401(k) Loan vs Personal Loan Comparison Guide for Borrowing Decision (2026)
Compare 401(k) loan vs personal loan: interest rates, qualification, tax implications, and borrowing decision for loan selection.
Summary
401(k) loans and personal loans serve different needs. This guide compares rates, qualification, tax implications, and selection criteria.
Key Steps
- 1Compare rates: 401(k) loan prime + 1-2%, personal loan 6-36% based on credit.
- 2Check qualification: 401(k) loan no credit check, personal loan requires credit approval.
- 3Understand tax implications: 401(k) loan default taxable, personal loan not taxable.
- 4Evaluate opportunity cost: 401(k) loan reduces retirement growth, personal loan preserves.
- 5Consider employment risk: 401(k) loan becomes taxable if leave employer.