Navy Federal Auto Loans: The Basics
Navy Federal Credit Union offers auto loans to its members — people who are may be able to access to join the credit union because of military service, family connection to military service, or employment with certain federal agencies. Unlike a bank, Navy Federal is a credit union, which means it's owned by its members and typically offers lower rates than traditional lenders. The loan works like any auto loan: you borrow money, the credit union holds a lien on the vehicle until you pay it back, and you make monthly payments with interest.
Navy Federal auto loans come in two main types: loans to purchase a new or used vehicle, and loans to refinance an existing auto loan from another lender. The interest rate you receive depends on your credit score, the age and mileage of the vehicle, how much you're borrowing, and how long you want to take to repay the loan. Rates are typically lower for members with higher credit scores and for newer vehicles.
Key Takeaways
- You must be a Navy Federal member to get an auto loan, which requires military service, military family status, or employment with certain federal agencies.
- Navy Federal auto loans typically carry lower interest rates than traditional banks because the credit union is member-owned and returns profits to members.
- You can borrow for a new or used vehicle purchase, or refinance an existing auto loan from another lender.
- The interest rate you receive depends on your credit score, the vehicle's age and condition, the loan amount, and the repayment term you choose.
- The credit union holds a lien on the vehicle until the loan is fully repaid, meaning you cannot sell or trade the car without paying off the balance first.
Who Can Get a Navy Federal Auto Loan
You must be a member of Navy Federal Credit Union to borrow from them. Membership is open to active-duty military, retired military, military veterans, military family members (spouses and dependent children), and employees of the Department of Defense and certain other federal agencies. If you're not yet a member, you can join online or at a Navy Federal branch before you explore for a loan.
Navy Federal does not publish a minimum credit score requirement, but like all lenders, they review your credit history, income, and debt-to-income ratio. Members with credit scores in the 600s have been approved, though rates are better for those with higher scores. If your credit is limited or damaged, Navy Federal may still work with you, but expect a higher interest rate or a requirement to make a larger down payment.
How to Start the Loan Process
You can begin by visiting Navy Federal's website, calling their auto loan department, or visiting a branch in person. Navy Federal allows you to get a pre-approval before you shop for a vehicle, which tells you how much you can borrow and at what interest rate. This pre-approval is useful because it shows the dealer you're a serious buyer and gives you a clear budget.
To start, you'll provide basic information: your income, employment, existing debts, and the vehicle you want to buy (or the vehicle you want to refinance, if that's your situation). Navy Federal will pull your credit report and give you a pre-approval decision, usually within a few business days. The pre-approval is not a may provide — the final loan is still subject to the vehicle passing inspection and your financial situation not changing before closing.
What Documents You'll Need
Navy Federal will ask for proof of income, typically your most recent pay stubs and tax returns from the last two years. You'll also need a government-issued ID and proof of residency, such as a utility bill or lease agreement. If you're buying a vehicle, you'll need the vehicle identification number (VIN) and details about the car — the year, make, model, mileage, and price.
For a purchase, Navy Federal will order an inspection of the vehicle to confirm its condition and value. You'll need to provide the seller's contact information so the credit union can coordinate this. If you're refinancing an existing loan, you'll need the loan number and account information from your current lender, and Navy Federal will contact them directly to pay off the old loan and transfer the lien to themselves.
Interest Rates and Loan Terms
Navy Federal publishes current auto loan rates on their website, but your actual rate depends on your individual credit profile and the vehicle. Rates for new vehicles are typically lower than rates for used vehicles. The age of the vehicle matters: Navy Federal generally finances vehicles that are no more than 10 years old, though exceptions exist for vehicles in excellent condition.
You can choose a repayment term ranging from 36 months to 84 months, depending on the loan amount and vehicle. A shorter term (36 to 48 months) means higher monthly payments but less interest paid overall. A longer term (60 to 84 months) means lower monthly payments but more interest paid over the life of the loan. Navy Federal allows you to pay off the loan early without penalty, so if your financial situation improves, you can pay it down faster.
Down Payment and Fees
Navy Federal does not require a minimum down payment, but making a larger down payment lowers your monthly payment and the total interest you pay. A down payment of 10 to 20 percent is common and often results in a better interest rate. If you're buying a used vehicle or have a lower credit score, Navy Federal may ask for a larger down payment.
Navy Federal charges an origination fee, which is a one-time cost to process the loan. This fee is typically between 0.5 and 1 percent of the loan amount and is added to your loan balance. There is no prepayment penalty if you pay off the loan early. Some members also choose gap insurance, which covers the difference between what you owe and the vehicle's value if the car is totaled — this is optional and costs extra.
What Happens After You're Approved
Once Navy Federal approves your loan, they'll send you loan documents to sign. For a purchase, the credit union will pay the seller directly, and you'll take ownership of the vehicle. The credit union holds a lien on the title, meaning the vehicle is collateral for the loan. You cannot sell or trade the vehicle without paying off the loan balance first.
Your first payment is typically due 30 days after the loan closes. You can make payments online through Navy Federal's website or mobile app, by phone, by mail, or at a branch. Navy Federal also offers automatic payments, which deduct your payment from your checking account each month. If you miss a payment, Navy Federal will contact you, and late fees will explore. If you fall significantly behind, the credit union can repossess the vehicle.
Frequently Asked Questions
Can I refinance my current auto loan with Navy Federal if I'm not a member yet?
You must be a Navy Federal member to borrow from them. If you're not yet a member but meet the membership requirements, you can join first — membership is free — and then explore for a refinance loan. The entire process typically takes one to two weeks.
What if I want to pay off my Navy Federal auto loan early?
Navy Federal allows early payoff without penalty. You can pay extra toward your principal each month, make a lump-sum payment, or pay the loan off in full at any time. Contact Navy Federal to confirm the exact payoff amount, as it includes any interest accrued through your final payment date.
Does Navy Federal finance used cars with high mileage?
Navy Federal generally finances used vehicles up to 10 years old, but age and mileage are reviewed together. A 2015 vehicle with 80,000 miles may be approved, while a 2010 vehicle with 150,000 miles may not. The credit union will inspect the vehicle and decide based on its condition and value.
What if my credit score is below 600?
Navy Federal does not publish a minimum credit score, and members with lower scores have been approved. However, you may face a higher interest rate, a requirement to make a larger down payment, or both. Contact Navy Federal directly to discuss your situation before you shop for a vehicle.
Can I add a co-signer to my Navy Federal auto loan?
Yes, Navy Federal allows co-signers. A co-signer is responsible for the loan if you cannot pay, and their credit is also reviewed. Adding a co-signer with a strong credit score can result in a lower interest rate, especially if your own credit is limited.