tc4tee

I just got declined for a loan from eloan.com i dont want to keep applying to other sources because of all the credit checks. the only credit problems ive had is with student loans and ive been paying those off consistently for over 2 years and only have 2700 more to pay.
anyway i need a car to go to and from work and not really car savvy enough to buy or trust a used car. my problem is that since ive been rejected for this loan for $10000 should i try my luck at a dealership and get a loan or should i just borrow the money from my 401K and pay it back biweekly ( this is something i didnt want to do because of what i would lose in compount interest)
like i said i need a car. the one im driving now is on its last leg.

any helpful suggestions?

nero_tC

probably not the advice you want to hear...

but don't touch the 401K. where do you work anyway? finish paying off the student loans. what's the rate by the way? trade in your car or try selling it and go out and get yourself an affordable/reliable USED car. you don't want to screw up your 401K just to get a tC. and if you must get a brand new car go for something cheaper, even though you get a lot of car for the money with the tC. there are some really good deals on new cars right now.

also, what percentage does your company match in the 401K? and how much are you contributing?

tc4tee

thanx

I work for a bank.

the rate for my studen loan is 4.9

my company matches 100% up to 6% of your pay

JasonH

Did you try applying at a dealership? That's where I would start. With interest rates so low, even if you got a bad rate, it might cost you less than what interest your 401K makes.

I borrowed against my 401K when I bought my house (actually, I used my 401K money to buy furniture and appliances and stuff.)

deathman

I personally wouldn't touch that 401k. I know I don't have one but its basically something you don't touch unless its a emergency. I disagreed with my parents to pull money out of their 401k's so I could go to school, im sorry but its their for retirement not for other things.

If anything get a used car, sorta newer but not to old. You shouldn't have to worry about many problems with a car thats under 100 thousand miles.

jeffrgunn23

I wouldn't worry about applying for credit using diffrent sources. Your credit score will not be affected as long as you are applying for car loans. All of the credit reporting agencies realize that you are going to shop interest rates, so as long as you are applying for auto loans you can have your credit pulled 150 times without it affecting your score. If you were also shopping credit cards, mortgages, and store credit cards all at the same time, then your score would drop.

bofa

I'm currently a manager at a large benefits outsourcing company. My team handles small market 401k plans for about 10,000 companies. There are a lot of things to consider before taking a loan.

As much as I'd like to write them in this forum, there are too many questions to go over. I suggest taking advantage of your plan's Financial Consultant or Account Executive for advise. If not, and if you'd like, pm me and we can get in touch.

In short it really boils down to, how much is your vested balance, how old you are, what interest rate do they offer, what investments are you currently in, how long do you plan on staying at the company and a few other factors.

bofa

I'm usually not one to correct people, but I believe you're incorrect. When shopping for a car, the only forgivenes allowed for pulling your credit report is when they're all pulled the same day. If you have multiple credit pulls on the same day, it counts as one inquiry.

If you shop for two months like I did, it ads up and kills your score.. I ended up with 47 inquiries by visiting 3 different dealerships. Apparently they continued to run my credit even after I walked from the deals a couple of times. Thankfully a good chunk of them were completed on 3 separate days, so it only counted as 19 inquiries (but still hurt my score.. by about 22 points)

SWF_05_tC

I'm willing to bet that 95% out there with 401k's don't know what their company has them invested in. This is not uncommon, but borrowing against your 401k can be really bad for you, or it can just set you back a bit depending on age and what you have vested. There are several options other than borrowing from the 401k, but if you are young enough and can afford the hit (a 401k generally is not enough for retirement anyway, you need a lot more than that) then it might not be the worst option either. Find out all of your options and choose the one that works best for you after weighing the pros and cons of each one. If you are sure your car won't make it much longer and have exhausted all other options, then use the 401k as a last resort.

arcyallen

I paid off my credit card debt witha 401(k) loan six years ago, and regret it ever since. Find other sources - they're out there. And I agree with most on this board - buy a good, used car. If you're borrowing 10k, I assume you might have around $6k down? If so, use that to buy a used Corolla or something for now!

sTalking_Goat

do student loans affect your credit that much? My Mom is still paying for her loans (University and Law School) never pays above the minimum, but always pays on time. Has excellent credit.

She says no one ever expects you to pay off student loans so the credit reporting agencies ignore the balance, they just check to see that you're paying it every month.

How true is that?