PenFed Personal Loans Review: What You Need to Know

Quick Take: Pentagon Federal Credit Union (PenFed) is one of the largest credit unions in the U.S. It offers unsecured personal loans with comparatively low annual percentage rates (APRs) and fees to members, but you may need excellent credit to qualify.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Pros & Cons 

Pros 

• Lower APRs than many banks or online lenders

• No origination fees or prepayment penalties

• Offers smaller-dollar loans (minimum of $600)

• Check rates without hurting your credit

• Generous autopay rate discount

Cons 

• Must become a PenFed member to receive funding

• Usually requires excellent credit and strong finances

• No loans over $60,000

• Loan terms capped at 5 years

• Late fees of $29 (with a 5-day grace period)

Company Overview 

Founded in 1935, PenFed is now one of the largest federal credit unions in the U.S. Its mission is to help its over 2.8 million members achieve their financial goals, and it does so by offering an array of consumer-friendly financial products, including bank accounts, credit cards, mortgages and personal loans. 

Credit unions are non-profit financial institutions owned by the people (or “members”) who use their services. These members typically represent a linked affinity group, like state government employees, students, regional residents or labor unions.   

However, PenFed, which began as a credit union for military members and their families, is now open to everyone. Headquartered in McLean, Virginia, it supports digital membership applications.

Key Features 

Interest Rates 

PenFed personal loans offer fixed APRs ranging from 6.74% to 17.99%. That’s a notably low range, as most lenders offer personal loan APRs between 8% and 36%. 

PenFed’s maximum APR stacks up well against those of many competing lenders. This chart shows the estimated monthly payment and total borrowing costs for a 5-year, $10,000 personal loan.

Qualifying for PenFed’s maximum APR vs. a lender with a more standard maximum APR could save you $107 a month and $6,447 in total fees and interest. 

One small caveat is that these displayed rates are contingent on signing up for autopay prior to loan funding. You get a 0.25% rate reduction for doing so; without it, all PenFed APRs are 0.25% higher. The bigger caveat is that PenFed personal loans generally require good-to-excellent credit for approval.

👉 How to Calculate Interest on Your Loan

Loan Amounts 

PenFed offers personal loans from $600 to $50,000. That makes it one of the few traditional providers of smaller-dollar personal loans. Many top lenders have $1,000 minimums, and some require $2,000 or $5,000. 

Conversely, some lenders, including Wells Fargo, offer much larger personal loans, up to $100,000. 

Repayment Terms 

Generally speaking, shorter loan terms require higher monthly payments but cost less in total interest, while longer terms allow for lower monthly payments but cost more in total interest. 

PenFed offers 1-year, 2-year, 3-year, 4-year and 5-year repayment terms. That’s a solid set of options that could help you find a loan with an affordable monthly payment and reasonable total borrowing costs. 

Few lenders offer short 1-year personal loans, but some offer longer repayment terms, from 7 to 20 years.  

Funding Speed 

PenFed could fund your loan as fast as one business day, but that timeline hinges on full approval and when you sign your loan documents.

It also assumes you want to receive the funding via direct deposit. PenFed allows some applicants to receive loan proceeds via a paper check. In that scenario, funding could take longer.

Other Notable Features

PenFed has a mobile app that’s well-rated in the Google Play Store and Apple App Store. It ranked 4th in the most recent J.D. Power Consumer Lending Satisfaction Study, behind major financial institutions American Express, Citi and Discover. 

However, it has a middling Trustpilot score with some reviewers reporting surprise loan denials and IT issues.   

Costs & Fees 

PenFed personal loans don’t come with origination fees or prepayment penalties. While $0 prepayment penalties have become standard across top lenders, many still charge origination fees, particularly for less-qualified borrowers. These fees, which are usually a one-time, upfront processing charge, typically cost between 0% and 12% of your loan amount. 

PenFed charges a $29 late fee for payments more than 5 days overdue, which is a bit high, relative to the industry standard. Some providers, like SoFi, have $0 late fees, and others, like Prosper, charge $15 or 5% of the unpaid monthly payment amount (whichever is greater). 

Eligibility Criteria 

PenFed doesn’t publicly disclose minimum credit score, debt and income requirements, but information on its website suggests borrowers may need a traditionally strong financial profile to qualify, especially for its best terms. In fact, the credit union encourages applicants to apply with a co-borrower with a higher income and stronger credit rating to improve their odds of getting a low APR.

Users on online forums like MyFico and Reddit report receiving loan denials, even with good credit scores and above-average salaries.  

How To Apply 

Generally speaking, you can apply for a PenFed personal loan by:

1. Visiting its website or mobile app

2. Checking your rates and choosing your offer

3. Providing any documentation or information, like government-issued ID, pay stubs or tax returns, required during PenFed’s verification process 

4. Signing your loan documents and providing banking details or your preferred method of disbursement

5. Receiving your funds

Per its website, you don’t need to be a PenFed member to check rates or apply for a loan (only to accept and receive an offer). However, we found it difficult to do so without a PenFed member account. 

The credit union also says you can check rates without hurting your credit score. You may be prompted to provide a Social Security number and to authorize PenFed to view your credit report during this process. 

Comparable Options 

PenFed offers competitive personal loans, but you have other options as well. See how PenFed compares to alternative lenders. 

LightStream

LightStream is an online lender that provides comparatively low-cost personal loans. It offers APRS between 6.49% and 25.39%, and skips origination fees, late fees and prepayment penalties. LightStream, like PenFed, generally requires good-to-excellent credit and strong financials for loan approvals, however. 

Upstart 

If you have thin or fair credit, consider Upstart, an online lender that uses an AI-enhanced lending model to up its approval odds for applicants who could struggle to get financing elsewhere. Upstart offers a low starting APR (6.5%) and a 0% origination fee option, but if you have so-so credit, your loan might have higher APRs and a costly (up to 12%) origination fee.   

Who It’s Best For 

PenFed is best for borrowers with excellent credit who are seeking low APRs and no origination fees, particularly if you have a good, longstanding relationship with the federal credit union. 

However, you may want to consider other personal loan providers if you have fair credit or other borrowing risk factors, like a high debt-to-income ratio or lower income, relative to your desired loan amount. PenFed is known for being a choosy lender. You’ll also need to look elsewhere if you need loans over $60,000. 

Final Take 

If you have excellent credit and a strong financial profile, consider requesting offers from PenFed. It has a generally competitive APR range, an autopay rate discount, and no origination fees, making it a potentially lower-cost personal loan option. Be sure to shop around, however. PenFed loan approvals aren’t guaranteed, and, even if they were, you could find the best deal for you by comparison-shopping across top personal loan providers.  

FAQs 

Is PenFed good for personal loans?

PenFed is a good option for personal loans, offering relatively low APRs, no origination fees and no prepayment penalties. It generally requires good-to-excellent credit to qualify, especially for its best terms.

Does PenFed do a soft pull?

PenFed does a soft credit pull when you use its “check rates” option. It’ll provide conditional rates and approval without hurting your credit score. PenFed does a hard credit check to verify the information on your application once you accept an offer. Hard credit pulls can ding your credit score. 

Why would PenFed deny me?

PenFed might deny your personal loan application if you have fair or poor credit, insufficient income, a high debt-to-income ratio or other red flags on your credit report, like missed loan payments or old collection accounts.  

Sources

• PenFed.org - Personal Loans Official WebsiteWellsFargo.com

• Personal Loans Official Website

• SoFi.com - Personal Loans Official Website

• Prosper.com - Personal Loans Official Website

• MyFico.com - Got Denied PenFed Personal Loan … I Need Advice

• Reddit.com - I Was Pre Approved for 40k Auto Loan with PenFed

• Lightstream.com - Personal Loans Official Website

• Upstart.com - Personal Loans Official Website

• LinkedIn.com - PenFed Credit Union Page

• Trustpilot.com - LendingClub Review

• JDPower.com - Consumer Loan Satisfaction Stagnant as Financial Health of Customers Declines, J.D. Power Finds