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401K loans

Posted by on Feb. 8, 2012 at 8:56 AM
  • 3 Replies

I recently took a loan out against my 401K.  I never realized how easy this is to do and how cheap it is.  The interest rate is 4% and I'll have the loan paid off in a year.  Has anyone else done this before?




by on Feb. 8, 2012 at 8:56 AM
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specialwingz
by on Feb. 14, 2012 at 11:35 AM

I haven't.  But, my oldest DD did for a short time when they were building their house.  Seems to have worked out pretty well for them.

michiganmom116
by Rhonda on Feb. 14, 2012 at 11:38 AM
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I would never do it.  There are risks that I wouldn't want to deal with, plus you're not earning interest on your investment that you borrowed, which is typically a lot higher than the interest rate you're paying.  It's better to get a low interest rate loan somewhere else and let your retirement keep earning for you.

My BFF did it and now hates that she did.

nmaxwell816
by Gold Member on Feb. 15, 2012 at 1:37 PM

I didn't know that you wouldn't gain interest for that time period.  My loan is for 12 months so that's not too bad

Quoting michiganmom116:

I would never do it.  There are risks that I wouldn't want to deal with, plus you're not earning interest on your investment that you borrowed, which is typically a lot higher than the interest rate you're paying.  It's better to get a low interest rate loan somewhere else and let your retirement keep earning for you.

My BFF did it and now hates that she did.


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