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BlogBlogThink Before You Borrow – Why You Shouldn’t Borrow from Your 401K

Think Before You Borrow – Why You Shouldn’t Borrow from Your 401K

Savings NesteggMany people these days have some type of 401K through their job, some others may have one voluntarily. When cash is tight and you need money, for many Floridians, one of the first thoughts they have is to borrow from their 401K. Though it is true that you will get the money you need, there are some things that you need to keep in mind before doing this.

Some people think it is a good idea to borrow from your 401K. After all, you are borrowing from, and paying interest to, yourself. However, this isn’t as good as it sounds. There are fees associated with borrowing from your 401K, most notably an administration fee of some kind. This can be several hundred dollars and will limit the amount you can take out.

Another thing that you should be aware of is your payment history. For example, if you know that you have problems with paying loans back, this may not be a great option for you. If you miss just one payment, you will put this loan into default and owe taxes on it. On top of that, if you take this loan out when you are under the age of 59.5, you will be charged a 10% fee.  You should also be aware, if you lose your job for some reason, why you are paying the loan off, you will owe the balance in 60 days.

As you can see, a loan from your 401K may not be the best option for everyone. Luckily there are other things that you can do in order to get the money you need at low rates. One of these is to choose a car title loan. You will find that a car title loan is very easy to get, you can get your money in a matter of hours and you will easily be able to pay it off in the short term.

If you are interested in learning more about a car title loan, you will need to contact a local company like Embassy Loans. Contact them today and see how this type of loan can be a better option than borrowing from your 401K.



Embassy Loans is a leading provider of auto title loans since 2005

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Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

Monthly Interest Rates range from 1.5% to 2.5% (18% to 30% APR), with 15-18 Month Terms.

No Prepayment Penalties!

Embassy Loans uses “Title Loans” for advertisement purposes only and provides auto equity loans. Embassy Loans Inc. is licensed under the “Florida Consumer Finance Act” under Florida Statute 516 and as such Embassy Loans is exempt from any licensing requirements under the “Florida Title Loan Act” to the extent that any of Embassy Loans’ activities involve the making of a loan of money to a consumer secured by bailment of a certificate of title to a motor vehicle.

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Frequently Asked Questions

What is an Auto Equity Loan?

An auto equity loan, sometimes known as a car title loan or a car equity loan, is a type of loan that allows you to borrow money by using your vehicle as collateral. The loan is secured by your vehicle, meaning you agree to use the equity in your car to back the loan. 

What is an Unsecured Personal Loan

An unsecured personal loan is a loan that does not require collateral. Funds are provided based on your credit worthiness and your ability to repay. 

What Is the Credit Builder Program

The credit builder program is designed to help individuals establish or improve their credit score with the primary purpose of building a positive credit history through regular payments.

Can i have more than one Loan at a time?

Embassy Loans can only extend one loan at a time and it’s advisable to start with one and focus on making payments in a timely manner to prevent default.

What happens if I miss a payment?

Missing a payment can have negative consequences, including late fees, a drop in your credit score, and potential default on the loan. Consistent, on-time payments are crucial to benefit from the program.