Skyla Credit Union vs. PenFed: Which offers better auto loans?

If you’ve fallen in love with a vehicle, finding a loan is the next step to making it yours. With interest rates averaging around 7 percent for new vehicles in 2023’s third quarter, according to data from Experian, it’s wise to look for ways to save.

One potential money-saving route is to secure an auto loan through a credit union. Credit unions often boast lower interest rates than banks. Credit union loans for new vehicles with 60-month terms offer rates averaging 0.68 percent lower than banks, according to the National Credit Union Administration.

Two of Bankrate’s top picks are Skyla Credit Union and Penfed Credit Union. Skyla offers a high loan amount, while PenFed is better suited for extended loan terms. And both are good choices if you’re looking to refinance your current auto loan.

Skyla vs. PenFed at a glance

Best for flexible underwriting criteria

Skyla Credit Union

Rating: 4.1 stars out of 5

4.1

Learn more in our Bankrate review

• Bankrate's view

  In early August, Parsons FCU completed its merger with the North Carolina-based federal credit union Skyla. Skyla now boasts expanded benefits for borrowers, including more brick-and-mortar locations. 

  As with most credit unions, you need an account to qualify. Anyone interested can join Skyla through the American Credit Council.

• Pros and cons

  

  Pros

  • Wide loan amount range: Skyla allows you to borrow as little as $3,000 up to a high maximum of $150,000.
  • Competitive interest rates: A starting APR below 6 percent is hard to find in this credit environment.
  • 24/7 support: Skyla offers around-the-clock customer service for its borrowers through its 24/7 phone support.

  

  Cons

  • Small maximum term: Most lenders, including PenFed, offer financing terms up to 84 months, but Skyla only has loan terms between of up to 48 months.
  • Unspecified refinancing requirements: Lenders usually share several requirements to qualify for refinancing, but all Skyla shares is a maximum vehicle age. If you are planning to refinance your vehicle with Skyla, you may have to apply and go through a hard credit check to judge your eligibility.
  • No option to prequalify: Prequalifying for your auto loan helps provide an estimate of what you will be expected to pay without taking a credit score hit — a perk not offered by Skyla.

Best for a wide range of loan terms

PenFed Credit Union

Rating: 4.4 stars out of 5

4.4

Learn more in our Bankrate review

• Bankrate’s view

  Formally known as Pentagon Federal Credit Union, PenFed offers borrowers loans for new and used cars along with refinancing loans. The Virginia-based institution serves all 50 states, and its membership fee is waived for those applying for auto loans. It is an especially strong option for drivers shopping for a new car, as its car-buying service can help the buying process go more smoothly.

  Like Skyla, PenFed has 24/7 customer service. But it also offers a car-buying service and long terms — up to 84 months. And its refinancing option is also strong. You are able to borrow up to 125 percent of your current loan balance to help cover other bills. 

• Pros and cons

  

  Pros

  • Vehicle shopping assistance: PenFed’s car-buying service, powered by TrueCar, has an extensive inventory of new and used cars to assist in shopping.
  • Prequalification: Unlike Skyla, you can prequalify to check your rate without undergoing a hard credit check.
  • Refinance up to 125 percent: Those refinancing their current loan can receive up to 125 percent financing on the current loan balance. Cash-out auto refinancing can help you pay off high-interest debt or cover emergency expenses.

  

  Cons

  • Traditional underwriting criteria: PenFed uses credit score as the main factor when considering applicants, unlike Skyla, which has a more flexible underwriting process.
  • Several expected fees: PenFed enforces both a late fee and a returned payment fee in addition to other potential charges.
  • No autopay discount: Some lenders offer discounts for those who sign up for automatic payments, but neither PenFed nor Skyla does.

How to choose between Skyla and PenFed

Both Skyla and PenFed offer online applications and in-person branch support. Opt for Skyla if you need a large loan, and choose PenFed if you want to use its car-buying service.

Choose Skyla for large loan amounts

If you intend to purchase a more expensive vehicle it can be challenging to find a loan that covers the cost. Skyla can make vehicle ownership possible for even top-of-the-line cars. The maximum loan amount is $150,000 which is much higher than the majority of other lenders.

Choose PenFed if you want to extend your loan term

The choice to secure a longer-term auto loan comes with the perk of a less expensive monthly payment. But it means you will be stuck with a vehicle longer and pay more in interest throughout the loan. If monthly cost is your main consideration, PenFed has the edge.

It also advertises a minimum APR of 5.24 percent APR for an 84-month loan for borrowers who use its car-buying service. If you bought a $40,000 car with a $2,000 down payment, using that rate and term, you’d have a $579 monthly payment. A car loan calculator can help you weigh the monthly cost against the greater cost of interest.

Compare more lenders before applying

Skyla offers loans for up to $150,000. PenFed is great for someone looking for longer loan terms. But before signing off on either loan, compare more auto loan rates to see what other terms you could qualify for.