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Message
re: Talk me out of a 401k loan
Posted on 8/16/25 at 8:14 am to Fat Bastard
Posted on 8/16/25 at 8:14 am to Fat Bastard
quote:
business investment? great. for a damn car? F no.
100%.I am okay with doing literally anything if the investment outperforms the cost but I would not take out a 401k loan for a car. I would tell my kid to get a job.
This post was edited on 8/16/25 at 8:15 am
0
Posted on 8/16/25 at 9:12 am to ronricks
Yes understand this.. but don’t have an extra $10-15k laying around unfortunately
Posted on 8/16/25 at 9:16 am to Reagan80
Thanks for everyone’s input.
Won’t be touching the 401k, which was my initial thought and how I’ve always felt:
Just wanted to get some “experts” opinions…
Won’t be touching the 401k, which was my initial thought and how I’ve always felt:
Just wanted to get some “experts” opinions…
Posted on 8/16/25 at 9:32 am to xBirdx
Speaking from experience, get the kid an older vehicle, at least for a year or two. I'm talking a 10-15 yr old one with a 100k+ miles on it. Maybe consider something a little bit newer when they go off to college etc if you can afford it.
Posted on 8/16/25 at 9:56 am to xBirdx
Why do you need to buy a kid a car? Simply you don’t. Especially don’t do it if you can’t afford it and taking from your 401k is the worst idea ever and means your can’t afford it.
Posted on 8/16/25 at 10:46 am to xBirdx
Another reason everyone needs liquidity before stuffing an IRC section 401(K). That retirement becomes a target for deprecating-asset purchases.
Posted on 8/16/25 at 11:15 am to xBirdx
There's an additional tax I believe too. This is a horrendous idea.
Posted on 8/16/25 at 11:48 am to fallguy_1978
quote:
Speaking from experience, get the kid an older vehicle, at least for a year or two. I'm talking a 10-15 yr old one with a 100k+ miles on it. Maybe consider something a little bit newer when they go off to college etc if you can afford it
I just went to Car Gurus and searched for a used Accord under $13K with 120,000 miles or less within 100 miles of me. Had 21 cars pop up. I'm with the Fallguy on this one.
Posted on 8/16/25 at 12:28 pm to xBirdx
There are a lot of companies offering 0% interest car loans right now. Why would you take out a loan at 7% if you can get one for 0% 
This post was edited on 8/16/25 at 12:40 pm
Posted on 8/16/25 at 12:54 pm to GCTigahs
quote:
I'm with the Fallguy on this one.
Both of mine popped tires, hit curbs, got into accidents within their first 2 years of driving. Both turned out to be decent drivers with a little bit of experience. We provided each of them with one newer vehicle around age 18.
Posted on 8/16/25 at 1:27 pm to xBirdx
The biggest issue is the fact that moving forward you'll consider that money as "accessible." Can of worms kinda thing.
Second issue is getting tight and potentially cut into your contributions to pay the loan.
Second issue is getting tight and potentially cut into your contributions to pay the loan.
Posted on 8/16/25 at 1:55 pm to xBirdx
Don’t use appreciating assets to buy depreciating assets. That’s the golden rule.
Posted on 8/16/25 at 2:20 pm to The Pickwick
quote:
There are a lot of companies offering 0% interest car loans right now.
Name them.
Posted on 8/16/25 at 2:49 pm to notiger1997
GM, Nissan, Jeep, Hyundai, Ford, Lincoln
Posted on 8/16/25 at 4:29 pm to Billy Blanks
quote:
There's an additional tax I believe too.
no there is not.
When you take a loan from your 401(k),
it is generally not considered a taxable distribution, provided you repay it according to the terms set by your plan and the IRS. This means you don't pay immediate taxes or penalties on the borrowed amount itself, which is a key advantage compared to a 401(k) withdrawal.
Posted on 8/16/25 at 4:46 pm to xBirdx
Besides all the stuff already mentioned with opportunity cost. With a 401k loan, If you leave your company (voluntarily or not), you could be forced to pay off the loan very quickly like within 30 days. That is up to each 401k plan to decide.
I took out a 401k loan when I bought my current house. Did this so didn't have to sell the old house beforehand. Even though I left that company, I had 10 years to pay it off which I had verified beforehand.
I took out a 401k loan when I bought my current house. Did this so didn't have to sell the old house beforehand. Even though I left that company, I had 10 years to pay it off which I had verified beforehand.
Posted on 8/16/25 at 5:00 pm to The Pickwick
I don’t know if any place giving 0% on used cars. I’d love to hear where..
Posted on 8/16/25 at 5:03 pm to tigerbacon
Why do I need to buy them a car…?
Is this a serious question… I guess “need “ can be interpreted differently…
But for transportation to answer your question.
I can afford a payment , obviously. Was just wondering the pros and cons of a 401k loan , as I am. It real familiar .
Is this a serious question… I guess “need “ can be interpreted differently…
But for transportation to answer your question.
I can afford a payment , obviously. Was just wondering the pros and cons of a 401k loan , as I am. It real familiar .
Posted on 8/16/25 at 5:12 pm to xBirdx
quote:
I don’t know if any place giving 0% on used cars. I’d love to hear where..
After reading your original post, I didn’t know you wanted a loan for a used car. My bad
Posted on 8/16/25 at 6:10 pm to The Pickwick
No worries../ I didn’t think there was that out there, but if so I had to know!
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