401(k) Loan Payoff Calculator: Time and Interest to Clear It
See how long a 401(k) loan takes to clear at a fixed monthly payment — and remember that the hidden cost is the foregone investment growth on the borrowed amount.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year payoff schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Time to pay off | Total interest | Total paid |
|---|---|---|---|
| $15k · 8% · $300/mo | 5y 2m | $3,306.70 | $18,306.70 |
| $30k · 9% · $600/mo | 5y 3m | $7,741.31 | $37,741.31 |
| $5k · 7.5% · $150/mo | 3y 2m | $624.38 | $5,624.38 |
| $50k home loan · 8% · $500/mo | 13y 10m | $32,670.64 | $82,670.64 |
How This Calculator Works
Enter the outstanding loan balance, the plan's interest rate (typically prime + 1% to 2%), and the monthly payment (usually deducted from paychecks automatically). The calculator simulates interest and payments month by month and counts the months to payoff. Standard plan loans must clear within 5 years (or longer for primary-home loans).
The Formula
Debt Payoff Time
B = balance, P = fixed monthly payment, r = monthly rate (APR ÷ 12), n = months to clear
Worked Example
A $15,000 401(k) loan at 8% APR paid down at $300 a month clears in 62 months and adds about $3,307 in interest — interest you pay to your own account. The hidden cost: if the market returned 8% over the same period, the $15,000 you borrowed would have grown by roughly $5,400. The interest paid to yourself doesn't replace that foregone growth.
Key Insight
401(k) loans look attractive because the interest goes back into your own account. The catch is foregone investment growth — the borrowed amount is parked in cash earning loan interest instead of compounding in the market. In an 8% market with an 8% loan rate, the result is approximately break-even; in a stronger market, the loan costs you. The bigger risk: leaving your employer with the loan outstanding triggers an immediate payoff demand or treats the balance as a taxable distribution.
Frequently Asked Questions
How much can I borrow from my 401(k)?
The lesser of $50,000 or 50% of your vested account balance. Some plans cap lower or restrict reasons. Primary-home loans can sometimes exceed the standard limit.
Is interest paid to me or to the lender?
To you — the interest goes back into your 401(k) account. That sounds free but isn't, because the principal you borrowed is out of the market during the loan period, foregoing potential investment growth.
What if I leave my employer?
Most plans require immediate payoff (within 60 to 90 days). If you can't pay, the outstanding balance is treated as a taxable distribution — adding ordinary income tax plus a 10% early-withdrawal penalty if you're under 59½. This is the biggest 401(k) loan risk.
Does the loan affect my credit score?
No — 401(k) loans don't appear on credit reports. They don't help build credit, but they also don't hurt your score if you miss payments. The consequence of missed payments is taxable-distribution treatment, not credit damage.
Should I take a 401(k) loan?
Generally a last resort after savings, HELOC, and personal loans. The job-loss risk is the killer issue — losing your job with an outstanding 401(k) loan turns it into a tax-and-penalty event. Use only if you're confident in continued employment.
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Methodology & Review
The payoff is simulated month by month: interest is charged on the balance at the plan's rate (often prime + 1%), the fixed payment is deducted, and the months are counted until the balance reaches zero. Interest is paid to your own account, but the borrowed amount is out of the market — foregone growth is the hidden cost not modeled here.
Written by Ugo Candido · Last updated May 17, 2026.