Welcome to the forums!
I don't know Penfed's lending practice for auto loans, but I don't think what you quoted is unreasonable from some lender or another. You're also likely to get another bump up in a few months both from the payments on your cards being reported and if you can get the collections successfully disputed that's nothing but goodness too. FWIW I just got an email from Penfed pushing their auto-loans, so it appears they want to actually put money in the field in auto-lending.
Unless the collections are for some huge sum of money, I don't think you're in that bad of a spot now, and you'll be better in a bit. For comparison purposes, I got 19% on a 20k note recently from another lender, with a decidedly worse record than you have (I would've loved to have that co-signed auto loan of yours, or even that credit limit of yours), I don't think you're a long walk from where you need to be if you're not there already. You might even be pleasantly surprised. You may want to check USAA too, they seem to be interested in making car loans currently as well.
As for carrying a balance or not, you'll hear a lot of things but none of us truly know and the people who wrote the algorithms aren't talking. My personal opinion is to just leave something on the card every month, but less than 9% or thereabouts as I think there's some merit in the results people have posted here on observed effects on their score. The important thing is to just make the payments, and probably more than the minimum as that makes simple financial sense anyway in most cases. When you actually go to pull the trigger on a loan of any type, get the balances close to zero'd out before that month's statement cuts for best results on the lender pull.
Yeah, I paid cash for everything but had something ugly on my record from years back... and I had no auto / mortgage so I was basically a thin file with a black mark. You're higher than that, and honestly this forum is populated with people that have been broken from a credit perspective at some point in their past. Most people in the gold-plated category never worry too much about it, and as a result never wind up on this forum at all.
Some of your options are going to depend on whether you're buying from a dealer or a private party. I have no clue on private party financing honestly, but many of the used car loans (Cap 1, others) have a limited set of dealerships that you can use it at. When you decide to pull the trigger, just go out and make a bunch of applications, the inquiries will all roll up into one if you do it in a short time period (two weeks or a month dependant who you talk to) for auto loans. Penfed, maybe USAA, lendingtree (hits Cap 1 and a few others all at once), and assuming you're buying from a dealer, whoever the dealer does business with.
It's really hard to say who is most likely to finance you as we just don't get anything other than anecdotal results (check out the Auto Loan Approval thread that's stickied) but lending underwriting can change all the time from lender to lender and of course we all start off as individuals to begin with; however, the approvals other people are getting might give you further idea who to go talk to.