What Does a 401(k) Loan Really Cost?
A 401(k) loan may avoid a traditional credit check, but it still has a payment and an opportunity cost. Compare both before deciding.
401(k) loan scenario
This estimate uses the statutory maximum loan rule and your own assumptions for rate, term, and investment return.
Maximum statutory loan
$50,000
The lesser of $50,000 or 50% of vested balance
Monthly payment
$386.66
5-year repayment schedule
Total interest paid
$3,199.36
Interest paid back through payments
Estimated opportunity cost
$8,051.03
Growth the borrowed amount could have earned
Estimated combined cost of interest plus opportunity cost: $11,250. This is not a guaranteed loss; it is a scenario comparison.
What the result means
The loan payment is the visible cost. The opportunity cost represents the growth your borrowed money might have earned if it had remained invested. Actual outcomes depend on market returns, plan rules, continued employment, and repayment behavior.
Important limitations
Federal rules generally cap a 401(k) loan at the lesser of $50,000 or 50% of your vested balance, but your plan can impose stricter rules. A loan may also become taxable if you leave your job and do not repay it under the plan's terms.
Source: IRS 401(k) loan rules. This is an estimate, not financial advice.
Figures current as of 2026-09-25. Found an error? Contact us.