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MachoGarage t1_j6nyf2w wrote

Reply to comment by DarmokTheNinja in 401k loan for auto purchase? by [deleted]

It's a private party sale, which I could get a personal loan for at probably 10% interest and hit my credit report, whereas with the 401k loan I am paying myself the interest and the loan does not affect my credit

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userpart2 t1_j6o01u4 wrote

10% on 7k for 30 days is about $58. There is little interest to be paid to yourself or a bank.

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CrazySteeeveee t1_j6o14q0 wrote

Find a credit union near you, should be able to get that rate down below 7%. Not sure why youre concerned w credit score unless youre swallowed in debt while stll pocketing 150k. Even at 10%, the interest is minimal over 2/3 months and sounds like it'll be worth a couple hundres more $ to secure your dream car

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Liquidretro t1_j6o0dzp wrote

Depending on the age of the car you can still likely get a car loan for a private party sale. Have you actually applied or talked to a banker about a personal loan? The credit hit is minor and doesn't matter if you are not planning on using credit in the next few months.

I dislike 401k loans in general as you are taking money out of the market, and depending on the plan rules may need to stop contribution, might not be able to pay off early, you would have to pay it all off should you be fired or leave before it's paid off, etc. It's also just bad practice to think of that 401k as a place to go get money from when in need. This is a want, not a need, not an emergency.

This is the type of thing savings are for especially when you can replenish in such a short time frame.

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