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?
4 people like this
9 responses
• China
28 Jun 11
ask him if he really need the car or just want to be known he has a car like that .if he take the second reason,then he don't need to buy the car ,because we don't need just to please others and leave oursleves in the trouble.
@KrauseHome (28093)
• United States
27 Jun 11
Personally I guess that is their decision to make, and it depends on the amount of interest they charge to pay it back. We have had to borrow $$ from my husbands 401K a couple of times. It would really be nice if we could leave the rest of it alone, but it has helped pay off a lot of my Medical bills, and also helped us get into the home we are living in now as well. Sometimes I think a person really needs to weigh the pros and cons on something like this and decide if it is really worth it to them.
@SIMPLYD (51710)
• Philippines
23 Jun 11
In my opinion, your friend did an unwise move and is so impulsive. What if something happened to him along his course of life and would need money so much? Where would he get it? With such kind of attitude, he will most likely regret it later.
@Cutie18f (9566)
• Philippines
20 Jun 11
Well, that's his money. LOL. I know that some people can't be stopped when it comes to buying something they really love to own. I think your friend will be very happy to have the car now and does not worry much about old age. Some people are like that and I am like him too.
• Australia
20 Jun 11
unwise
@moirai (758)
• Philippines
20 Jun 11
Well, personally I am someone who doesn't buy something that is beyond my reach even if I need it so so badly... so much more if I only 'want' it as opposed to 'need' it. Needless to say, I disagree with what your friend did. I just hope that he wouldn't have too much problems with the whole thing...
@cream97 (29179)
• United States
19 Jun 11
Hi. kingparker. I think that your friend should only borrow this money from his 40lk if he really need the car, and if he has no other possible way of getting the money to buy a new car if he really, really needs it. I don't know too much about 40lk, except that people only pull it when they plan to retire from their job. I think that he should try to find another way of paying for a new car so that he can save his 40lk. If he buys it now, he will have to pay this car off, from his own 40lk. It is a decision that he should think strongly about before using his 40lk funds. If he can afford to risk it, then this will have to be a choice that he will have to live with once he has made this decision. If he doesn't use his 40lk funds, then this money will stay just right where it is at now.
• United States
19 Jun 11
I don't think this was a very wise choice. 401k's are for retirement. That's the money you're supposed to start saving now so that when you're retired you'll still have money. Your friend should have just stuck it out with his old car or gotten a new or used car for a whole lot less. Now he's going to have to struggle getting his 401k back up. Oh well, people are free to make their own decisions in life though. There's not too much we can do about it unfortunately =/
• United States
19 Jun 11
My sister did this now she is paying it back and struggling. tell him to live within his means for sure.