Borrowing for RRSPs
Don't have enough cash on hand to make your maximum contribution? Or maybe you have unused RRSP deduction room from previous years. If so borrowing may be the solution for you.
With an Alterna Investment Loan, the amount you'll save on taxes is often more than the interest you'll pay to borrow. To maximize your RRSP benefit, we recommend that you immediately apply your tax refund to the loan to reduce your borrowing costs. You should also try to pay off the loan as early as possible.
See how borrowing over a one-year period can get you a tax refund that is much higher than the cost of the interest you pay:
| Loan | $3,500 |
Term | 1 year |
| Rate | 6% |
| Marginal tax rate | 41% |
| Payment | $302 |
| Cost of borrowing | $126.78 (and much less if you provide your income tax refund to the loan) |
| Tax refund | $1,435 |
Apply for an Investment Loan