Check a personal loan rate before you borrow from your 401(k)
The only way to know whether a 401(k) loan is the cheaper choice is to have a real personal loan rate to compare it with. Check a rate with one or two of the lenders and marketplaces below, then type the rate and origination fee into the comparison tool. You apply on their sites, not this one. We never see your application and nobody pays us for the visit.
Where to check a rate
| Where | What it is |
|---|---|
| Upgrade | Online lender; you apply directly |
| Upstart | Online lending platform; you apply directly |
| LendingTree | Marketplace that shows offers from several lenders |
| MoneyLion | Marketplace that shows offers from several lenders |
The list is alphabetical within each type and isn’t a ranking or an endorsement. Each site says on its own page whether checking your rate affects your credit score, so read that before you start. We don’t take payment from any lender or marketplace listed here, and the links carry no tracking code. If that ever changes, the link and how we make money will say so first.
Why check a rate first
A 401(k) loan wins on interest almost every time, because you pay the interest to yourself. It loses when you leave your job before it’s paid off, when the payment pushes you to cut your contributions, or when the market does well while your money is out of it. A personal loan costs more in interest and avoids all three.
Once you have an offer, type its rate and origination fee into the comparison tool. It shows the payment, the money gone for good, and what your 401(k) looks like at 65 for each option.
Reading an offer
- APR vs. interest rate. The APR includes the origination fee spread over the loan; the interest rate doesn’t. The comparison tool asks for the rate and the fee separately so the fee isn’t counted twice.
- Origination fee. Usually taken out of the loan before you get the money, so less than the loan amount reaches your account. Borrow enough to cover it, or pick a lender that doesn’t charge one.
- Prequalification vs. approval. A prequalified rate can change after the full application, which is when a lender usually runs a hard credit check.
Borrowing for a business instead?
Personal loans aren’t meant for business use. If the money is for starting or buying a business, see using your 401(k) to start a business, where you can send us a question about your plan.
Price the alternative before you borrow
A personal loan leaves your retirement money invested. Check a rate with a lender and put it next to your 401(k) loan.