What Is A Bi Weekly Payment Plan?
A bi-weekly payment plan does not require you to get a new loan or drastically change your current loan. All you are doing is making the payment in a different way. Instead of the traditional 12 monthly payments per year, you are now making 26 payments per year. You take the amount that you would have paid monthly, split it in half, and pay that amount every 2 weeks. Then you will make an extra full monthly payment. You won't even feel the difference in money.
Most bi-weekly payment plans are set up through your car lender. In some cases you may have to pay a fee to have them set the program up for you.
Why Does A Bi Weekly Program Help You?
There are several ways that a bi-weekly plan will help you, but the best way to show you is to give you an example. You can use a loan calculator to get the information on your specific loan needs. Here's an example of how much you could save.
- Original loan amount: $28,000
- Interest rate: 7.5 percent
- Term of the loan: 5 years
- One payment per month: $561.06 per month
- Two payments per month: $280.53 every two weeks
Here are the benefits of paying in these terms. Consider this for your loan.
- Instead of paying on the loan for 60 months, you will pay it off in 54.5 months.
- Instead of paying a total of $33,663.75 with interest included, you will pay a total of $33,125.42. That is a savings of $538.33.
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A bi-weekly payment plan can really help you to save money. In many ways, this type of repayment plan will not affect you in any way. In the example above because you are paying every two weeks instead of monthly, you can save money without feeling the pain of making that extra payment. You can even have these payments automatically withdrawn from your bank account making it even more easy. But, how does this help you?
Use an auto loan calculator to help you to see the benefits for your specific loan. What you will find is that no matter where you are in your loan, what you pay or how you pay, you are likely to save money. You do not need to have a new loan to get started with this type of savings plan and you do not need to take a guess at your savings because the auto loan calculator can help you to see what it is exactly.
Many bi-weekly repayment plans can actually help you in other ways. For example, if you want to make an additional payment each month to your principle balance, they can often accommodate this. For example, perhaps you would be making a $280.53 payment every two weeks. By rounding that up to $300 and applying that extra to your principle, you will pay off your loan even faster and for less. In addition, for many people, having smaller payments to make each month is easier to budget for. Many can afford to do this and do not realize it.
Take into consideration how a bi-weekly repayment plan can help you. You may find quickly that it is the right way for you to save a considerable amount of money on the loan that you already have in place. Use an auto loan calculator to help you to see the sheer savings that you could be getting.