401k Loan Payment Calculator
Calculate your 401k loan payment and the true opportunity cost of borrowing from retirement savings. See monthly payments and lost investment growth.
💰 401k Loan Payment Calculator
Free · Instant · No registration required
⚠️ This calculator provides estimates for educational purposes only. Actual loan payments may vary based on your lender's specific terms, fees, and your credit profile. Consult a licensed financial advisor before making major financial decisions.
About This 401k Loan Payment Calculator
A 401k loan lets you borrow from your own retirement savings — typically up to 50% of your vested balance or $50,000, whichever is less — and repay yourself with interest. While the interest goes back to your account, borrowing from your 401k has significant hidden costs that this calculator helps you quantify.
The biggest cost of a 401k loan isn't the interest rate — it's the opportunity cost: the investment returns you miss while that money sits out of the market. If the market returns 7–10% annually and your loan rate is 9%, you may be no worse off from a rate perspective, but you're still losing decades of tax-deferred compounding on the borrowed amount.
How to Use This Calculator
Enter the amount you want to borrow — maximum is $50,000 or 50% of your vested 401k balance.
Enter the 401k loan rate from your plan documents — typically Prime Rate plus 1%.
Enter your expected investment return — use a conservative 6–7% for a long-term average.
Click Calculate to see your payment and the true opportunity cost of removing money from your retirement account.
How the Payment Formula Works
Our calculator uses the standard loan amortization formula used by all US banks, mortgage lenders, and credit unions:
// Variables: M = Monthly payment amount P = Principal (loan amount) r = Monthly interest rate (APR ÷ 12 ÷ 100) n = Total number of monthly payments (term in months)
Each payment covers two components: interest (charged on your remaining balance) and principal (which reduces your balance). In the early months, more of your payment goes toward interest. As your balance decreases, more goes toward principal — this is called front-loaded interest amortization.
Key Considerations Before Borrowing From Your 401k
Borrowing from your 401k can seem like an easy solution in a financial pinch — you are borrowing from yourself and no credit check is required. However, this option comes with hidden costs that many people underestimate. Understanding those costs before you borrow is critical to making a sound financial decision.
The most significant cost is lost investment growth. Money withdrawn from your 401k stops compounding. On a $20,000 loan over 5 years, assuming a 7 percent average annual return, you could miss out on roughly $6,000 to $8,000 in portfolio growth. You pay that cost even though you are technically repaying yourself — the opportunity cost is real.
There is also employment risk. If you leave your job — voluntarily or not — most plans require full repayment within 60 to 90 days. If you cannot repay, the outstanding balance is treated as a taxable distribution, triggering income taxes plus a 10 percent early withdrawal penalty if you are under age 59 and a half. Always model the worst-case employment scenario before borrowing.
That said, 401k loans have real advantages: no credit impact, no underwriting delays, and the interest paid goes back into your own account. For short-term needs where you are confident in your employment, it can be a reasonable bridge. Our Personal Loan Calculator shows what unsecured borrowing would cost with your credit profile — sometimes a personal loan is cheaper when you factor in lost investment growth. The general Loan Payment Calculator helps you compare repayment scenarios side by side.