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PenFed Auto Loan Review

Dena Standley | November 21, 2023

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: PenFed has helped countless consumers own a car due to their favorable rates and widespread reach. They have been in business for almost nine decades. But does it mean most consumers have enjoyed their services? We will answer this question below and give you more information about the company.

In America, numerous companies offer auto loans to consumers. Unfortunately, a good number are scammers or have poor reputations for how they treat their customers. To achieve your dream of owning the right car to meet your needs, you must look for a reliable lender offering credible loan services.

PenFed is the auto lender of choice for many consumers who have used them for auto financing. Before you can access their loan, you have to open a savings account and become a credit union member. The membership rule is common for credit unions.

Today, SoloSuit will give you more details about them, how they work, and the reviews they’ve received from various platforms.

What is PenFed, and how does it work

Pentagon Federal Credit Union (PenFed) is a well-known Virginia-based financial institution established in 1935 that operates as a credit union across all fifty states. Ideally, credit union membership is required, but you can become a member as part of the loan application process. PenFed offers a wide range of services, including:

  • Savings and checking accounts
  • Credit cards
  • Personal and auto loans
  • Mortgages
  • Investment services

Although it originally focused on serving the military, it has expanded to accommodate others such as government personnel, specific organization staff, and the general public. PenFed uniquely offers auto loans ranging from $500 to $150,000. This feature caters to a wider range of borrowers compared to other auto lenders. The following table summarizes the pros and cons of using PenFed auto loan services.

PenFed Auto Loan Pros and Cons

Pros Cons
Allows up to six potential loan offers without a hard credit inquiry Credit union membership required
Provides 100% online car buying services with bonus offers No rate discount for automatic payments
No origination fee Relatively high late fee payment
Wider loan range Lease buyouts unavailable

How does PenFed work?

Before applying for a PenFed loan, confirm your eligibility to benefit from their services, then apply for membership. Afterward, follow these steps to receive your auto loan:

  1. Start the application process online or in person at a PenFed branch near your location.
  2. Fill out the form and ensure you provide accurate financial and personal information, including your social security number, contact details, employment information, and existing debt.
  3. Choose the loan amount and terms that match your needs. Consider your borrowing history and credit score as you choose because loan approval depends on these factors.
  4. Submit the form and attach the required documents, such as tax returns, bank statements, and pay stubs.
  5. Give PenFed time to go through your application and conduct a credit check. This step will determine whether they will approve or deny your loan application.

Once they approve your loan, you'll receive a loan agreement contract. Go through the document and ensure you understand the loan terms before signing.

PenFed auto loan customer reviews

Having been in business for over 88 years, PenFed has gathered a rather poor customer review, with an average 1.18 stars out of 5 (from hundreds of customer reviews) on its Better Business Bureau page. However, other platforms give them far better ratings. For example, Consumer Affairs records a 2.8 stars, Trustpilot 4.4 stars, and Bankrate 4.3 stars, all out of 5 stars.

Customer complaints range from poor customer service, exorbitant additional fees, and failure to update the debt balance. Here is an example of a real complaint against PenFed from its BBB profile:

“I defaulted on a $5,700 car loan with PenFed, and they eventually sold the debt to a 3rd Party. PenFed offered me a settlement of the debt for the sum of $350 (just after the Date of the first delinquency and prior to charging off the debt). I immediately sent the $350 to PenFed, but they rejected the payment and returned the letter to me with my uncashed check. After subsequently selling the debt to a 3rd Party (and inflating the amount due), PenFed engaged in an unlawful collision with the Credit Bureaus by constantly removing ALL positive payment history from my credit report. I believe that PenFed (through its employees) is trying to punish me for defaulting on these debts.”

If the original creditor or a third-party debt collection agency asks you to pay more than you owe, like in the example above, stop them by sending a Debt Validation Letter. Learn more from this video by George.

SoloSuit can also help you settle your debts for less than you owe with our tool, SoloSettle. This tool uses technology to help you negotiate a debt settlement via email until you reach an agreement with your creditor.

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