While evaluating a short term RRSP loan like this one, the numbers seem good on paper. But:
If I need to save $1,000 in tax deductions, I need to put the entire borrowed money into the RRSP before I start making any loan payments. But the loan payments begin as soon as I take the loan – so basically each monthly payment for $220.00 comes from my savings.
I gather that the savings shown at the end is to be taken with a grain of salt. If I just took those payments for $220, saved it over a year and put it in the RRSP, then the savings would be 40% of $2,640 = $1,056, which is much greater than $860. So it seems to me that this kind of loan is never a good idea?
Am I missing something? Maybe if the interest on the loan were tax deductible, then it might make sense, but I don't think that is the case here.