Pay down 401k loan or credit union loan first?
Is it smarter to pay down/off a loan I took against my 401k (I'm 42 yrs old) or my credit union loan? They're both about the same loan amount and interest. The credit union is holding my truck as collateral for the loan, so that would be freed. But if I lose my job I'm worried I would owe the 401k loan balance at once (which is what I've heard from co-workers.) Thanks for your input.
Asked By: curlytop - 10/3/2011
Best Answer - Chosen by Asker
Best for your credit rating - pay off your truck loan at the credit union... More
Answered By: Huntsman - 10/3/2011
Additional Answers (3)
I would pay off the 401(k) loan first. If you leave your job for ANY reason, the loan becomes an early withdraw, subject to the 10% penalty, in 60 day. In theory, you could pay it off to avoid the early withdraw, but you can't afford that if you are unemployed.
Answered By: STEVEN F - 10/3/2011
The 401K loan.
Answered By: Judy - 10/3/2011
The truck loan. 1. You are paying interest to a bank and helping them make money whereas on the 401K you are paying interest to yourself so pay yourself the most interest. 2. One of those other answers mentioned if you get laid off you still have a paid off truck which you will need. I totally agree there. 3. Yes... More
Answered By: Ron - 10/3/2011
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