10/13/2026
Have you ever thought about using your investments to buy something instead of taking out a loan?
Debt dilemma: What You Need to Know Before Raiding Your RRSP For a Car Purchase, a newspaper article in The Province, shows you how to compare the two options:
“Using savings instead of a loan can seem cheaper and simpler, but an RRSP withdrawal brings taxes, permanently lost contribution room, and years of foregone growth.
When a car needs replacing, the better choice depends on comparing those long-term costs with the true cost and affordability of a loan. Here is a practical way to compare the two options.
A car loses value whether you pay with cash, savings, an RRSP withdrawal, or a loan. None of those payment methods make it an investment. The key difference is what happens to the money you do not spend. If you finance the car, your RRSP remains invested and can continue growing tax-deferred. If you withdraw from the RRSP, the money leaves your account permanently, the contribution room is not restored, and you give up any future growth it might have earned.
Because the car depreciates either way, it’s best to compare the loan’s total borrowing cost with the taxes and the long-term opportunity cost of the withdrawal.”
It’s worth a read, go check it out!
