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If you make biweekly payments, you lose the opportunity to invest them. You should ask yourself, what else could you be doing with the $2,000? In the example, if you, the borrower, elects to pay every other week, you'll pay $2,000 more per year than if you make 12 monthly payments. This is an intentional design feature, not a bug!Ī biweekly loan and making extra payments will save you even more money.īut is doing either the right, long term, financial strategy? Forgone Opportunity Costs - They Could Cost You!Īt the top of this post, when explaining how a biweekly payment loan works and how it saves interest charges, I showed you some simple arithmetic. Note: In keeping with the theme of this calculator, the extra payment for the biweekly loan will be 1/2 the amount you enter. Or you may want to see how much the biweekly loan will save over the conventional loan when you add extra payments to get an additional saving boost. The idea here is, you may want to compare a debt paid biweekly without additional payments to a debt paid monthly, where you do plan to make extra payments. To see how much you'll save, you may apply the extra payment to either the monthly loan or the biweekly loan, or both. This calculator supports both lump sum or one-time extra payments as well as a series of additional payments. The "Loan Summary" shows how much interest the biweekly loan saves the borrower.Įven making one extra payment will save you interest. Doing this is called prepaying principal. When you decrease the amount owed, you lower the amount of interest due. If you have the available cash flow, you can make extra payments which are used to reduce the loan balance.
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