Pros Explained

• High loan maximum: Although some lenders cap auto loans at $100,000, PenFed has a higher limit. You can finance up to $150,000, which allows you to buy higher-end vehicles.
• Added coverage and protection options: You can purchase additional protection for your vehicle through PenFed, such as guaranteed asset protection (GAP) coverage and vehicle protection plans. 
• Better-than-average rates: As a credit union, PenFed tends to have lower fees and better rates than banks and traditional auto lenders.
• Cash-back offers from select manufacturers: Members of the credit union can qualify for additional savings through PenFed's car buying service, powered by TrueCar. Select car manufacturers provide members with special discounts or cash-back offers, such as $2,000 cash back when purchasing specific makes and models.

Cons Explained

• Credit union membership required: Before you can take out a loan with PenFed, you must join the credit union. PenFed's membership application process is simpler than that of other credit unions, but it still requires extra steps. 
• Stricter vehicle restrictions for longer terms: If you want to take advantage of a longer loan term, such as 61 to 84 months, PenFed has a higher loan minimum. The minimum loan amount for a loan term between 61 and 72 months is $15,000, and the minimum is $20,000 for terms of 73 to 84 months. 
• Must use car buying service for lowest rates: PenFed's rates are quite competitive. But to qualify for the lowest advertised rates, you must use its car-buying service. If you buy a car on your own, you'll pay a slightly higher rate.
  

Types of Auto Loans Offered by PenFed

PenFed allows borrowers to take out loans for new or used cars, and you can purchase a vehicle from a dealership or private party. 

New Auto Loans

• APR: 5.39%–17.99%
• Loan amounts: $500–$150,000
• Loan terms: 36–84 months

PenFed's lowest rates on new car loans are reserved for borrowers that use its car-buying service, powered by TrueCar. If you get a loan from PenFed but you buy a car outside of that platform, you'll pay a higher rate.  PenFed allows you to finance up to $150,000 or 125% of the purchase price, whichever is less. 

Used Auto Loans

• APR: 6.49%–17.99%
• Loan amounts: $500–$150,000
• Loan terms: 36–84 months

Higher rates apply to used car loans, and once again the best rates are limited to customers that use PenFed's car buying service. 

Customers buying a used vehicle who want an 84-month loan term must select a car that is five years old or newer and has fewer than 60,000 miles.

Refinance Auto Loans

• APR: As low as 5.94%
• Loan amounts: $500–$150,000
• Loan terms: 36–84 months

For auto loan refinancing, PenFed considers recently manufactured vehicles with fewer than 7,501 miles to be new cars. All other vehicles are considered pre-owned and are subject to higher rates.

Time to Receive Funds

After you've selected a vehicle, submitted a loan application, and been approved, you must sign the loan agreement. Once you return the signed agreement, PenFed will issue you the loan funds via check. 

PenFed mails auto loan checks made payable to the dealership or the private seller, and it can take five to ten days to receive the check. This is quite a bit longer than some other lenders, who may disburse the loan funds the same day you’re approved.

Borrower Requirements

• Minimum recommended credit score: Not disclosed
• State availability: PenFed's auto loans are available nationwide, including Washington, D.C., and U.S. territories.
• Membership requirements: PenFed requires borrowers to join the credit union before qualifying for a loan. You can join by opening a new savings account and depositing at least $5 in the account.

Vehicle Requirements

• Maximum accepted mileage: 125,000
• Maximum loan-to-value ratio: Up to 125% in the U.S. (a maximum of 110% in Puerto Rico and the Virgin Islands)
• Maximum accepted age: No maximum

PenFed Auto Loan Features

• Origination fee: PenFed does not charge origination fees. 
• Prepayment fee: There are no prepayment penalties, so there's no downside to paying off an auto loan from PenFed early.
• Discounts: Lower interest rates are available to borrowers who use the TrueCar service. 
• Rebates: Some of PenFed's partner manufacturers, including Audi and Dodge, offer cash bonuses to those who have been a member for 60 days or more and complete a new or used vehicle purchase.
• Pays creditors directly for refinance loans: PenFed does not issue direct creditor payments; instead, it will mail you a check made out to the financial institution that holds the loan.
• Can change due date: PenFed allows members to change their payment due dates. 
• Car-buying service: PenFed's car-buying service is powered by TrueCar, and customers can buy new or used cars through the platform. 
• Partner dealerships: PenFed doesn't have partner dealerships. However, it does have partnerships with some vehicle manufacturers that offer cash-back bonuses to qualifying members. 
• First-time car buyer program: PenFed doesn't operate a first-time car buyer program. 
• Mobile app: The PenFed mobile app is available through the App Store and Google Play. You can make payments, view statements, and manage your profile through the app.

Co-Signers and Co-Applicants

If you don't qualify for a loan because of your credit history or your income, you can apply for a PenFed auto loan with a co-borrower. If you add someone with good credit and a steady income, you may improve your chances of getting a loan and qualifying for a competitive rate. 

PenFed does not allow co-signers, only co-borrowers; co-borrowers share equal responsibility for the loan and own the vehicle equally, unlike co-signers.

Customer Service

You can reach PenFed's customer support team via phone, or you can send a secure message through the . 

Customer Satisfaction

Although PenFed wasn't included in J.D. Power’s 2023 U.S. Consumer Auto Financing Study or 2022 U.S. Dealer Satisfaction Study, PenFed generally has positive reviews from customers.

On Trustpilot, PenFed has 4.5 out of 5 stars based on over 1,400 reviews, putting it in the "Excellent" category. PenFed auto loan reviews praise the lender's reasonable rates, helpful customer service, and user-friendly loan application.

How to Apply for a PenFed Credit Union Auto Loan

Follow these steps to apply for a loan from PenFed:

1. Submit the pre-qualification form: The form will prompt you to enter your name, address, income, and employment information. Because the form only uses a soft credit inquiry, pre-qualifying allows you to view potential rates and get an idea of how much you can borrow without affecting your credit score. 
2. Find the perfect car: You can use PenFed's car buying service, purchase a car through a local dealer, or find a vehicle from a private party. 
3. Fill out the loan application: Once you find the car you want, you must fill out a full credit application and consent to a hard credit check. If you're approved, PenFed will send you a loan agreement to review and sign. 
4. Wait for the check: PenFed doesn't issue checks directly to vehicle sellers. Instead, it sends you the check through the mail, and the check is made payable to the seller. It can take several days to arrive, so make sure the seller is aware they may not receive payment right away.

Alternatives to PenFed

Loan Types Offered	New, used, refinance, cash-out refinance, lease buyout	New, used, refinance, cash-out refinance, motorcycle, RV	Used
States Available	All states, D.C., Puerto Rico	All states and D.C.	All states and D.C. except AK, HI
Used APR Range	5.24%–17.99%	5.49% and up	Not disclosed
Used Loan Amounts	$500–$150,000	$500–$350,000	Not disclosed
Used Loan Terms	36–72 months	60–84 months	36–72 months
Minimum Time to Receive Loan	5 days	1 day	1 day
Recommended Minimum Credit Score	Not disclosed	Not disclosed	500
Maximum Accepted Mileage	125,000 miles	None	140,000 miles
Maximum Accepted Age	None	None	Varies
Maximum Accepted Loan-to-Value Ratio	125%	125%	Not disclosed

Final Verdict

Whether you're looking to buy a used car or a new vehicle, or you have an existing loan and you want a better rate or lower payments, PenFed offers excellent loan options. Besides competitive auto loan rates and high loan maximums, customers can use PenFed's car-buying service to find the perfect car and secure better rates. Plus, those who use the car buying service may be eligible for cash bonuses from vehicle manufacturers. Since PenFed's membership is open to the public, these are some of the best and most accessible auto loans available from a credit union. 

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points across more than 20 auto loan lenders, including interest rates, fees, loan amounts, borrower requirements, and vehicle requirements, to ensure that our reviews help users make informed decisions for their borrowing needs. We also conducted a survey of 1,016 auto loan borrowers for attitudes and opinions about lenders and the loan approval and disbursement process. See our full auto loan review methodology for more information.