Quick answer: A personal loan is borrowed from a lender. A 401(k) loan borrows from eligible retirement savings and can affect retirement planning if not repaid as required.
Important differences
A 401(k) loan may avoid a lender credit review, but it can reduce invested retirement money and may create tax consequences if not repaid under plan rules.
| Feature | Personal loan | 401(k) loan |
|---|---|---|
| Source | Lender or lending partner. | Eligible retirement plan. |
| Credit review | May involve credit review. | Plan rules control. |
| Risk | Fees, interest, credit impact. | Retirement impact and possible tax consequences. |
| Availability | Depends on lender criteria. | Depends on employer plan rules. |
Questions to ask
Ask whether your plan allows loans, what happens if employment ends, and whether reducing retirement investments is worth the short-term need.
Consider advice
For retirement-account decisions, consider a qualified financial or tax professional.
Methodology
This page is educational and uses illustrative examples. Borrow Your Loan does not publish unverified partner rates, approval odds, or lender requirements. A lender or partner controls any final offer, APR, fee, amount, repayment term, and funding decision.
Sources and consumer references
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