When most people contribute to their 401(k) plans, they think about saving up for retirement. However, a few people also use this retirement account as a credit line to cover various expenses. You can take out a loan against a 401(k), but just because you can do something doesn't mean that you should.
A car owner currently has an auto loan with a 12.6% interest rate. Borrowing against the 401(k) plan only results in a 9.5% interest rate for a 36-month term. A lower interest rate will help the borrower save money. It may seem like a good move on the surface, but once he shared his situation with Reddit, a different picture emerged.
