A 401(k) loan is cheap on paper, but the real cost is the growth you miss.
This calculator estimates the true cost of a 401(k) loan by projecting the market growth you would give up while the borrowed money sits outside your investments.
When you borrow from a 401(k), the withdrawn amount stops earning market returns until you repay it, even though you pay interest back to your own account. The real cost is the gap between the return you would have earned in the market and the loan's rate. This tool projects that foregone growth over the repayment period so you can see the opportunity cost.
Beyond lost growth, a 401(k) loan can carry risks the calculator does not model, such as repayment becoming due if you leave your job and possible taxes and penalties if it defaults. Repayments are also made with after-tax dollars, which can add to the effective cost. Compare this estimate against other borrowing options before deciding. Not financial advice.
Not entirely, because the borrowed money misses market gains that often exceed the interest you pay back.
Many plans require rapid repayment, and an unpaid balance may be treated as a taxable distribution with penalties.
No, it estimates only the foregone market growth, so the full cost of a default could be higher.
See the exact formula and a worked example on our methodology page.