retirement

4 reasons to take out a 401(k) loan

It's the lowest-cost loan available
Next
3 of 6
Back

Robert Gordon, senior financial adviser with Investor Solutions in Coconut Grove, Fla., says a 401(k) loan could be a useful option for people who have problems getting credit at affordable rates -- for example, someone whose credit score has plummeted because of bankruptcy or a short sale.

"When they get ready to go into the market, instead of subjecting themselves to two (percent), three (percent) or four percentage point increases in rates or not getting credit at all, (a 401(k) loan) could be a resource," Gordon says.

Just remember that the interest you save by choosing a 401(k) loan over a bank loan still might not be enough to make up for your loss of earnings from taking the money out of your retirement account.

Bankrate's 401(k) loan calculator shows you how much your retirement nest egg stands to lose if you borrow from your 401(k).


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.08%  0.16 4.24%
15 year fixed 3.19%  0.04 3.23%
5/1 ARM 3.36%  0.10 3.46%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.36% --0.00 4.36%
50K FICO-based HELOC 4.06% --0.00 4.06%
100K FICO-based HELOC 3.91% --0.00 3.91%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.79% --0.00 2.79%
48 month used car loan 2.98% --0.00 2.98%
60 month new car loan 3.23% --0.00 3.23%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.94% --0.00 0.94%
2 Year CD 1.13% --0.00 1.13%
5 Year CD 1.76%  0.00 1.76%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.77%  0.06 15.71%
Cash Back Cards 16.48%  0.07 16.41%
Low Interest Cards 10.96%  0.10 10.86%
 
Next
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Blog

Jennie Phipps

Work less — ‘It’s a better life’

Retirement actuary Steve Vernon says working less while delaying Social Security is the best way to retire.  ... Read more

advertisement
Partner Center
advertisement

Connect with us