- Introduction
- Borrowing from Your 401(k) Plan
- Penalty-Free IRA Withdrawals
- Borrowing from Your Brokerage Account
- Life Insurance Loans
- Business Loans
- Personal Loans
- Borrowing from Relatives or Friends
- Quick Comparison of Borrowing Options
Borrowing Considerations
If you are considering borrowing to meet your objectives, you will have to go through a series of steps as part of the borrowing process:
- Make sure you explore other alternatives before deciding to borrow money.
- Take a look at your current debt situation to see if you can financially handle more debt.
- Once you decide to borrow, look at all the different sources of funds that are available to you.
The table below summarizes aspects of different ways you can borrow money.
|
Source of Funds |
Interest |
Fees |
Availability |
Tax-Deductible Interest |
Risk Factors |
|
Refinance Home Mortgage |
If market rates are lower than your current rate, consider this option. |
Varies |
Fairly easy |
Generally yes |
Risk of losing home if in default |
|
Home-Equity |
Typically lower than most other loans |
Low |
Easy |
Generally yes |
Risk of losing home if in default |
|
401(k) Plan |
Fairly low |
Minimal, if any |
Easy |
Generally no |
Risk of depleting retirement fund |
|
Margin Loans |
Fairly low |
Minimal, |
Easy |
No, unless money is used to purchase investments |
If market value of collateral declines, you may have to make up the difference in cash |
|
Life Insurance |
May be low |
Depends on insurance company |
Easy if you have sufficient cash value in your policy |
Generally no |
If loan is not repaid, death benefits will be reduced and interest on unpaid amount will continue to compound. |
|
Business Loan |
Moderate |
Depends on purpose of loan |
Limited |
Yes |
Business assets may be at risk |
|
Secured Personal Loan |
High |
Minimal |
Limited |
Generally no |
Collateral at risk |
|
Unsecured Personal Loan (e.g. credit cards) |
Highest |
Minimal |
Limited |
Generally no |
Temptation to mount up expensive debt quickly |
|
Relatives or Friends |
Varies |
None |
Limited |
Generally no |
Jeopardize relationships |
- ARE NOT A DEPOSIT
- ARE NOT FDIC-INSURED
- ARE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- ARE NOT GUARANTEED BY THE BANK
- MAY GO DOWN IN VALUE
Important information about procedures for opening a new account
To help the government fight the funding of Terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
What this means to you: When you open an account, we will ask you for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Investment products are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Insurance products offered through Osaic Institutions, Inc.
