Determine how much you can afford to make an accelerated biweekly payment regularly. However, if your goal is to pay off your car loan amount early, biweekly payments in combination with extra principal payments can really help speed things up. If you have higher interest debt, it may make more sense - and cents - to direct your money toward those accounts instead of making biweekly car payments. While the average interest rate for borrowers in the subprime credit tier was 9.41%Ĭredit cards tend to have even higher interest rates to personal loans with the average APR of 21.40% in 2022. According to Experian, borrowers with excellent credit scores who financed a new vehicle in 2022 saw an average rate of 2.47%. If you have good credit your chances of securing a low auto loan interest rate are pretty good. You’ll need to consider if the small amount of time and money you’d save is worth it. With the most common car loan term being 72 months (or 6 years), an extra payment per year with biweekly payments would save you only about 6 months’ time. You’ll need to decide if this is worth it though. Since you’d be saving some money and making at least one extra car payment each year, it’s safe to say you can pay your car off faster with a biweekly payment plan. Do You Pay Your Car off Faster With Biweekly Payments? At the end of your loan term, you’d have paid $2,632.10 in interest saving $289.30. Let’s say you made biweekly payments the whole time instead of monthly payments. There are 60 months or five years left on your loan and your monthly payment is $382.02.Īt the end of your repayment term, you’ll have paid $22,921.39 total on your loan and $2,921.39 in total interest alone. Let’s say you have a $20,000 car loan at a 5.5% interest rate. The best way to determine how much you could save is by plugging your numbers into our auto loan calculator. Generally, the more you pay toward your auto loan, the more you can save on interest since you’d be chipping away at the principal balance faster. Then, the remainder of your payment will go toward the principal.
Another portion could go toward any fees or optional add-ons you agreed to when you financed the vehicle. Your car payment amount doesn’t just go toward the principal balance, a portion goes toward interest.
Biweekly car loan calc full#
That’s $453 more a year, or essentially one full extra monthly car payment.Ĭalculate Your Savings Can You Save Money With Biweekly Payments? So if you take your biweekly amount which is half of your monthly payment ($226.50) and multiply it by 26, you’d end up paying a total of $5,889 toward your car loan in a year. With a biweekly payment, you’d make 26 payments instead of 12 (52 weeks in a year divided by 2). If you pay $453 per month for a whole year, this adds up to $5,436 total paid toward your car loan ($453 x 12). Due to these “extra” weeks, you will naturally end up paying more on your car loan throughout the year if you stick to a biweekly payment schedule. Some months have five weeks, which is why if you get paid every other week you may receive three paychecks in one month. There are 52 weeks in a year but not all months have an even four weeks. Plus, you’d end up making 13 full car payments - or one extra payment - in one year. If you wanted to make biweekly payments, you’d start making payments of $226.50 (half of $453) every two weeks. For example, let’s say your auto loan is $453 per month. You can set up your auto loan payments this way, as well.Įssentially, you’d take your monthly car loan payment and split it in half, making that payment biweekly. It’s common among homeowners looking to make an extra mortgage payment to build equity and pay off their loan faster.
See Today's Rates The Difference Between Biweekly and Monthly Paymentsīiweekly is just a fancy way of saying every two weeks.
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