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With new car loans increasingly on the rise, this strategy has become increasingly relevant.
For larger loan amounts, the interestsavingsthat bi-weekly payments could provide could also be greater.
You make an extra payment each year so you pay off your principal faster, paying less interest.
In these loans, interest is accrued daily on the outstanding principal balance.
By paying more often, you are preventing interest from accruing between payments.
Additionally, some people may also need the discipline of making payments more often than once a month.
Nonetheless,not all loansnor lenders use bi-weekly payment.
Some states allow pre-computed simple interest loans with fixed interest rates, so paying more often doesnt lower them.
For most simple interest loans, bi-weekly payments can significantly reduce both metrics.
You could save over $500 in interest and pay off your loan about five months earlier.
the interest for a given month in the term of a loan has a set amount of interest.
In such cases, sticking to monthly payments might be more practical.
Holgate pointed out, Bi-weekly payment loans are not very common.
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