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    Pat baxter's Avatar
    Pat baxter Posts: 1, Reputation: 1
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    #1

    Sep 8, 2013, 07:16 AM
    401k withdrawal vs auto loan for new car purchase
    I an over 59 1/2 is it smarter to withdraw the money for a new car , 30,000, from my 401k or get a car loan to pay for it.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Sep 8, 2013, 08:34 AM
    Are you still employed? If so what would be smarter is to take a loan against the 401(k). If not, it would depend on the interest rate of the loan and the investment return of the 401(k).
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    Sep 9, 2013, 07:55 AM
    In general I would agree with ScottGem on this, however before taking a loan from your 401(k) you need to review your retirement plan to ensure that this won't be setting back your retirement nest egg. If you borrow money from your 401(k) it puts you a bit behind on building assets in expectation of retirement in another few years. In effect you are sacrificing a bit of your retirement nest egg in exchange for a car that may not even be around any more when you do retire. So think it through carefully.
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