Do any banks/leanding companies accept 401k as loan collateral ? I do not want to borrow money from 401k just use it as collateral to keep my interest rate low and to get a bigger loan. Thanks.
- posted
17 years ago
401k used as collateral
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- posted
17 years ago
No. The purpose of collateral is to secure the loan in case of default. There would be no way for the lender to seize the monies in a 401k in case of default.
Elizabeth Richardson
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- posted
17 years ago
Is this because the law prevents a lien against a 401k or against a 401k going into some time of escrow .. Thanks.
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- posted
17 years ago
Use it as a collateral? No. Consider it as part of your total asset, possibly.
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- posted
17 years ago
But how much more? Do your really want to take on the risk in hopes of getting 2% or 3%, or whatever, more than the 7% your loan will cost? The fact that a bank won't touch it is in itself a warning that the risk could be larger than you think.