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Any interest you pay in is added to your balance - you're paying yourself that interest, not a bank.

But you end up paying taxes twice on the money you're putting back into your 401K - you're repaying the 401K loan with after-tax dollars, and once you hit 59.5 and can withdraw, you pay taxes on money you withdraw from your 401K - so you end up paying taxes 2X on that portion of money you borrowed from the 401K.
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