Average person with an outstanding 401(k) loan owes $9,700. On the surface, a 401(k) loan may sound like a good way to borrow money. After all, you’re paying yourself back with interest, right? However, keep in mind that over the long run, the stock market has generated annual returns of more than twice the average 401(k) loan interest rate — so you could actually be depriving yourself of valuable compound gains.