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Message
re: Talk me out of a 401k loan
Posted on 8/16/25 at 9:20 pm to xBirdx
Posted on 8/16/25 at 9:20 pm to xBirdx
It’s not a need is my point you may want to buy one for them but you don’t need to. If you can afford the payment that’s better than a 401k loan. Also, why not buy a cheap reliable car or have them at least pay half? When I turned 16 I drove a 1500 dollar truck that had no power anything, a stick but did have ac. It got me through college. I loved every second of it and took great car of it. Parents paid 750 for my birthday and I paid the other 750. It was an 80’s dodge ram 2 door. Once I could buy my own car I gave the truck to my wife’s younger sister who just turned 16. Lasted until she was out of college. Why does every 16 year old need a vehicle that cost over 10k?
1
Posted on 8/16/25 at 9:46 pm to tigerbacon
I wish that were the cases have you priced used cars lately??
I’d like something halfway reliable for my teenager… and nothing under $10k will get me that.
I’d LOVE that as well… when I turned 15 I got a $4k truck. … those don’t really exist. If so, let me know! Lol
I’d like something halfway reliable for my teenager… and nothing under $10k will get me that.
I’d LOVE that as well… when I turned 15 I got a $4k truck. … those don’t really exist. If so, let me know! Lol
Posted on 8/16/25 at 11:32 pm to xBirdx
quote:Just went to TrueCar app and there are a decent amount of Hondas and Toyotas for under 10k.
I’d like something halfway reliable for my teenager… and nothing under $10k will get me that. I’d LOVE that as well… when I turned 15 I got a $4k truck. … those don’t really exist. If so, let me know! Lol
Posted on 8/17/25 at 12:21 am to saderade
its been said before, but ask yourself if what you are buying at today's prices is going to be worth the 400-500% its loan value
Posted on 8/17/25 at 1:57 am to oneg8rh8r
Ive been thinking about doing to put down on a house, or buy a piece of land to develope.
Maybe 25k. I can only borrow half of what the 401k is worth.
Maybe 25k. I can only borrow half of what the 401k is worth.
Posted on 8/17/25 at 7:34 am to saderade
I have bought two cars for teens in recent years, so I checked (had never used Truecar, thanks for posting).
Seems like you can get a Honda or Toyota with 125-185k miles for $8-$12k; most options are over 300 miles away and need delivery.
Is $10k for over 100k miles a good deal these days? Leap of faith having to get delivered
Seems like you can get a Honda or Toyota with 125-185k miles for $8-$12k; most options are over 300 miles away and need delivery.
Is $10k for over 100k miles a good deal these days? Leap of faith having to get delivered
Posted on 8/17/25 at 8:55 am to xBirdx
I just googled 2010 used Toyota Corolla and 5 popped up under 10k and under 120k miles. Those will last over 100k mileage. There you go
Posted on 8/17/25 at 10:41 am to xBirdx
If you need a loan to buy your kid a car, you’re trying to do too much. Get them a beater or have them get a job to pay for it
Posted on 8/17/25 at 1:03 pm to Upperdecker
That’s my point too but they seem adamant that their child deserves this and a 20k plus car. Their money and not mine so it’s on them not me or you. Maybe they were hoping people would say this was a great idea? If so they should of stayed in the Ot board
Posted on 8/17/25 at 6:51 pm to xBirdx
401k loan could be excellent if you could time the market. Barring that skill, don’t do it. 
Posted on 8/17/25 at 10:18 pm to tigerbacon
quote:
but they seem adamant that their child deserves this and a 20k plus car.
f that
Posted on 8/18/25 at 7:09 am to Fat Bastard
But are you able to replace that money or still capped for the year?
Posted on 8/18/25 at 7:56 am to xBirdx
quote:
I’d like something halfway reliable for my teenager… and nothing under $10k will get me that.
Gotta laugh at this one if you think no reliable car exists under $10k.
My first car was a 1990 Honda Accord that already had nearly 200k miles on it, I put another 85-90k miles on that thing before the transmission dropped out of it over the course of 5 years. I beat the living piss out of that car as well.
There are plenty of reliable vehicles even under $5k out there if you look hard enough and buy smart. This isnt a forever vehicle for them, its their first car they will probably have for a few years or even less.
Blows my mind people spend so much money on a 16 year olds first car, they will probably wreck it and can almost guarantee you they wont take great care of it. So dumb to buy them a $20k+ type vehicle. Insurance will be nuts too, have fun with that.
A friend of ours just earlier this year finally gave up on her 2003 Honda Accord which ran up close to 300k miles as well. Just was needing too much added oil plus a coolant leak and I know she also wasnt taking great care of that vehicle the last several years.
Our neighbor made their 16 year old work and save up some money to buy his first vehicle and he got a 2001 S10 pickup for $2000 off facebook marketplace. He is wrenching on that thing all the time (modifying it) but has had it for well over a year at this point (maybe 2 full years).
Again, there's PLENTY of cheap reliable vehicles out there that are way under $10k.
THIS would be a great 1st car for a kid. Just needs some minor maintenance items done (like brakes), but nothing a grand or so into it wouldnt probably fix. Already has some wear but nothing bad on it so if kid dings it up, who cares. Any vehicle you'd want to get inspected just to make sure it's not a complete lemon but expect any cheap vehicle to need at least a little TLC up front. But thats fine, buy a $3900 vehicle like that, spend another grand or so on it between brakes and changing all the fluids and it's a $5k reliable vehicle for several years probably.
This post was edited on 8/18/25 at 8:33 am
Posted on 8/18/25 at 8:45 am to Sunnyvale
quote:
Maybe 25k. I can only borrow half of what the 401k is worth.
Are these loans through employer or brokerage?
The last time I looked into these my brokerage would only allow borrowing against non retirement funds and the rates were awful (8ish).
What kind of rates and options are y'all getting?
Posted on 8/18/25 at 8:52 am to Billy Blanks
quote:
But are you able to replace that money or still capped for the year?
what do you mean replace?
You may or may not be able to make normal annual contributions moving forward during the life of the loan. depends on the specific plan. My solo401k(QRP) documents allow me to continue with normal contributions even IF i have a loan.
Posted on 8/18/25 at 9:46 am to xBirdx
What is the payment difference between the 401k loan vs. a normal auto loan? You're going to be paying back some amount for some period of time in both scenarios. You may be finding yourself haggling between $50 a month at the detriment to your retirement. This on top of the tax implications. I don't know what the numbers are, but put the kid to work or find another way to pay for it without screwing yourself into working for some number of years past your retirement goal.
Posted on 8/18/25 at 10:06 am to xBirdx
I'm happy this thread is here today. having some first world financial issues. is it possible to be "retirement poor"? i think we are... we have a lot of money saved up in retirement accounts. we hammered it early and we won't have to worry about anything once we get there. issue is, we still have 20 years until then and not a lot of liquid assets to tap into in the interim... we have expenses between now and then that wear us thin. two routes to resolve this (or a combination of the two) will be to spend less and somehow make more. Need to come up with something to make a few extra thousand a year to cover things like the OP stated, kids cars, their insurance, tuition, etc....
i know, woe is me...
i know, woe is me...
Posted on 8/18/25 at 12:29 pm to Randall Savauge
quote:how long until you or your spouse is 59.5?
we still have 20 years until then
or, if either of you have 401k's, how long until you are 55?
Posted on 8/18/25 at 12:40 pm to Chicken
quote:
how long until you or your spouse is 59.5? or, if either of you have 401k's, how long until you are 55?
16y, 10y
Posted on 8/18/25 at 1:18 pm to Randall Savauge
most of money in 401k's or IRA?
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