401(k) Loan Calculator

Evaluate your 401(k) loan options with our easy-to-use calculator. Understand how borrowing from your retirement fund affects your future savings and plan your loan repayment accordingly.

Monthly Interest Rate:

0.004167 %

Total Number Of Payments:

36.00

Monthly Payment:

$299.71

Description

The 401(k) Loan Calculator helps you estimate your monthly repayment amount if you choose to borrow from your 401(k) plan. By entering the loan amount, interest rate, loan term, and payment frequency, you can calculate the amount you’ll need to repay each period. This tool is useful for understanding the financial impact of taking a 401(k) loan.

Formula

To calculate the monthly payment for a 401(k) loan, follow these steps:

  1. Monthly Interest Rate:

    Monthly Interest Rate=Annual Interest RateNumber of Payments Per Year×100\text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{\text{Number of Payments Per Year} \times 100}
  2. Total Number of Payments:

    Total Number of Payments=Loan Term (Years)×Number of Payments Per Year\text{Total Number of Payments} = \text{Loan Term (Years)} \times \text{Number of Payments Per Year}
  3. Monthly Payment:

    Monthly Payment=Loan Amount×Monthly Interest Rate1(1+Monthly Interest Rate)Total Number of Payments\text{Monthly Payment} = \frac{\text{Loan Amount} \times \text{Monthly Interest Rate}}{1 - (1 + \text{Monthly Interest Rate})^{-\text{Total Number of Payments}}}

Steps to Calculate

  1. Determine the Loan Amount you wish to borrow from your 401(k) plan.
  2. Enter the Annual Interest Rate for the loan.
  3. Specify the Loan Term in years, indicating how long you plan to take to repay the loan.
  4. Enter the Number of Payments Per Year, typically 12 for monthly payments.
  5. Calculate the Monthly Interest Rate using the formula provided.
  6. Calculate the Total Number of Payments by multiplying the loan term by the number of payments per year.
  7. Calculate the Monthly Payment based on the formulas above to determine your repayment amount per period.

Facts About 401(k) Loans

This calculator helps you visualize the repayment obligations when taking a loan from your 401(k), making it easier to evaluate whether it’s the right financial choice.