Personal Loan vs. 401(k) Loan: Which Is the Better Choice? When you need cash fast, tapping your retirement savings via a 401(k) loan may seem easy—but it carries unique risks. A personal loan offers predictable payments and keeps retirement funds intact. In this guide, we’ll compare both options so you can decide which path protects your finances and long-term goals. Table of Contents 1. Overview of Both Options 2. Pros & Cons of a 401(k) Loan 3. Pros & Cons of a Personal Loan 4. Cost & Tax Comparison 5. How to Choose the Right Loan 1. Overview of Both Options 401(k) Loan: Borrow up to 50% of vested balance (max $50K), repay into your account with interest (typically prime + 1%). Personal Loan: Borrow from a lender with fixed APR (6%–36%) and set term (1–5 years), repay with monthly payments. 2. Pros & Cons of a 401(k) Loan Pros: No credit check, interest paid back to your account, usually low rate. Cons: Missed market gai...