A friend of mine want borrow money from 401k to buy a new car

United States
June 19, 2011 12:17pm CST
I knew that my friend, he likes this Lexus so much, and he wants to buy it so bad. Since he doesn't have enough money for it, and he definitely wants that car so much. He doesn't like the car loan rate from his own bank, so he prefer to borrow some of the money from his 401k plan that he has with his job. I think that he made a unwise decision on it. Since 401k is for his future retirement, he shouldn't bother to use that fund. It is his future expenses when he retired. And basically, he simply has this impulse to buy a new car, not want to hang on his old car. If he can hold his impulse, and satisfy what he has, he doesn't need to borrow any money from 401k plan. Since he took it out, they might charge him tax again. If he borrow from it, they will also charge him interest probably lower than the market rate. What do you think of it?