If you have a financial emergency, a 401(k) loan can be a better option than taking a bank loan due to the quick approval process. A 401(k) loan does not involve credit checks, and you can receive your money in days. Also, it charges a lower interest rate than a bank loan, and this interest you goes back to your 401(k) account.
On the downside, tapping into your 401(k) retirement savings is considered a bad idea since it could jeopardize your retirement income. The money borrowed from your 401(k) will no longer grow tax-deferred, and your money will not earn an investment return. Overall, do your best to avoid 401k loans and use other source of money.