PenFed Personal Loans Review: Solid Banking, With Even Better Borrowing Options

4.3 _/5

Our take: PenFed personal loans are great for the average borrower, especially if you’re looking for a handy place to keep all your borrowing and banking in one place. If you have excellent credit, you might get lower rates elsewhere, like from another top-rated personal loan lender. But if you don’t, PenFed has a lower interest rate ceiling than many other personal loan lenders, which helps ensure you’re not being overcharged for your loan.

Personal loans

• Widely available
• No origination fees
• Allows coborrowers
• Full-service credit union
• Doesn’t charge excessive rates

• Relatively low customer reviews
• Must deposit $5 to join credit union
• Doesn’t disclose a lot of basic information

Loan amounts	Up to $50,000
Rates (APR)	8.99% – 17.99%
Term lengths	Up to 5 years
Fees	Returned payment fee: $30 Late payment fee: $29

What is PenFed Credit Union?

PenFed Credit Union (short for Pentagon Federal) has been around since 1935. It’s based out of Alexandria, Virginia, near the nation’s capital. That’s also a nod to its roots, since it was originally founded to serve government employees. 

These days, though, membership is much more open. Unlike most credit unions, which restrict membership to people living in a specific area, anyone can join PenFed as long as they meet basic banking requirements, such as having a taxpayer ID. 

How do PenFed personal loans work?

PenFed offers personal loans exclusively to its members. If you meet the membership requirements, as well as the requirements to get approved for a personal loan, you can use the funds for just about anything, aside from things like post-secondary education expenses. (You’d need a student loan for that.) 

Here are some common ways people use PenFed loans:

• Car repairs
• Emergencies
• Debt consolidation
• Home repairs and renovations

You can also see evidence of PenFed’s nonprofit nature in its loan costs. Other (for-profit) lenders charge up to twice as much for interest, plus origination fees that can cost hundreds of dollars. PenFed, by contrast, charges no origination fees on its loans.

Am I eligible for a PenFed personal loan?

We reached out to a PenFed representative to get more information on what you need to get a PenFed personal loan. 

• Membership: If approved, you’ll need to become a member to receive the loan funds. You don’t need to be a member to check your rates first, though.  
• Citizenship: According to a company representative, you only need a federal taxpayer ID number, such as a Social Security Number. 
• Credit score: Not disclosed. However, PenFed says elsewhere that, in general, borrowers need a credit score of 580 or higher to qualify for personal loans with most lenders. That may or may not be the case with PenFed’s personal loans. 
• Income: Not disclosed.

Pros and cons

Here’s a quick rundown of the main advantages and disadvantages of choosing PenFed for your personal loan:

Pros

• Widely available

  PenFed is available nationwide, and almost anyone can join as long as you have a federal taxpayer ID number. 

• No origination fees

  Some of PenFed’s competitors charge origination fees of 10% or higher. PenFed doesn’t charge any origination fees, which can save you hundreds of dollars.

• Allows coborrowers

  PenFed, unlike many personal loan lenders, allows you to add another person to your loan application. That can sometimes boost your approval odds if you’re not quite able to get the loan on your own.

• Full-service credit union

  PenFed isn’t just a lender. It offers great banking products, too, like a high-yield savings account, rewards checking, travel credit cards, and more.

• Doesn’t charge excessive rates

  PenFed isn’t the absolute cheapest lender, but it’s not far off, either. Even if PenFed charges you its highest personal loan rates, it’s still about half as much as other personal loan lenders.

Cons

• Relatively low customer reviews

  Customers generally describe subpar experiences of the bank as a whole, but reviews of its personal loans specifically paint a more positive picture. 

• Must deposit $5 to join credit union

  A routine procedure for joining a credit union, but nonetheless, it’s an extra step you don’t have to take with for-profit lenders. 

• Doesn’t disclose a lot of basic information

  It’s helpful to know what kind of credit and income PenFed requires before you apply, but a company representative declined to provide that information. It also doesn’t describe minimum loan amounts or term lengths.

Customer experiences

Many people have left reviews of PenFed, but these generally focus on other aspects of the credit union’s business:

Platform	Rating	Number of reviews
Yelp	1.7 stars	157 reviews
Google	3.5 stars	154 reviews
Trustpilot	3.4 stars	1,543 reviews
Better Business Bureau	A+ rating / 1.18 stars	217 reviews

The independent reviewer J.D. Power did, however, give PenFed a glowing fourth-place rating among similar lenders for its personal loan customer service.

How to apply for a PenFed personal loan

Getting an online personal loan is usually a quick process, and PenFed doesn’t disappoint in this department. Even though you’ll need to jump through a few extra hoops compared to a  non-credit-union lender, it’s still a relatively straightforward process:

1. Get prequalified: Click the green “Check Your Rate” button on its personal loan page and enter some basic details to get a loan offer. You don’t need to be a member to get prequalified, but you will need to create an account and undergo a soft credit inquiry. Now’s also a great time to check your rates with other lenders and credit unions. 

1. Choose an offer: If you’re happy with PenFed’s loan offer, you can proceed with the application. You’ll need to provide additional details and upload a few documents, as well as undergo a hard credit inquiry, which can affect your credit score.  
2. Join the credit union: If your final loan application is approved, you’ll need to become a member before you can receive your funds. To join, you’ll need to deposit $5 in a savings account, which establishes your membership. 
3. Receive loan proceeds: You have three options for getting your money. You can request a paper check, which takes five to seven business days to receive. For faster service, choose an ACH transfer to a third-party bank account or a direct deposit into your PenFed account, which takes one to two business days.

Alternatives

It’s always a good idea to compare your rates with other lenders to ensure you’re getting the best deal, regardless of the loan option you choose. Here’s how PenFed stacks up with several other lenders: