Making biweekly payments on your mortgage is acknowledged as one of the best ways to lower the total cost of your home and shorten the time to payoff. Wouldn’t it be great if you could do that for all of your loans? The good news is you can. Biweekly payments aren’t just for mortgages anymore!
You can apply a biweekly payment program to any loan that you now pay monthly. The program works the same as it does for mortgages: Instead of making one full payment each month on your loans, you make a half-payment every two weeks. That adds up to 13 payments a year instead of 12. That extra money is periodically applied to principal, which reduces the interest. Bonus: You can save a ton of money on interest and shave years off the lifespan of your loan.
If paying your debts off sooner and saving money on interest sounds good, you can apply the biweekly mojo to many types of loans.
Student Loans: Could this be one of the solutions to our country’s student loan crisis? The amount owed on student loans exceeds $1.3 trillion — that’s trillion with a “t”! If you have $35,000 in student debt financed for 10 years at 4.66%, using biweekly payments will save $710 over the life of the loan, and just as important — using the AutoPayPlus loan payoff calculator — you’ll discover that debt could be paid off 10 months sooner. If you want to be debt free even faster, try using the loan calculator with extra payments to find out how much you’d have to add to each payment to meet your debt-freedom goal date.
Auto Loans: Next to a mortgage, auto loans are one of the largest monthly expenses for most families. How much would it lower your stress if you didn’t have a car loan to carry? You can pay off an auto loan faster and save money on interest using a biweekly payment program. If you borrowed $42,000 for five years at 3% to buy that truck you’ve been eying, by paying off the loan biweekly instead of monthly, you’d save close to $200 in interest and the early payment calculator reveals that the vehicle would be owned free and clear four months sooner. Helpful right?
Credit Cards: If you have a stubbornly high credit card balance, and you haven’t been able to work it down, consider this: Refinancing that debt and paying it biweekly could save you thousands of dollars. If you owe $15,000 and pay that off using a loan with a 10-year term and a 10% interest rate, your payments will be $99 every two weeks. You’ll save almost $700 in interest and pay the loan off 10 months earlier.
If you had all three types of loans — student, auto, credit cards — and enrolled all of them in a biweekly payment plan, you’d save almost $1600 in interest on just those loans. You’d also lower your effective interest rate, and you will have conquered those debts faster. Think about what you’d do with the money you’re not sending out each month in repayments (hint: vacation, college for your kids, retirement for you). Now smile, and get busy!
AutoPayPlus can help you pay down debt faster. Withdrawals from your account every other week fit conveniently with paychecks and your monthly budget, while an extra half payment twice a year toward principal reduces interest over the life of the loan. Please visit our website to check out the early payment calculator and learn more about this exciting program.