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How to save thousands with PenFed CU

Nicholas Hinrichsen - Published: July 15, 2021

Although you are a member of PenFed CU there is a 88% chance that you have your car loan with another lender. You probably got your loan at the dealership when you bought the car, which isn't ideal because PenFed CU offers you much lower rates. In fact, you can probably save more than $300 every year / $25 every month through refinancing.

The good news is that we can help fix this quickly, especially if you made all of your loan payments on time. Instead of making your monthly payment to the other lender, check your eligibility and refinance now

Table of contents


Background on PenFed CU
  • PenFed CU reviews
  • How will you make your PenFed CU payments?
  • Does PenFed CU report to the credit bureaus?

Before refinancing to PenFed CU
  • Things to consider before refinancing
  • Common mistakes people make when refinancing

How to lower payments with PenFed CU
  • Step by step guide to refinance
  • Experts’ take on how to refinance
  • How much does it cost to refinance?
  • How soon can you refinance?
  • Will refinancing hurt your credit?
  • What happens if I pay extra?
  • Expected Savings from refinancing?
  • What are current refinance rates?
  • Can you refinance with the same lender?

Things not to do when refinancing
  • Reasons you should not refinance
  • Can I skip a car payment?
  • Does PenFed CU have a grace period?
  • How long does PenFed CU take to repossess my car?

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Background on PenFed CU


Before going into more detail, here a little background about PenFed CU: PenFed is the US's third largest Credit Union, with assets of $25 billion and more than 1.8 million members. While PenFed specializes in serving the military, military affiliation is not strictly required to become a member

Like any other Credit Union, PenFed has a community charter and therefore offers its products such as auto loans at extremely competitive rates. In addition to a variety of loans, savings, and deposit products PenFed also offers credit cards and other financial services.

PenFed CU targets the segment of American car shoppers with great (i.e. super prime) credit and we observed an average auto loan interest rate of 5% (within a range of +/- 1%), while rates vary a lot by credit score. Our PenFed CU auto loan calculator can pre-qualify you hassle-free through a simple credit application and help you get a sense for how much you can expect to save from a PenFed CU auto refinance and the best rates.

PenFed CU reviews


If you currently don't have your loan with PenFed CU, you most likely got the loan at the dealership during the car purchase. You might have used your previous vehicle as a trade-in to lower your down payment. Instead of using the PenFed CU loan you were most likely pre-approved for, the dealer went ahead and found you a loan with another lender and at a higher rate - without you realizing it!

79% of all Americans with auto loans get their auto loan at the dealership. People shop for new cars, they don't shop for new loans. As a result, auto dealers have a leg up when it comes to giving car shoppers loans. In fact, the same is true for auto insurance and when you inquire about a warranty.

The challenge is this:

  1. the number 1 goal of a car dealer is to sell a car
  2. the number 2 goal of a car dealer is to sell the car at the highest possible margin

Considering the interests of the car dealer and how most car shoppers get their loans, no wonder Americans are overpaying on their interest rates, right?

As mentioned above, PenFed CU is an auto loan and financial services company that specializes on the segment of Americans with great (i.e. super prime) credit. We looked at reviews for PenFed CU and found the following:

  • BBB: 1.2 out of 5 stars and 192 complaints
  • Yelp: 2 out of 5 stars from 162 reviews
  • Glassdoor: 3.6 out of 5 stars from 455 reviews

Ever wondered if PenFed CU treats everyone like you? Sadly, they do. Other loans you might have also qualified for could have been with one of the following auto loan companies:


If you bought your car at a Franchise Dealership, you may have qualified for a loan with one of the Captive Finance companies (i.e. the auto loan companies that are owned by the respective car brand), e.g.:


After you've made your first 6 / 12 / 18 payments, your chance to refinance your loan and lower your monthly payments has come. The challenge with refinancing is that most auto loan companies require you to visit their branch before they can give you any indication of how much money you will be saving. Fortunately, we can help with that.

How will you make your PenFed CU payments?


If you decide to refinance your loan with PenFed CU paying online is easy. Simply go to https://www.penfed.org and login on the right at Log In. You can choose between:

  • Making a one time payment.
  • Enrolling in Autopay from your checking account.

Please note that many banks and financial institutions offer a rate discount for enrolling in autopay (to reduce your interest expense and lower your monthly payment). PenFed CU would have highlighted this option to you to get you into a lower interest rate when you got pre-qualified during your application process for your auto financing.

If you can’t pay online, you’ve also got the option to:

Pay your bill over the phone: Call 1-800-247-5626

Pay your bill through the mail: Send a check to PenFed CU

PenFed CU
2930 Eisenhower Avenue
Alexandria VA 22314

Does PenFed CU report to the credit bureaus?


When you obtain your auto loan, PenFed CU reports your new loan to the credit bureaus. Your PenFed CU loan shows up as a so called trade-line on your credit report. Through a soft or hard credit inquiry, we can see:

  • When you got your PenFed CU loan
  • What your initial balance was
  • How high your monthly payment is
  • Whether you've made your payments in time and full
  • How high your outstanding balance is
  • How many payments are remaining

If you miss a payment, PenFed CU will very likely report the incident to the credit bureaus. Just like any other auto finance company, PenFed CU will also report to the credit bureaus when you paid off your loan or refinanced it. In both of those cases, your loan will show up as paid off.

Before refinancing to PenFed CU


Before refinacing your current loan with PenFed CU we recommend first taking a look at how much you actually owe. To get a clear picture of your current loan, we need to pull up your current loan payoff statement to obtain your loan payoff amount and details. The loan payoff statement is not your outstanding balance. Instead, the loan payoff statement summarizes the following data points:

  • your payoff amount (usually your loan amount balance plus a few small fees)
  • the due date until your payoff is valid to avoid late fees (usually 10 days from when you requested it)
  • the per-diem (how much of daily interest your loan accumulates)
  • your account number (the new lender needs that to payoff your loan)
  • the payoff address (the new lender needs to know where to mail the check to)

With your accurate payoff information in mind, you're well equipped to make an educated decision on whether or not to refinance your loan with PenFed CU. High monthly savings doesn't necessarily mean refinancing is worth it quite yet. We'll therefore look into a few nuances of refinancing first.

Things to consider before refinancing


We've seen a number of 'traps' when helping Americans refinace their auto loans. Just to be clear, there is no such thing as a prepayment penalty. So all the information required to consider a refinance can be found on the official payoff statement.

Once you know the payoff amount, you need to decide whether you want to pay off your loan yourlself or let the new lender (i.e. PenFed CU) take care of that. You can contact PenFed CU's customer service reps to find out what they prefer:

  1. Call the PenFed CU customer service phone number at 1-800-247-5626 and ask to be connected to the loan payoff department.
  2. Log into the online banking at Log In (https://www.penfed.org, login on the right) and browse to the 'Loan Payoff' tab. You will be able to download a PDF.
  3. Do a three-way phone call with the new lender and a PenFed CU customer service rep at 1-800-247-5626, which allows PenFed CU to ask all the questions necessary to pay off your existing loan.

It won't help you a lot with your current loan but once you're ready to pay off your PenFed CU loan one day, you can overnight a check to the following address:

PenFed CU
2930 Eisenhower Avenue
Alexandria VA 22314

Once you paid off your auto loan, expect to receive the vehicle title along with a lien release letter in the mail. Car loans are usually secured personal loans and in order to be able to sell your vehicle or refinance it, you need the lien release in hand.

We provided those addresses above because we always struggle to find a service provider's contact information. Just be aware, due to COVID-19, waiting times for customer service reps might be longer than usual.

Want us to take care of the refinance for you? We can lower your rate in less than two minutes.

Common mistakes people make when refinancing


We've been helping Americans lower their payments with the help of PenFed CU for a long time now. Let's imagine for a second you already have your loan with PenFed CU: PenFed CU - or any other auto lender for what its worth - doesn't want you to refinance their loan. Therefore, you won't find a lot of information about how to refinance your PenFed CU on the Internet.

One common mistake we're seeing when helping customers lower their car payments with PenFed CU is the following:

Many borrowers think that refinancing with PenFed CU means 'restructuring' the loan. With restructuring we mean: get a second chance to make payments after you have missed a few payments or closing the chapter with your previous lender and starting over with PenFed CU. Logically, that's not what refinancing is.

Refinancing your auto loan with PenFed CU means quite the opposite: you will be able to lower your payments by decreasing your interest rate and/or stretching the term because you've done a good job and made your payments to your previous lender in time and in full.

If you have not made your payments to your previous lender in time and in full, you're not a good candidate for refinancing with PenFed CU. Your goal has to be to not miss payments again.

How to lower payments with PenFed CU


To lower your monthly payments on your auto loan with PenFed CU (also known as PenFed, Pentagon Credit Union or Pentagon Federal Credit Union), you need to find out whether PenFed CU can extend your used car loan term or offer lower auto loan rates before the loan is paid in full. The best way to do so is through an online application that returns your annual percentage rate (APR) immediately. Usually, lenders offer you a lower rate than your current auto loan for one of two reasons:

  1. When you bought your car, the participating dealer marked up your rate. That's common for auto loan originations and to make more money.
  2. You improved your credit over time and now qualify for a lower car payment and interest rate.

Both of these observations are common sense and the reason for why you can save a lot of money, especially if you drive your car for personal use. You had great credit with the credit bureaus and further improved your credit report, you're not facing any financial difficulties and therefore, your new lender will be likely one of the following ones:


You already had super prime credit segment (FICO above 720 on your credit history) and are wondering if you can still save some money or stretch your loan? Credit Unions love super-prime members. These lenders have a community charter, are FDIC approved and are non-profits providing a great customer experience. Therefore, the rates are as low as they get.

In the following, we will walk you through the exact steps to pay off your current loan and refinance with PenFed CU. If you want to skip the details and refinance now through a simple loan application, get an offer with a few clicks and with no impact on your credit.

Step by step guide to refinance


Follow these 7 steps to refinance your auto loan with PenFed CU:

  1. Figure out your payoff amount
  2. Check if you have positive / negative equity
  3. Compare rates offered by lenders or contact a refinance broker
  4. Calculate your new rate and monthly payments
  5. Sign all the paperwork
  6. Payoff your existing loan
  7. Set up auto-pay with your new lender


Experts’ take on how to refinance


Experts in the refinancing space such as CreditKarma, NerdWallet and Bankrate are strong proponents of auto loan refinancing. That is true for PenFed CU customers like you as well as any other auto loan company. NerdWallet even released a list of the 10 Best Auto Loan Refinancing Lenders, followed by Money.com, LendingTree, Investopedia and The Balance.

Personal finance is an important topic. We have seen studies that show how happiness and mental well-being directly correlate with stable and reliable finances. Therefore, we strongly recommend doing a lot of research and then refinancing your auto loan with PenFed CU.

The experts above have a good general understanding of personal finance. Given our backgrounds (MiT, McKinsey, Bain, Merrill Lynch, Stanford Graduate School of Business, Carvana etc) we are the absolute, unquestioned and unchallenged authority on auto loan refinancing in particular and have published a thorough thought leadership piece about it.

How much does it cost to refinance?


The cost to refinance your current auto loan with PenFed CU are somewhere between $15 and $449. In theory, refinancing doesn't cost anything. You don't have early repayment fees on your PenFed CU auto loan and the only charge that applies is the fee for the Department of Motor Vehicles (DMV) to change the lienholder on your vehicle title.

However, depending on who you work with to refinance your loan with PenFed CU auto loan, you might be incurring some (hidden) fees of up to $449. Take a look at our thorough refinance lender comparison to get a good overview by refinancing company of their respective cost related to refinancing your loan with PenFed CU.

How soon can you refinance?


You're eager to refinance your current loan with PenFed CU? Great, you should absolutely work towards lowering your payments through refinancing with PenFed CU.

Car dealerships make most of their money on finance and insurance products. Therefore, there's a good chance that you are overpaying and can save money through refinancing - already the day you drive off the lot! That said, you will save the biggest amount of money from refinancing after you made 12 to 18 payments. That's when you will notice the effect from improving your credit above and beyond great (i.e. super prime) credit.

That said, we recommend checking regularly: you can get a free refinance offer with no impact on your credit in three simple steps.

Will refinancing hurt your credit?


Refinancing will not hurt your credit! If you have the app CreditKarma installed on your phone, take a peek at what factors determine your credit. You will find the following:

  • Number of Hard Inquiries (less is better)
  • Age of Credit history (more is better)
  • Credit Card Utilization (less is better)
  • Total Accounts (more is better)
  • Derogatory Marks (less is better)
  • Payment History (more is better)

None of these factors is impacted negatively if you obtain a refinancing offer for your current loan from PenFed CU. Lenders don't need to do a hard credit inquiry to make you a firm refinance offer. Neither do they charge an application fee. From a soft credit pull, we can see your whole credit file and estimate your rate.

Should you decide to accept the refinance offer, the new lender will have to perform a hard inquiry in order to add your new loan to your credit file. The hard inquiry, however, only happens after you have been approved.

We argue that the positive impact of refinancing your current loan with PenFed CU outweigh the negative impact of the hard credit inquiry: after you refinance your current loan with PenFed CU, you will have a lower rate and lower monthly payments. As a result, the likelihood that you will be able to establish a perfect payment history increases which will drive your score up quickly.

What happens if I pay extra?


The answer is simple: your loan term will shorten but your monthly payment will stay the same. A number of our customers hope they can reduce their monthly payments through paying extra but no lender will do that.

To lower your monthly payments, you have to refinance your loan. If you haven't considered refinancing your current loan with PenFed CU yet, you definitely should: not only can you reduce your monthly payments within 2 minutes or less, your total interest expense will go down as well and as a result, you can save $150 every year / $13 every month.

Expected Savings from refinancing?


We performed a study on the top 40 auto loan companies to refinance and found that the average PenFed CU loan rate is around 5% (within a range of +/- 1%). If you made your payments for 6 / 12 / 18 consecutive months, you're guaranteed to be able to save money by refinancing your current loan with PenFed CU.

Your new interest rate should be on the order of 4% or below. That means you will save $100 every year / $8 every month if your remaining loan balance is around $10,000 and you refinance. Usually, we see higher loan balances when refinancing our customers, e.g. around $15,000. If your loan balance is around $15,000 you will save $150 every year / $13 every month when you lower your rate by 1%.

For a guaranteed rate in less than 2 minutes, open WithClutch.com, enter your phone number, select your goal (e.g. 'Lower my monthly payment') and click on 'Apply Now'. Our process will not hurt your credit and you'll receive a firm and guaranteed rate with not more than 5 clicks. Should you have any further questions, check out our FAQs.

What are current refinance rates?


We can help you get the following PenFed CU refinance rates:

Credit New car Used car
760+ 2.69% 3.49%
700-760 3.00% 4.25%
650-700 5.50% 6.50%
600-650 9.75% 10.75%
550-600 15.50% 17.50%
Below 550 22.00% 22.00%

As mentioned above, PenFed CU car loan rates vary a lot by credit score, i.e. lowest rate for excellent credit to highest rate for challenged credit. Yet, the rates are usually the same no matter where you live in the United States - be it Hawaii or Maine, Alaska or Florida. We therefore recommend taking a look at your PenFed CU refinance offer for your exact and personalized refinance terms.

Can you refinance with the same lender?


The answer is short and sweat: no, you cannot refinance your current loan with the same lender. Your current lender has done one of two things with your loan:

  • Kept it to generate profit over the course of the loan and while you are paying your interest.
  • Sold your loan to an institutional investor or the public through a securitization to realize a lump sum profit immediately.

In both of those cases, the institution holding your loan is expecting your monthly payments. When you refinance, however, you change the expected cash flow from your current lender to PenFed CU, which impacts your current lender's bottom line negatively. Your current lender would not allow that and neither would PenFed CU.

Therefore, your current lender won't let you refinance your loan with the same lender. Instead, you need to find a new lender such as PenFed CU offering a lower rate.

Fortunately, we recently studied the best car loan refinance companies and wrote a thorough review. In a nutshell, only WithClutch offers a fully digital pre-qualification experience, even for borrowers with minimum monthly income and without charging unreasonable fees. We do our best to give our clients the best auto refinance loans. Our partner lenders can offer the lowest rates and can help with lease buyouts as well as refinancing.

Things not to do when refinancing


Refinancing your current loan with PenFed CU may feel intimidating and overwhelming. That's totally understandable, you don't refinance your loan with PenFed CU every day and therefore want to avoid a few pitfalls:

Reasons you should not refinance


You should not refinance your auto loan with PenFed CU if you end up with a higher overall interest charge. That means, you don't want to refinance your loan if you end up in a worse financial product, with a higher interest rate. Let's take a look at the following example:

if you're currently paying 5% and $450 monthly, you don't want to accept a loan at 5% even if the monthly payment might be $400 only because your lender stretched the loan over a longer period of time. It is definitely possible but we highly recommend against it.

We've seen thousands of success stories of clients refinancing their current loan with PenFed CU. Some of our clients wanted to reduce their monthly payment with PenFed CU while keeping the loan term constant. Other clients wanted to reduce the monthly payments by even more and therefore stretched the loan term to 60, 72 and some even 84 months.

And other clients had positive equity in their car - i.e. the remaining loan balance was lower than the value of their car - and therefore decided for themselves that the best auto loan from all of our loan offers would be the one with cash-out from PenFed CU.

Still, one question a lot of our customers ask us is this: 'I haven't been great about making my payments so my credit score hasn't improved a lot quite yet. However, I really want to lower my monthly payments. Should I refinance, accept a higher rate and stretch the loan over a longer period of time?'

We don't encourage such a refinance. It's a bad financial decision and you're locking yourself into making a lot higher payments over a long period of time. Don't be penny-wise and pound-foolish!

Can I skip a car payment?


You're short on cash and are wondering whether you can skip a car payment with PenFed CU? The answer is yes, you can defer one or more payments on your existing auto loan. You have to talk to PenFed CU about the deferral first though. You can't just not pay or you risk collection calls and ultimately a repossession.

Ideally, you give PenFed CU a call at 1-800-247-5626 and describe your situation. PenFed CU's goal is for you to make your payments throughout the whole term of the loan. Finance charges will continue to accrue on the unpaid loan balance, which means you will end up paying more on your loan after all. But for as long as you communicate well with PenFed CU, they will defer one or more payments out of courtesy and to help you with your repayment.

All that said, you can lower your PenFed CU payments through refinancing if you've made all your latest payments on time. In three simple steps, you can find out how low your payments could be without having to skip a payment or two.

Does PenFed CU have a grace period?


The PenFed CU late payment policy provides a grace period of 7 to 15 days. Grace periods vary from lender to lender and due to the coronavirus pandemic, banks have become a lot more lenient with their borrowers.

Late fees vary drastically by loan, the minimum late fee we've encountered was 5% of the monthly payment amount. However, we strongly advise not to take advantage of PenFed CU's grace period unless you have an emergency. You'd be putting your credit at risk, which can have a long-term, negative impact on your personal finances.

Instead, we recommend exploring if refinancing can help you reduce your monthly burden and potentially even provide unexpected cost savings. Provide your phone number and follow our three simple steps to get a firm offer, 100% online and with no hit on your credit.

How long does PenFed CU take to repossess my car?


Repossession law varies slightly from state to state and range from 3 to 5 months after you stopped making payments on your PenFed CU loan. Each individual retail and installment contract - the contract you signed when you got your car and PenFed CU loan - states what constitutes a default.

Some states and contracts even trigger a repossession within 45 days (or a month and a half) of being in default. You are in default when you stopped making your payments and for as long as you haven't paid the PenFed CU late fees.

Just catching up with your missed payments making PenFed CU whole doesn't automatically mean you're not in default anymore. You really need to pay PenFed CU everything you owe including fees to be not considered in default any longer.

Refinance your PenFed CU loan now


Haven't explored refinancing yet? Take a look at our exhaustive article about all the auto refinance companies and you will realize, WithClutch.com is the only fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.

Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.