PenFed Auto Loan Review 2025

Pentagon Federal Credit Union (PenFed) auto loan terms and requirements

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About PenFed auto loans: a closer look

Pentagon Federal Credit Union, also known as PenFed, offers new and used car purchase loans, refinance loans, lease buyout loans and private party auto loans. It also offers cash-out auto refinancing, so borrowers with vehicle equity may be able to receive cash with a new refinance loan.

PenFed was originally chartered to serve only U.S. military members, veterans and federal employees but that is no longer the case. The credit union now has an open charter, meaning anyone can join nationwide. Credit union membership is required to get a loan, but borrowers can join after receiving auto loan approval as part of the loan process.

Auto loan applications can be submitted online, by phone or in any PenFed branch, although the branch network is somewhat limited. Applicants receive up to six pre-qualified loan offers showing the rate and payment amount for various terms. Pre-qualification is done using a soft credit check, which will not affect an applicant’s credit scores. A hard credit inquiry occurs only after an applicant moves forward with a loan offer.

Unlike many other credit unions and banks, PenFed’s potential rate discount is not tied to setting up automatic payment. Instead, discounted rates may be offered when a vehicle is purchased using PenFed’s online car buying service through TrueCar.

When reviewing and rating auto lenders, NerdWallet writers gather information directly from the lender about customer experience, transparency, loan affordability, loan requirements and flexibility. PenFed scores well for affordability, with competitive interest rates, the possibility of a rate discount and no origination fees.

The credit union's lowest scoring category is for transparency. NerdWallet asks lenders to provide minimum and maximum requirements to get a loan, so borrowers can assess if that lender is a good fit before applying. PenFed declined to provide a range of information — from minimum credit requirements to maximum vehicle age and mileage for used cars and refinancing — meaning its star rating reflects a lack of data for some scoring.

Do you qualify for a PenFed auto loan?

Here are PenFed's responses to our questions about requirements to qualify for an auto loan.

Other PenFed auto loan details

• New vehicle definition. Previous model year and newer. Must be untitled with no previous owner.

• Pre-qualification and preapproval. Offers pre-qualification with a soft credit check. Applicants see various options that show different terms and payments. Once a loan is approved, the offer is good for 30 days.

• Upfront fees. Does not charge an application or document processing fee.

• Interest rate discounts. 0.25% to 0.80% APR discount (depending on the loan term selected by the member) for members who use the PenFed car buying service through TrueCar and finance that purchase directly with PenFed. No rate discount for automatic payments.

• Refinancing time restrictions. Borrowers can refinance as soon as the previous loan's paperwork is complete and the title can be transferred. Borrowers aren't required to have a certain balance or number of months remaining on a loan to refinance.

• Deferred payments. Does not offer option to defer payments at the start of a loan.

• Selected payment due date. Borrowers can't select their payment due date.

• Late payment grace period and fee. Has a late payment fee with grace period. Did not disclose fee amount or grace period length.

• Hardship plans. Declined to provide any information about availability of hardship programs.

• Contacting PenFed. Borrowers can reach PenFed by phone, email, text, live chat or visiting a location, with Spanish-speaking agents available by phone. Hours are Monday-Saturday 8 a.m.-8 p.m. CT.

• Mobile app to manage account. Yes.

• Membership. Military service not required. PenFed has an open charter, meaning anyone with a valid Social Security number or ITIN can join. Typically, members are required to open a primary savings account with a $5 deposit, but PenFed pays this $5 for auto loan applicants.

Back to About PenFed

PenFed may be a good fit for those who:

• Find a car to buy through PenFed's online auto buying service. Applicants can take advantage of PenFed's partnership with TrueCar to find a car, apply for a loan and get approved financing before going to the dealership. Vehicles purchased and financed through this service are eligible for an interest rate discount.

• Want to compare loan terms. Applicants receive up to six pre-qualified offers that show the rate and payment amount for various terms. Pre-qualification is done using a soft credit inquiry, so it won't affect your credit scores.

• Want the benefits of credit union membership. Getting an auto loan through PenFed requires opening a savings account there, which opens the door to using other credit union services. Borrowers can manage their loan along with other accounts through online banking and a mobile app.

Before you apply to PenFed

Check your credit. You can get your free credit report on NerdWallet or at AnnualCreditReport.com. If you find errors, file a credit dispute to correct them before you apply for an auto loan.

Figure what monthly payment you can afford. Use an auto loan calculator or lease buyout calculator to determine what APR and repayment term you need to get monthly car payments that fit your budget. When you know your maximum car payment, a car affordability calculator can help you determine a realistic car price.

Gather your documents. PenFed requires the following to submit an initial application: Social Security number or ITIN, address, time at address, phone, email, citizenship status, birthdate, employment status, employer name, income, housing status, housing payment amount, basic vehicle information, vehicle identification number (VIN).

How to apply for a PenFed auto loan

1. Pre-qualify on PenFed’s website. Applicants can apply for a PenFed loan online, in-person at any PenFed branch or over the phone at 800-247-5626. During the pre-qualification process, you'll be asked how much you want to borrow, what type of auto loan you want, what type of car you’re looking for, how you’ll be purchasing your car as well as some personal information. When you pre-qualify for a loan, you’ll receive rate, payment and term estimates. There's no hard credit pull at this stage. After your pre-qualification application, PenFed will help you set up a membership to the credit union.

2. Preview offers and formally apply. After you select a loan option and move forward, PenFed will do a hard credit check, which means that your credit score could temporarily dip. Borrowers can apply for a PenFed auto loan 100% online, including document upload. If you're already a PenFed member, all personal application information will prefill except for employment and income. Both preapproval and final loan approval offers are valid for 30 days.

Back to About PenFed

How do we review direct lenders for auto loans?

NerdWallet's review process surveys companies that offer any combination of new car purchase loans, used car purchase loans, auto refinance loans (traditional and/or cash-out) and lease buyout loans. These companies include direct lenders and aggregators; the latter group doesn't have in-house loan products but matches borrowers to third-party lenders within a network. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

Our survey for direct lenders has different questions than the survey for aggregators, but each includes more than 60 data points. NerdWallet independently confirms product details and, when necessary, follows up with company representatives. At least two writers and an editor verify the facts for every lender review to ensure data are accurate.

To receive a star rating, a lender must respond to NerdWallet’s annual auto loans survey. Star ratings are then assessed from poor (one star) to excellent (five stars).

For more details about the categories considered when rating direct lenders and our process, read our full methodology.