PenFed Personal Loans: 2024 Review

PenFed offers personal loans that can be easily customized to fit most borrowers’ needs. Though PenFed is best known for serving military members, anyone can join by funding a savings account with a minimum of $5.

According to the lender, it accepts excellent-credit borrowers, and unlike other credit unions, you can apply for membership as part of the loan application.

» MORE: Benefits of credit union loans

Table of Contents

PenFed personal loans at a glance

Where PenFed personal loans stand out and fall short

Do you qualify for a PenFed personal loan?

How to apply for a PenFed personal loan

How PenFed personal loans compare

How we rate PenFed personal loans

PenFed personal loans at a glance

Where PenFed personal loans stand out

Soft credit check to pre-qualify: Unlike other credit unions or even some major banks, PenFed lets you pre-qualify online to see your potential rate, loan amount and monthly payment without affecting your credit score.

Co-signed loans: You can add a co-signer with higher income or a better credit score to your loan application to help improve your chances of qualifying or getting a lower rate. Though this person won’t have access to the loan funds, they share responsibility for repaying the loan.

» MORE: Best co-signed personal loans

Rate discount for autopay: PenFed offers a 0.25 percentage point discount on your loan’s annual percentage rate if you sign up for autopay. Autopay can help you avoid missing a payment, and getting a rate discount means you’ll pay less in interest on your loan.

Quick approval and funding: PenFed can provide an immediate decision on your loan application. Once you’ve signed the loan documents, it can also send the funds electronically in one to two business days. If you prefer a check, you’ll have to wait longer — about five to seven business days, according to the lender.

» COMPARE: Fast personal loans

Where PenFed personal loans fall short

No direct payments to creditors: Unlike some lenders that offer debt consolidation loans, PenFed doesn’t send payments directly to creditors when you consolidate debts with a loan. Instead, the funds are deposited into your account or sent by check, and you pay off other debts yourself.

» COMPARE: Best debt consolidation loans

Doesn’t clearly display loan terms on website: PenFed’s personal loans homepage doesn’t list the full range of loan amounts and terms available to prospective borrowers, which can be an inconvenience if you're looking to quickly compare loan options between lenders.

Do you qualify for a PenFed personal loan?

Though you don’t need to be a PenFed member to apply for a personal loan, you’ll have to become a member before you’re funded. Other requirements include:

• Minimum credit score: 700.

• Maximum debt-to-income ratio: 75%. 

• Be a U.S. citizen and provide a Social Security number. 

• Show four active credit accounts and no bankruptcies.

Here are details on PenFed’s average borrower:

• Credit score: 740.

• Annual income: $105,000.

• Debt-to-income ratio: 15% to 20%. 

• Loan amount: $17,500.

• Term: 60 months.

Before you apply

• Check your credit. You can get your free credit report on NerdWallet or at AnnualCreditReport.com. Doing so will help you spot and fix any errors before you apply.

• Calculate your monthly payments. Use a personal loan calculator to determine what APR and repayment term you’d need to get a loan with affordable monthly payments.

• Make a plan to repay the loan. Review your budget to see how the loan’s monthly payments impact your cash flow. If you have to cut other expenses in order to repay the loan, it’s better to know that before you borrow.

• Gather your documents. PenFed may require proof of income, which can be a W-2, paystub or tax document, as well as proof of address and a Social Security number. Having these documents handy can speed the application process.

How to apply for a PenFed personal loan

Here are the steps to apply for a PenFed loan.

1. Pre-qualify on PenFed’s website. You’ll be asked how much you want to borrow, what the funds are for and your desired repayment term, as well as some personal information. There’s no hard credit pull at this stage.

2. Preview offers and formally apply. After viewing your loan options, you can submit a formal personal loan application. This could require more documents, like W-2s, pay stubs and bank statements to confirm the information you gave during pre-qualification. PenFed will do a hard credit check when you apply, so your credit score could temporarily dip.

3. Make a plan to repay the loan. PenFed reports payment to all three major credit bureaus (Equifax, Experian and TransUnion), so on-time payments will help build your credit score, but missed payments will hurt it. Setting up automatic payments and keeping an eye on your budget are two ways to manage your loan payments.

Compare PenFed with other lenders

Personal loan lenders offer different rates, loan amounts and special features, so it pays to weigh other options. The best personal loan is usually the one with the lowest APR.

Discover and Achieve are two online lenders that also offer personal loans, but since they’re not credit unions, you don’t need to first become a member to apply or get funded.

PenFed vs. Discover

Discover personal loans are available to borrowers with a minimum credit score of 660. Though Discover offers a smaller range of loan amounts, you’ll find perks like direct payment to creditors with debt consolidation loans and a slightly faster funding time.

» MORE: Read our review of Discover

PenFed vs. Achieve

Achieve accepts borrowers with a minimum credit score of 620 and offers multiple rate discounts that can help you save money on interest. You can pre-qualify to see your potential rate, but you’ll pay an origination fee with this lender.

» MORE: Read our review of Achieve

How we rate PenFed personal loans

NerdWallet writers rate lenders against a rubric that changes each year based on how personal loan products evolve. Here’s what we prioritized this year:

• Category definitions

  Affordability (25%)

  An affordable loan has low rates and fees compared to other similar loans and may offer rate discounts.

  Customer experience (20%)

  A good customer experience includes allowing borrowers to choose and change their repayment date, a fully online application process, a mobile app to manage the loan and a customer service team with wide availability.

  Underwriting and eligibility (20%)

  The lender reviews borrowers’ credit reports and credit history and tries to understand their ability to repay a loan. It offers loans in most states and doesn’t restrict eligibility by requiring a pre-existing relationship.

  Application process (20%)

  Borrowers can pre-qualify to check their potential rate, loan amount, repayment term and APR without affecting their credit score. They can easily find answers to questions about the personal loan on the lender’s website. The application process is fast enough to allow funding within a couple of days or less.

  Loan flexibility (15%)

  A flexible loan is one that offers a wide range of loan amounts and repayment term options. It includes common features like additional loan types and direct payment to creditors on debt consolidation loans.

  Discretionary

  A lender’s star rating can be reduced if the lender is sued by a state or federal regulator for unfair consumer practices or has been accused by a reputable source of suspicious business practices.