Payoff Loan

Not enough details. What kind of loan was the BOA? I mean, what were the terms? If it was a fixed loan, a set a mount with monthly payments, the new owner of the loan has to honor the original terms. If it was a variable rate, there are still terms that must be honored, often, you have a choice to not 'accept' the new terms, and pay off at the original offer. If you did the 401(k) loan (not recommending just yet), how much can you afford top pay back each month? That will be part of any advice you get here. JOE

Also, what are the terms of the 401(k) loan? Can you continue to make monthly payments if you were to become "seperated from service" or is it the loan due in full at that point?

If the former, do you have to leave your 401(k) with the company to make monthly payments (usually the case)? If the latter, what is the likelyhood you could payoff the loan? Your age and marginal tax bracket would also help us solidify some potential consequences.

Do you own a home (are HELOCs and HELs available)? What kind of loan terms do you expect to get from Chase?

Thanks Joe and Kastnna,

Sorry took me a day to gather info. It was a credit line from BofA on a 12% interest rate, I was paying $259.00 per month and I can still afford to pay that or little more.

I checked with my 401K plan advisor, I can borrough 18K on 9.25% bi- weekly payment through payroll which comes out as $173.00 p/p.chk, if I sperated from the company I have 90 days to pay it off, Chase offer on personal loan is 13%, I am 45 and own a home, you think HEL is the way to go, I also have a car paid off worth around $25k, should I re- finance my vehicle and go that route. Somehow I am keep thinking about

401K loan and pay back the interset to myself rather than to others, I guess wishful thinking.

Abid

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It sounds like you've been doing too much wishful thinking already, and living way beyond your means.

Sell the expensive car and use the proceeds to pay off your debt. You should have enough leftover to buy yourself a less expensive used car with cash, or try walking, riding a bike, or taking public transportation for a while, until you get out of the hole you've dug for yourself.

If you must borrow money, a home equity loan is usually the way to go, because of the preferred tax treatment on the interest. Borrowing from your 401(k) plan is robbing yourself of your retirement savings, and taking out a loan on a depreciating asset like a car is just a Dumb Idea generally.

-Sandra the cynic

Perhaps. While the equity loan may be partially deductible (I say "partially" since the amount of interest up to the Standard Deduction does not help), equity loan interest on proceeds not spent on the home is not deductible for the Alternative Minimum Tax. Oops.

-HW "Skip" Weldon Columbia, SC