When "13" is Not Unlucky
In most cases, you can save a lot of time and money by simply making 1/2 of your normal monthly loan payment every two weeks.
That's because doing so results in making one extra loan payment per year (13 instead of 12) without hardly noticing the difference in your cash flow.
The following mini-calc will show you how much your bi-weekly payment would be:
As you will see, when using the full calculator, this small change in your loan repayment method can make a huge difference in the amount of interest you will end up paying.
But before you switch to making bi-weekly payments, be sure to check with your lender to make sure they allow you pay off your loan ahead of schedule. Some of the sneaky devils just hold your extra payments in escrow and apply them based on the original monthly amortization schedule.
How to Convert Bi-weekly to Monthly
In case you need to convert bi-weekly payments to monthly before using the calculator, here is how I make the conversion, along with a mini calculator that will do the conversion for you:
| Example: Convert $500 bi-weekly payment to monthly equivalent. | |
|---|---|
| Average number of days in a year ((365 x 3) + 366) ÷ 4): | 365.25 |
| Number of weeks in a year (365.25 ÷ 7): | 52.1785714 |
| Number of biweeks in a year (52.1785714 ÷ 2): | 26.089 |
| Multiply biweekly payment amount by biweeks/year (26.089 x $500): | $13,044.64 |
| Monthly equivalent ($13,044.64 ÷ 12): | $1,087.05 |