Auto Loan Calculator Bi Weekly vs Monthly
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Reviewed by Calculator Editorial Team
When you take out an auto loan, you have the option to make payments bi-weekly (every two weeks) instead of monthly. This calculator helps you compare the two payment schedules to determine which option saves you more money over the life of your loan.
How Bi-Weekly Payments Work
Bi-weekly payments are essentially monthly payments divided into two equal installments. Most lenders offer this option, and it can provide several benefits:
Key Benefit
Bi-weekly payments reduce the total interest paid on your loan compared to monthly payments because you're paying more frequently throughout the year.
Here's how it works:
- Your lender calculates your monthly payment amount.
- They divide this amount by 2 to get your bi-weekly payment.
- You make payments every two weeks instead of once a month.
- You'll make 26 payments in a year (instead of 12) and pay interest on the loan for fewer days.
Bi-Weekly Payment Formula
Bi-Weekly Payment = Monthly Payment ÷ 2
For example, if your monthly payment is $300, your bi-weekly payment would be $150. You'd make this payment every two weeks for 26 payments in a year.
Bi-Weekly vs Monthly Comparison
Let's compare the two payment schedules using a $20,000 loan at 5% APR for 5 years:
| Payment Type | Payment Amount | Total Payments | Total Interest | Total Cost |
|---|---|---|---|---|
| Monthly | $355.25 | 60 | $2,432.20 | $22,432.20 |
| Bi-Weekly | $177.63 | 130 | $2,232.20 | $22,232.20 |
In this example, choosing bi-weekly payments saves you $200 in interest over the life of the loan. The total cost is slightly lower with bi-weekly payments because you're paying interest on the loan for fewer days.
Example Scenario
For a $30,000 loan at 4.5% APR for 60 months:
- Monthly payment: $537.67
- Bi-weekly payment: $268.84
- Total interest saved: $1,200
- Total cost difference: $1,200
These savings can add up significantly over the life of your loan, especially for larger loans or longer terms.
Using the Calculator
The calculator on the right allows you to compare bi-weekly and monthly payments for your specific loan scenario. Here's how to use it:
- Enter your loan amount in the first field.
- Enter your annual interest rate (APR).
- Enter the loan term in years.
- Click "Calculate" to see the comparison.
The calculator will show you:
- Your monthly payment amount
- Your bi-weekly payment amount
- The total interest paid with each option
- The total cost of the loan with each option
- A chart comparing the two payment schedules
Important Notes
- Not all lenders offer bi-weekly payments.
- Your lender may charge an origination fee.
- Bi-weekly payments may not be available for all loan types.
Frequently Asked Questions
Is bi-weekly better than monthly?
Yes, bi-weekly payments are generally better than monthly payments because you pay interest more frequently throughout the year, which reduces the total interest paid on the loan.
How much can I save with bi-weekly payments?
Savings vary depending on your loan amount, interest rate, and term. Typically, you can save $100-$500 or more in interest by choosing bi-weekly payments.
Do all lenders offer bi-weekly payments?
No, not all lenders offer bi-weekly payments. It's important to check with your lender to see if this option is available for your specific loan.
How does bi-weekly affect my credit score?
Making bi-weekly payments on time will have a positive impact on your credit score, just like making monthly payments on time. The frequency of payments doesn't affect your credit score.