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401K Loans vs Alternative Loans Such As Florida Payday Loans

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About one in four investors borrow money from their 401K or retirement savings. These loans have some advantages compared to other sources of credit, but they can also hit your retirement savings in unexpected ways.

Many investors have taken advantage of this kind of loan.  One advantage is that you can continue to make monthly contributions and have the security of knowing that the money will be there “just in case”.  To most, this type of loan is a source of cheap credit compared to unsecured lines of credit or credit cards.

A disadvantage of a 401K loan is that loans face double taxation since they are made with after-tax dollars. That is because you get taxed again when you withdraw them at retirement.  Another disadvantage is that if you leave or lose your job, you have to pay the loan off in full within a short period of time. If you do not pay your loan off, it is considered a distribution.  That means you will have to pay income tax on the full amount of the loan. And if you are younger than 59 ½, you will have to pay income tax on the loan in addition to a 10% penalty.

Many experts say that investors should consider the advantages of not taking out a loan from their retirement account even if it's paid back on time.  If you avoid taking out a loan, then your money continues to grow. Even if you remove some money temporarily, you can miss out on valuable compounding and may end up with less of a nest egg than you counted on when you retire.  Many people find it difficult to make monthly contributions while repaying their loan.  Remember, that there are always fees attached to taking a loan, even from your retirement savings.

Whatever your decision, many people believe that it is better to consider long-term goals rather than short-term goals. In other words, the long-term benefits of not touching your retirement savings may far outweigh the short-term benefits of taking the loan.  The danger is when 401K loans are used for non-essential reasons.

So, what are the alternatives to getting a loan when you are in need of funds for an unexpected expense or emergency?  Today, there is a growing popularity for turning toward alternative loan lenders.  Non-traditional loan lenders are able to provide consumers with fast cash.  These kinds of loans are referred to as payday loans, cash advance loans, auto title loans, and deferred deposit loans.  There are no credit check requirements for these loans.  In the State of Florida, the interest rate is regulated by the Florida Statutes.  Consumers who have blemishes on their credit history are usually able to qualify for these kinds of loans.

If you are in need of emergency cash to pay for outstanding bills such as car or house repairs, medical exams, insurance premiums, health benefits, or an unexpected event, you might consider applying for a Florida payday loan or a Florida auto title loan.  If you have been turned down for a bank loan, unable to get approved for a credit limit on your credit cards, a payday loan Florida or a car title loan Florida may be the best solution to help you get back on track.  For others who do not want to turn their investment savings upside down or have not yet opened a retirement savings account, a Florida payday advance or a Florida auto title loan can be the answer to a short-term financial crisis.

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