActive membership with PenFed


  • Extremely low starting interest rates
  • Car buying service available
  • Generally positive customer reviews


  • Preapproval limited to established members
  • Limited brick-and-mortar locations
  • Payment saver loans have balloon payments

Our take on PenFed auto loans

PenFed is one of the few national credit unions that services all 50 states and has open membership criteria. Out of the many auto loan providers I’ve reviewed, it certainly stands out in the variety of options it offers customers. Its low interest rates don’t hurt either, although only established members with excellent finances will qualify.

And while PenFed caters to military members and their families, anyone is able to apply for membership. This makes it less restrictive than most credit unions and similar lenders, like USAA.

However, it’s not all positive. Despite decent customer reviews, there are plenty of complaints about poor customer service, long wait times and rejections despite excellent credit. You’ll also face a hard hit to your credit if you haven’t had an account for at least 90 days. And even if your account has been around for that long, there may still be a hard credit check.

Overall, PenFed is a good choice for established members. If you’re willing to wait a few months before you apply, you can take advantage of its low rates on new and used auto loans.

PenFed reviews and complaints

PenFed receives mixed reviews from its customers. On its BBB page, there are numerous problems with its slow processing times and poor customer service. And while complaints receive unique responses, its negative reviews only receive a brief apology with no way for the customer to have problems fixed.

Customers on Trustpilot, the App Store and Google Play are generally much happier with PenFed’s customer service.

How PenFed auto loans compare to other lenders

PenFed has some of the lowest rates — provided you qualify. That being said, Carvana and USAA are two top alternatives to PenFed. Carvana is a quick online option, and USAA is a good choice for current and former military members.

It’s important to know that Carvana only provides financing for its inventory of used cars. This means you must shop at Carvana if you want to use its loans. If you’re looking for a used car, it’s a good place to start. The process is entirely online, and Carvana allows you to test drive your car for up to seven days to ensure it’s a good fit.

If you’re looking for a lender that works with the military and understands its needs, USAA is a good alternative. While we don’t rate it as highly as PenFed, it does offer competitive rates and large loans for new and used cars.

PenFed Auto Loans


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Minimum credit score


Minimum credit score

No minimum credit score


Starting at 4.59%


3.9% to 27.9%

Loan amount

$500 – $100,000

Loan amount

Not stated

PenFed rates, fees and terms

PenFed is a competitive lender that offers a wide variety of loan options for its members.

New and used vehicles

PenFed allows you to finance up to $100,000 or 110% of the vehicle’s value, including title, tags, taxes and additional products. Loan terms range from a standard 36 months to 84 months. But if you’re buying a used car, it will need to be model year 2016 or newer to qualify for a term over 60 months.

Its interest rates start at 5.39% — which is one of the lowest APRs out there. You’ll need good to excellent credit to qualify.

And while PenFed has a low minimum loan amount of $500, only its 36-months loans have that low starting rate. If you want anything longer than a three-year term, you’ll need to borrow at least $7,500.

New vehicle loans

Starting APRLoan termMinimum loan amount
5.39%36 months$500
5.49%48 months$7,500
5.54%60 months$10,000
5.84%72 months$15,000
6.74%84 months$20,000

Used vehicle loans

Starting APRLoan termMinimum loan amount
6.04%36 months$500
6.14%48 months$7,500
6.14%60 months$10,000
6.24%72 months$15,000

Payment saver loans

PenFed’s payment saver loans have the appeal of low initial payments. You can borrow between $10,000 and $100,000 with terms of 24 to 60 months. But interest rates start higher than the interest rates for its traditional car loans. You’ll also face a balloon payment at the end of your loan.

This means that you’ll make smaller monthly payments, but at the end of your loan term, you’ll owe the remaining balance as a lump sum. From here, you can pay it off, sell or trade in your car or refinance your loan. Similar to a lease, the balloon payment is calculated based on the estimated residual value of your car at the end of the loan term.

For example, a $30,000 new car loan with a 3.99% APR, 60-month term and a final balloon payment of $8,500 would have monthly payments of around $402. The total cost of your loan would be nearly $34,000.

To put this in perspective, a traditional $30,000 new car loan with a 3.99% APR and a 60-month term would have monthly payments of around $552. The total cost of your loan would be a little over $33,000 — or $1,000 less than with a balloon payment.

So while you’ll save money each month, you’ll be stuck with a higher overall cost and a huge payment to make at the end of your loan. PenFed also limits your annual mileage to 15,000, which can further restrict how you use your vehicle.

New payment saver loans

Starting APRLoan term
2.99%24–36 months
3.49%37–48 months
3.99%49–60 months

Used payment saver loans

Starting APRLoan term
3.74%24–36 months
4.24%37–48 months
4.54%49–60 months


PenFed allows its members to refinance both new and used vehicles from other lenders. The exact amount you can refinance — and your APR — will depend on the loan term you choose. However, PenFed makes it easy: Refinancing your previous loan has the same rates as borrowing a loan for purchasing a new or used car.

There are some additional requirements. If you want to refinance a new vehicle, you must be the original owner. The vehicle itself should have less than 7,500 miles and be model year 2020 or newer. Used vehicles have over 7,500 miles — with no stated maximum mileage restriction — and are older than model year 2020.

PenFed requirements

PenFed isn’t 100% clear about its requirements, so you’ll need to reach out to a representative to see if you and your potential vehicle qualify.

Personal requirements

To qualify for a loan, you must be a member of PenFed Credit Union. If you aren’t already, you can join if you meet its membership requirements and by paying $5. However, only those who have been a member for at least 90 days will be eligible for preapproval. New members won’t — which means a hard credit check before you see your potential loan terms.

Other requirements, like your credit score or income, aren’t stated directly. Like most lenders, you will likely only qualify for the best terms if you have excellent credit and a low debt-to-income (DTI) ratio. For most people, this looks like a score of 670 or higher.

Vehicle requirements

New car loans must be for vehicles under 7,500 miles and model year 2020 or newer. Requirements for used car loans from PenFed aren’t fully outlined on its site. What is mentioned is that the model year must be 2016 or newer for terms from 61 to 72 months.

How the application works

If you’re already a PenFed member, you can log in to your account and apply online. If you aren’t a PenFed member, you can still apply online. Just go to its auto loans page and click Apply now under the type of loan you’re interested in.

From here, you can fill out its application. The process should take around 10 minutes to complete. Loan decisions may be available within a few business days.

However, applicants must be members for 90 days or more to apply for preapproval. New members may still qualify, but it means a hard credit check once you submit an application. In this case, you may want to make PenFed a last stop when comparing car loans to avoid impacting your credit.

What sets it apart

Like other lenders, PenFed offers gap insurance and extended warranties. But there are two ways it stands out from the crowd.

PenFed car buying service

PenFed works with TrueCar to help you find a deal on your next car. You can search by model and ZIP code, and established members of PenFed can qualify for exclusive offers from top manufacturers.

And in addition to special deals, you may also qualify for discounted rates — as low as 0.99% on new cars with 60-month terms.

Debt protection

PenFed offers comprehensive debt protection plans on all installment loans — including auto loans — in the case of death, disability or involuntary unemployment.

While this is an extra cost to your loan, it can help ease the debt burden on your or your family in a worst-case scenario. PenFed has three plans to choose from, and it’s entirely optional. Plus there’s no commitment. If you decide to cancel debt protection, you won’t have to continue paying for this service.

Not sold on PenFed or our top alternatives? You can compare current auto loan rates to help find your next loan.

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