(MONEY Magazine) – If after reading the previous story you feel emboldened to finance your next big-ticket purchase, your thoughts may turn to a pretty alluring lender: yourself. After all, it's likely that your 401(k) plan charges a hard-to-beat rate of around 9.5% right now, and you collect the interest.

Well, think again. For starters, if you leave your job before you've repaid the loan, you generally have no more than three months to settle the debt. Otherwise, your employer considers the loan a withdrawal, and you'll owe taxes on the money, as well as a 10% penalty if you're under age 59 1/2. Second, a loan eliminates one of your 401(k)'s biggest advantages, which is that you don't pay taxes on what you invest until you withdraw it. If you borrow from your 401(k), the money you use to repay the loan is taxed once as income--and again when you withdraw it. Finally, if you stop contributions until your loan is repaid, your 401(k) could be worth at least 20% less by the time you retire, according to a recent study by the General Accounting Office.

The best policy: Borrow against your 401(k) only if you can keep investing while you repay the loan and you've exhausted all other avenues of funding. Plus make sure what you hope to achieve with the loan is at least as important as living comfortably in retirement. "Too many people tap their 401(k) to buy a boat or truck," says Garrett Ahrens, an investment adviser at Balentine & Co. in Natchez, Miss. "During the time of the loan, your 401(k) could have doubled."

--Galina Espinoza