How much time and interest can you take off your car loan?
You can save money on your auto loan by making accelerated payments. The sooner you pay off your loan, the less interest you end up paying. By adding your financing details to the calculator, you can test out bi-weekly payments. You can see how much money you will save and how much faster you can pay off your car loan. You can also find out how to set up bi-weekly payments with your creditor.
Bi-weekly payments and your auto loan
Whether you are looking to build up your savings, or just get out of debt, you can save on interest with accelerated car payments. A biweekly payment structure requires you to make half of a monthly payment every two weeks.
Gradually the weeks will add up, and by the end of the year, you will have made the equivalent of one extra month of payments. That means instead of making 12 full payments in a year; you actually make 13. That’s because there are more than four weeks in a month (4.3 on average). These extra payments reduce the term of your loan too!
For example, let’s take a $50,000 auto loan with a 5-year term. Using bi-weekly payments, you can pay off the loan five months sooner and save almost $1000 in interest.
The terms of a loan repayment may vary depending on your agreement. Most creditors will offer bi-weekly payment plans, but they may charge you setup fees and service costs. Then, once you agree to an accelerated schedule, it can be difficult to go back to monthly payments. You could damage your credit if you can’t keep up with the new billing structure.
The best way to go about bi-weekly payments is on your own terms. You can add half a monthly payment to your current dues every six months, or an extra full payment every twelve. Just write in the memo, apply to principle. It can help to put away a little bit of money for the additional dues in smaller increments. Just divide your regular car payment by twelve and transfer that amount to your savings each month. You could even make some interest on your holdings in the meantime.
Let’s use the same example as above. The monthly payment on a $50,000 car loan, over a 5-year term, is $1,019.81. That figure divided by twelve equals $84.98. Putting away $85 per month could help you eliminate your debt faster and save on interest charges.
What is this calculator for?
The bi-weekly auto payment calculator is made to help you save your hard-earned money. When using this tool, it is essential to have some specific information on hand. This includes your first payment date, loan term, and the total loan amount. You will need the interest rate on the loan and have an option of monthly pre-payments for more savings.
When added to the calculator, you can see various reports on your payments. The system will show you the total interest paid on the loan, for both bi-weekly and monthly schemes. You can see how the different payment strategies will reduce your term and save your money.
How to use the bi-weekly auto loan calculator
Using the calculator is straightforward. Referencing your purchase records and loan agreement can be helpful. You can quickly locate your first payment date on your auto contract.
Step 1. Add your first payment date to the first line of the calculator. You can use your keyboard or try the calendar function to make this easier. The first payment date will not always coincide with when the loan agreement was executed, so you should verify this information.
Step 2. On the second line of the calculator, you should add the loan term in months. Common terms include 24 months (two years), 36 months (three years), 48 months (four years), and 60 months (five years). Longer terms are becoming increasingly more common.
Step 3. Next, the third line requires the original loan amount. The loan amount is the total cost of the car, after the initial down payment. You can find this on your auto purchase agreement, as most dealerships provide in-house financing. Sometimes you can get a better offer through credit union financing versus the dealership.
Step 4. The fourth line, interest rate, is the amount of interest that is owed on the loan. The interest rate is specified before you purchase the car. There are different interest rates for each term length. Plus, your credit score can influence the rate you are offered.
Step 5. Finally, there is an optional factor of monthly prepayments. Using this field will allow more funds to be allocated towards your auto loan repayment.
Once all of these details have been added, you can view the integrated results.
To the right of the inputs, payments and total interest are calculated for bi-weekly and monthly arrangements. This smart summary shows how the different payment strategies affect the interest on the loan.
Below the inputs is a prompt of how much time will be taken off of your loan with the accelerated payments. This figure tells how much faster you can be free of your auto debt.
Next, there is a tab called ‘bi-weekly repayments payoff‘. This graph is a comparison of the payments. You can follow bi-weekly billing in blue, versus, monthly payments in green. You can see how each billing structure reduces the total loan balance. The graph outlines the time in months, versus the amount of the loan, to show the loan payoff.
Finally, the second tab is a detailed table of the auto loan payoff schedule. This table lists all payments by month. It is easier to compare the savings when you can see the exact loan balance. You can expand any of the columns and highlight any row by selecting it.
Remember, that a loan calculator is only as accurate as the information given. Don’t forget to bookmark this page and save it to the home screen of your smartphone. You can return as your situation changes or as you purchase a new car. If you found this page useful, you can promote us on social media by using the share feature.