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Finance
Benefits of Applying for a 401(K) Loan
Borrowing money from a 401(k) plan should be one of the first options to consider when you are looking at a short-term liquidity requirement. Ideal duration for borrowing this loan is typically a year or less than that. Applying for a 401(k) loan is a more viable option than choosing a title loan or a payday loan. Additionally, the accompanying high-interest rates of these options make a 401(k) loan a much financially smarter move in comparison. Considering the viability as mentioned earlier, here are four more benefits of applying for a 401(k) loan and borrowing a lump sum from it: 1. Convenience and short duration requirement For most 401(k) plans, procuring a loan is very easy. It does not warrant credit checks and is not accompanied by the filing of lengthy applications. Since no credit inquiry is made against you, your credit score remains intact. Depending on your 401(k) plan, you can procure a loan with just a few clicks on the website. Once you are done applying for a 401(k) loan, you will get your check within a short-stipulated duration, without your privacy hampered. 2. Flexibility in repaying the loan Typically, most 401(k) plans come with a five-year amortization schedule for repayment.
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