I have seen many money experts and the most intelligent of people trip on this one.... They say do not take a 401K Loan...In my mind 401K loan is one the best sources of funding out there.....Let me explain. Myths about 401K loan : 1. Double Taxation : You take Pre-Tax Dollars as Loan and Pay in Post-Tax Dollars One of the biggest myths out there.....the way a 401K loan works is you take money from your 401K account (upto 50% of your 401K balance) which is pre-tax money ...and pay back through your after-tax pay-check deductions with interest (typically much lower than any bank loan ..currently 3.75% on Vanguard).... When ever some one says this to you ....simply ask them when you take a loan from a bank..do you pay in pre-tax or post-tax dollars?...clearly post tax dollars..... If they are not convinced explain it to them this way...lets say you take 10K out of your 401K account as a loan .....