§ Calculator · Loans

RRSP loan

What this is

Borrowing to top up an RRSP, then using the refund against the loan.

Banks aggressively pitch RRSP loans in February-March. The argument: contribute now, deduct against this year's income, get a tax refund, throw refund at loan. Math works ONLY if your marginal rate now is higher than at withdrawal.

·Best when you have unused RRSP room AND you're in a high bracket today.
·Bad when your marginal rate today < your expected retirement rate.
·The refund applied against principal cuts the loan term and interest dramatically.

Loan amount (CAD)Rate (%)Term (months)Marginal tax rate

Apply refund against principal

Monthly payment

$675

Expected refund

$6,489

Total interest

$680

Months to payoff

Effective annual cost

$340

RRSP loan interest is NOT tax-deductible (unlike an investment loan in non-registered). Run the numbers vs simply contributing what you can afford monthly without the loan.

Disclaimer

Educational, not financial advice. Output is generated by an AI assistant using simplified assumptions. Tax rates, contribution limits, and benefit amounts change annually; confirm with a CFP, CPA, or the relevant Canadian regulator (CRA, FSRA, OSC, IIROC) before acting.