PenFed Auto Purchase and Refinance Loans: 2025 Review

Full Review of Pentagon Federal Credit Union

Pentagon Federal Credit Union, also known as PenFed, offers new and used car purchase loans and refinance loans. 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. Typically, members are required to open a primary savings account with a $5 deposit, but PenFed pays this $5 for auto loan applicants.

Although military service is not required to join PenFed, the credit union remains a strong supporter of the military and veterans. The PenFed Foundation has helped more than 140,000 military families. This assistance includes temporary emergency financial assistance for car payments, rent, mortgages or utilities.

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. According to PenFed, information captured with the initial application usually enables borrowers to move quickly to final approval, without providing additional information.

Unlike many other credit unions and banks, PenFed’s potential rate discount is not tied to setting up automatic payment. Instead, rate discounts or cash bonuses may be offered when a vehicle is purchased through PenFed’s online car buying service. Current “as low as” rates — typically only available to borrowers with excellent credit — are provided on the PenFed website.

Table of contents

Pentagon Federal Credit Union

Pentagon Federal Credit Union may be a good fit for those who ...

Do you qualify for a Pentagon Federal Credit Union auto loan?

How to apply for a Pentagon Federal Credit Union auto loan

How auto loan rates work and how we collect them

How do we review auto loan direct lenders?

Pentagon Federal Credit Union at a glance

• RestrictionsRestrictions

  • New vehicle definition: Must have less than 7,500 miles and be plus or minus one model year from the current calendar year.

  • Maximum vehicle age: No maximum age for used vehicles.

  • Maximum vehicle mileage: 125,000 for used purchase or refinancing.

  • Other vehicle restrictions: New and used vehicles can be purchased from a franchised dealer or independent dealer.

  • Loan amount minimum: $500.

  • Loan amount maximum: $150,000.

  • Maximum loan-to-value ratio: 125%.

  • Refinance time restrictions: Borrowers can refinance as soon as the previous loan's paperwork is complete and the title can be transferred.

  • Bankruptcy restrictions: Did not disclose.

• Other loan detailsOther loan details

  • Approval speed: Immediate in most cases. Approved loan offer is good for 30 days.

  • Initial deferred payment: Does not offer.

  • Existing loan payoff: For refinancing, funds are provided to the borrower, who must then pay off the previous loan.

  • Selected payment due date: Borrower can not select their payment due date.

  • Late payment grace period and fee: Did not disclose length of grace period. Charges late payment fee of $29.

  • Hardship plans: Yes. It may include deferred payments and an extended loan term.

• More lender detailsMore lender details

  • Contact options: Phone, email, live chat, visit a location. PenFed provides Spanish-speaking agents by phone, email and chat.

  • Availability: Monday-Saturday 8 a.m.-8 p.m EST.

  • Mobile app to manage account: Yes.

  • Online resources: Offers an online learning center with auto loan content covering topics like buying a car, owning a car, refining and the like. PenFed also offers an online auto loan calculator.

  • Related services: PenFed offers GAP insurance and a vehicle protection plan for an additional fee that allows borrowers to extend their manufacturer's warranties. The credit union also offers an online car buying service through TrueCar. When using the car buying service, an applicant can find a car online, contact a dealer for member pricing, apply for the loan online and get approval before heading to a dealership. Another interesting perk included for those who use the car buying service is reimbursement of any car insurance deductible up to $500 twice a year when filing a claim. It’s worth noting that requesting information through the car buying service can result in multiple calls and emails from participating dealers.

  • Membership Military service not required. PenFed has an open charter, meaning anyone with a valid Social Security number or ITIN can join.

PenFed may be a good fit for those who:

• Find a car to buy through PenFed's auto buying service. Using this online service, applicants can find a car, apply for a loan and get approved financing before going to the dealership.

• Want to compare loan terms. Applicants receive up to six pre-qualified offers that show the rate and payment amount for various terms. Rates and terms at pre-qualification stay the same through preapproval and approval (unless the selected vehicle changes).

• 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.

Do you qualify for a PenFed auto loan?

Here are PenFed's basic eligibility requirements to apply for an auto loan:

• You must be a member of PenFed to apply for a loan. PenFed has an open charter, meaning anyone with a valid Social Security number or ITIN can join.

Here are PenFed's minimum borrower requirements to qualify for an auto loan. Note that meeting these requirements doesn’t guarantee approval. Also, many lenders are flexible with minimum requirements when considering an applicant's total financial picture.

• Minimum credit score: Did not disclose.

• Minimum credit history: 24 months.

• Maximum debt-to-income ratio: 20% payment-to-income.

• Minimum annual income: None.

Before you apply

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. For purchase loans, use an auto loan 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. For auto refinance loans, use an auto refinance calculator to see your monthly payment and determine what APR and term you need to make refinancing worthwhile.

Gather your documents. PenFed requires the following to submit an initial application: Social Security number or ITIN, address, phone, email, birthdate, employment status, employer name, income, housing status and housing payment amount.

» MORE: Compare auto loans, rates and lenders

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 viewing your loan options, you can submit a loan application. Note that PenFed offers preapproval with 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 and with the ability to prefill some information such as applicant and vehicle information. If you are 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.

3. Stay on top of your loan payments. PenFed reports car payments to all three major credit bureaus, so on-time payments will help build your credit score, but missed payments will hurt it. If you can, set up automatic payments to make sure your payments arrive by the due date.

» MORE: Compare auto loan refinancing lenders

How auto loan rates work and how we collect them

The auto loan APR range NerdWallet displays is provided by the lender. We make every attempt to keep rates updated, by sending out bimonthly rate surveys and encouraging lenders to send us updates when rates change. We also compare these rates to APRs on the lender's website, if available. The accuracy of our rates depends on the information lenders provide to us. It’s always a good idea to check average auto loan interest rates, and compare to similar lenders, to determine if a lender’s provided rate seems realistic.

We ask lenders to provide their lowest rate that at least 10% of applicants applying for the lowest rate have qualified for in the previous three months, without including any potential rate discounts. The lowest rates shown are typically available only to borrowers with good or excellent credit (a FICO score of 690 and above).

We also ask lenders for their highest rates, which typically reflect rates available to borrowers with fair or bad credit (a FICO score in the mid-600s or below). The highest interest rates result in higher monthly payments and more total interest paid.

Actual rates received by this lender’s auto loan borrowers may be different from the rates shown in this review.

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).