A 401(k) loan is a way to borrow money from your 401(k) plan. Although there are positives to such a loan, such as the ability to pay money to yourself, significant negatives, such as the temporary removal of your money from your retirement plan investments, exist as well. Ultimately, one should consider a 401(k) loan very carefully. In many cases, alternative funding sources might be preferable. Regardless, never take a 401(k) loan for a discretionary purchase such as a nicer car. You don't want to potentially wreck your retirement over something relatively unimportant.
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