PenFed Auto Purchase, Refinance and Lease Buyout Loans: 2023 Review

PenFed is a Virginia-based credit union that makes auto loans nationwide. Because of its open charter, anyone can join.
By Shannon Bradley  

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Auto loan reviews

PenFed Credit Union

  • New auto purchase loan

  • Used auto purchase loan

  • Auto loan refinancing

  • Auto lease buyout loan

The bottom line:

Best for borrowers wanting to use PenFed’s auto buying service for reduced rates and vehicle pricing.

New auto purchase loan review

PenFed Credit Union
PenFed Credit Union - New car purchase loan

Not yet rated

Est. APR
4.44-10.19%
Loan amount
$500-$100,000
Min. credit score
Did not disclose

Pros

  • Provides up to six offers with various rates and terms using a soft credit check.

  • Minimum loan amount is lower than other lenders.

  • Finances vehicles purchased from private parties.

  • Offers online car buying service with discounted pricing and rate.

  • Application process can be 100% online.

Cons

  • Credit union membership required to get a loan.

  • Must use PenFed online car buying service to get a rate discount.

  • Social Security number required with initial application.

Best for applicants who use the PenFed online car buying service to get a discount on rate and new vehicle pricing.

Full Review

Pentagon Federal Credit Union, also known as PenFed, offers new and used car purchase loans, refinance loans and lease buyout loans. Credit union membership is required, but individuals can join after receiving 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.

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 loan offers with various terms and rates based on a soft credit check, which will not affect their credit scores. If the applicant moves forward with an offer, PenFed initiates a hard credit inquiry. 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, PenFed offers a rate discount for terms of 36-72 months when a vehicle is purchased through its online car buying service. Current rates are available on the PenFed website and show a comparison between using and not using the car buying service. The rates shown reflect those available to borrowers with excellent credit.

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.

PenFed may be a good fit for those who:

  • Find a car to buy through PenFed's online auto buying service. Purchasing a new or used car through the online service qualifies an applicant for reduced vehicle pricing and a rate discount. PenFed advertises rates as low as 0.99% for borrowers with excellent credit and a 36-month term.

  • Are looking for a lower loan amount minimum. PenFed’s minimum loan amount requirement is among the lowest. It provides options for borrowers who may need a smaller loan to buy a used car or buy out their leased car.

  • 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.

PenFed at a glance

Application process

  • Origination fee: None.

  • Personal information needed: Social Security number or ITIN, address, time at address, phone, email, birthdate, employment status, employer name, housing status, housing payment, VIN, vehicle registration or license information.

  • Pre-qualification available: Provides up to six offers, with various rates and terms, based on soft credit check. Loan offers are good for 30 days.

  • Online, in-person or both: By phone, in branch or 100% online, including document upload.

  • Approval speed: Within 10 minutes if automated decisioning is used. Approval could take 24-48 hours if manual decision is required.

  • Funding: One day or less after loan closing.

  • Minimum FICO credit score: Did not disclose.

  • Minimum credit history: Did not disclose.

  • Minimum annual gross income: None.

  • Maximum debt-to-income ratio: Did not disclose.

  • Bankruptcy-related restrictions: Did not disclose.

  • States covered: All 50 states.

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

  • Maximum vehicle age: New vehicles must be untitled, have less than 7,500 miles and be plus or minus one model year from the current calendar year. No maximum age for used vehicles.

  • Maximum vehicle mileage: 125,000.

  • Other vehicle restrictions: No commercial or business vehicles. Used vehicles can be purchased from a franchised dealer, independent dealer or private party.

  • Loan amount minimum: $500.

  • Loan amount maximum: $100,000.

  • Refinancing time restrictions: Can refinance as soon as PenFed verifies lender payoff and title lien can be secured.

  • Loan terms: 24-84 months new purchase and refinance; 24-72 months used purchase, refinance and lease buyout.

  • Automatic payment: Offered but not required.

  • Rate discount: Yes, but only if purchasing a vehicle through PenFed car buying service.

  • Greater-than-minimum payments: Accepted and can be made by automatic payment. Is automatically applied as paid-ahead status (to the next due payment). Surplus is applied to the principal as designated by the member on each payment.

  • Biweekly payments: Accepted and can be made by automatic payment.

  • Late payment fee: Yes, $29 with a five-day grace period.

  • Prepayment penalty: None.

  • Co-borrowers allowed: Yes.

  • Co-signers allowed: Yes, can complete application at the same time.

  • Payment options: Mailed-in check, phone, mobile app, online banking, ACH, in person.

  • Selected payment due date: Yes, after signing the loan agreement. Can request by phone or in branch.

  • Cash-out refinancing: Yes, within maximum loan-to-value ratio of 125%.

  • Hardship plans: Yes, details depend on a borrower’s situation. Financial Hardship Center available on PenFed website.

  • Assistance provided: PenFed team assists applicants throughout the loan process.

  • Availability: Monday-Friday 7 a.m.-11 p.m., Saturday 8 a.m.-11 p.m., Sunday 9 a.m.-5:30 p.m. EST.

  • Contact options: Phone, email, social media.

» MORE: Compare auto loans, rates and lenders

How does this loan compare?

Consumers Credit Union
RefiJet
Tresl
Learn more
Learn more
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Est. APR

5.74-18.54%

Est. APR

3.39-22.00%

Est. APR

1.49-17.99%

Loan amount

$7,500-$500,000

Loan amount

$5,000-$100,000

Loan amount

$5,000-$100,000

Min. credit score

620

Min. credit score

550

Min. credit score

580

Used auto purchase loan review

PenFed Credit Union
PenFed Credit Union - Used car purchase loan

Not yet rated

Est. APR
5.64-11.34%
Loan amount
$500-$100,000
Min. credit score
Did not disclose

Pros

  • Provides up to six offers with various rates and terms using a soft credit check.

  • Minimum loan amount is lower than other lenders.

  • Finances vehicles purchased from private parties.

  • Offers online car buying service with discounted pricing and rate.

  • Application process can be 100% online.

Cons

  • Credit union membership required to get a loan.

  • Must use PenFed online car buying service to get a rate discount.

  • Social Security number required with initial application.

Best for applicants who use the PenFed online car buying service to get a discount on rate and used vehicle pricing.

Auto loan refinancing review

PenFed Credit Union
PenFed Credit Union - Refinance loan

Not yet rated

Est. APR
5.24-11.34%
Loan amount
$500-$100,000
Min. credit score
Did not disclose

Pros

  • Minimum loan amount is lower than other lenders.

  • Customer service available seven days a week.

  • Provides up to six offers with various rates and terms using a soft credit check.

  • Application process can be 100% online.

Cons

  • Credit union membership required to get a loan.

  • Social Security number required with initial application.

Best for applicants wanting fast, preapproved offers to determine if they would benefit from refinancing.

PenFed offers cash-out refinancing, meaning borrowers with vehicle equity may be able to receive cash up to 125% of the vehicle’s value with their refinance loan. Borrowers should weigh the pros and cons of cash-out auto refinancing.

» MORE: Auto loan refinancing lenders

Auto lease buyout loan review

PenFed Credit Union
PenFed Credit Union - Lease buyout loan

Not yet rated

Est. APR
1.79-17.99%
Loan amount
$500-$100,000
Min. credit score
Did not disclose

Pros

  • Provides up to six offers with various rates and terms using a soft credit check.

  • Application process can be 100% online.

  • Customer service available seven days a week.

Cons

  • Credit union membership required to get a loan.

  • Social Security number required with initial application.

Best for applicants wanting to quickly see preapproved offers for auto lease buyout loans.

» MORE: Compare lenders that offer auto lease buyout loans

More from PenFed

Established in 1935, PenFed is one of the largest credit unions in the U.S., with more than $25 billion in assets. Headquartered in Tysons, Virginia, PenFed serves more than 2 million members worldwide with a range of financial services including checking accounts, loans and credit cards. In addition to auto loans, PenFed offers gap protection, an extended warranty and debt protection that can be rolled into the loan. The PenFed website offers many self-serve options, such as educational articles and downloadable forms related to car buying and financing.

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.

PenFed auto loan rates

Lenders set their own requirements, but PenFed Credit Union’s lowest rates are typically available only to borrowers with good or excellent credit (a FICO score of 690 and above). Borrowers with bad or fair credit won’t qualify for the lowest interest rates. Rates also vary by term and whether a vehicle is purchased through the PenFed online car buying service.

You can check your credit score before applying for a car loan.

Loan example: According to NerdWallet's auto loan calculator that uses the VantageScore credit model, a borrower with a credit score of 661-780, a $20,000 car loan, repayment term of 48 months, interest rate of 4.5% and $0 down payment would have monthly payments of $457.

To review PenFed, NerdWallet sent a survey requesting more than 60 data points and followed up with company representatives. The information was compared with other lenders that seek the same customer or offer a similar product.

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