Can you get a better interest rate on a loan if you secure your loan with a 401K?
I want to take out a $9,000.00 loan.
If I rolled over $18,000.00 from my 401k to a bank or institution, would the bank loan me $9,000.00 at a competitive interest rate ? The lending institution can secure the $9,000.00 if I ever defaulted.
Answers:
Can you borrow from your 401k? I just did. The interest rate is 9%, and you're paying yourself the interest.
I did it online, and got a check the next week. Payments come out of your paycheck.
No. But a good credit rating would. You are better off getting the loan from your 401k. Of course if you default, it's the IRS that would get you...good.
No. Normal loan rate will still apply whether the loan is secured or not.
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Can't do it.First you can't roll over a 401k unless you quit your job. Second, you can't secure a private loan with a 401k or an IRA. They are non-assignable. They ask you about them, but it's silly of them to do so because they can't make you take a distribution if your loan goes into default status.
And before this even enters into your head.taking a distribution from your 401k instead of financing your purchase will cost your retirement about $100,000 when you're ready to retire. It could mean the difference between retiring at 65 and retiring at 68. Hope your short term purchase is worth working 2 extra years.
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