Quote:
Originally Posted by smallfun
Just curious, but has anyone considered borrowing from their 401k to finance? I worked out the numbers and total fees to set up and maintain the loan account amount to just under $90 for a 36 month loan of $11k. The interest rate of 4.25% (4.69% apr) works out to be around $750 over the course of the loan, but gets deposited back into the 401k account. In other words, it's like you're paying yourself interest. Aside from reduced earning potential, and assuming you're going to still be working with the same company during the term of the loan, are there any downsides to this?
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I would never borrow against a 401K to buy a car. The only time I would touch my 401k is if it was an extreme emergency.