Amortization
Biweekly Payments
Interest Only Payments
Biweekly Loan Payment CalculatorUse this calculator to quickly estimate regular amortizing loan payments for weekly, biweekly, semi-monthly, or monthly payments. When you change any inputs the calculator will automatically return the estimated payment along with the total interest you will pay over the life of the loan.
Tthis calculator uses regularly amortizing payments. Use our accelerated biweekly calculator if you want to use the 13-month method to repay your loan faster.
Guide published by Jose Abuyuan on February 14, 2020
When you take out a loan, lenders usually require a 12-month billing schedule. And for the most part, paying once a month is convenient. It allows you to send the same amount at a fixed date, making it easy to track your loan payments.
But apart from the standard monthly payments, did you know you can change your payment schedule? Specifically, you can choose a bi-weekly loan payment plan. For other people, paying every two weeks is actually more manageable. It allows them to synchronize their bi-weekly payment dates with their salary's pay period.
In this guide, we'll discuss how bi-weekly loan payments work, as well as how to calculate it yourself. We'll also compare them with monthly payments and accelerated bi-weekly payments to help you assess which option works better for you.
Bi-weekly loan payments are paid every two weeks (that's every other week) to your lender. It takes advantage of a 52-week schedule which is equivalent to 26 payments. When you add up your payments, you actually make 13 loan payments annually. In contrast, a regular monthly payment only generates 12 payments a year.
How does it affect your loan status? Following a bi-weekly payment schedule allows you to pay a bit more money on your loan. It helps save a bit of interest cost and may remove a few months on your loan term.
To give you a better idea, let's suppose you have a 5-year car loan. The table below compares interest and time savings on monthly loan payments versus bi-weekly payments.
Car Loan
| Loan Details | Monthly Payments | Bi-weekly Payments |
|---|---|---|
| Payment amount | $615.50 | $284.08 |
| Total interest cost | $6,929.76 | $6,859.78 |
| Interest savings | none | $69.98 |
| Loan pay-off time | 5 years | 4.99 years |
| Time saved | none | Less than a month |
*All loan calculations on this page are for the principal and interest portion of the loan. These calculations exclude things like loan application fees, vehicle registration costs, and sales tax.
The table above shows you can save $$69.98 in interest when you make bi-weekly payments. It can also remove around less than a month from your loan term.
While it does not reduce your loan balance or payment duration very much, there are people who prefer this setup. One, it's easy to manage loan payments when your billing schedule corresponds with your bi-weekly pay period.
Once you receive your salary, you can immediately set it aside to pay your loan. If you tend to forget payments once a month, this billing schedule obliges you to keep track of your payments every other week.
Second, since you're getting the amount straight from your paycheck, it eliminates the possibility of spending that money on other things. Bi-weekly payments will also not feel as heavy on your pocket, even though you are essentially making 13 payments a year. The amount is actually a little less than half of your regular monthly payment. If you think this is a good way to make sure you cover your loan payments, then consider this strategy.
The drawbacks? While some people are more comfortable with a bi-weekly payment plan, others find it too taxing to pay every other week. If you do not receive your salary on a bi-weekly basis (others are paid semi-monthly or monthly), you can still use a bi-weekly payment schedule. The good news is banks can automate bi-weekly payments. Just make sure your lender is receiving them on time.
Planning to shift to a bi-weekly payment schedule? Some lenders impose additional fees when you change your billing schedule. Meanwhile, other lenders do not offer bi-weekly payment options at all. It's best to clarify with your lender before making the switch.
Bi-weekly loan payments differ from accelerated bi-weekly loan payments. Though you may encounter them being mentioned interchangeably, these two concepts are not the same.
Bi-weekly payments are calculated using the standard amortization formula. The resulting payment amount is also slightly lower compared to its accelerated counterpart. The standard amortization formula is also used to compute payments made daily, weekly, semi-monthly, monthly, quarterly, semi-annually, and annually.
Standard amortization formula:
A = P*(r(1+r)n) / ((1 + r)n – 1)
Where:
On the other hand, an accelerated bi-weekly payment is derived by using the standard amortization formula and dividing its quotient by 2. The equation is as follows:
A = [P*(r(1+r)n) / ((1 + r)n – 1)] / 2
Essentially, we divide the monthly payment in half to calculate the accelerated bi-weekly payment. When you make 26 payments, this results in 13 whole payments annually. The larger payment literally accelerates debt reduction and shaves years off your loan term. Consequently, this translates into greater overall interest savings.
For an easy way to compute accelerated bi-weekly payments, use our bi-weekly vs. monthly loan calculator.
To illustrate, the table below shows how much interest and time you can save with accelerated bi-weekly payments for a 30-year mortgage. This is compared to monthly and bi-weekly payments.
Mortgage
| Loan Details | Monthly Payments | Bi-weekly Payments | Accelerated bi-weekly Payments |
|---|---|---|---|
| Payment amount | $1,135.58 | $524.11 | $567.79 |
| Total interest cost | $208,808.08 | $208,305.36 | $167,304.59 |
| Interest savings | None | $502.72 | $41,503.49 |
| Loan pay-off time | 30 years | 29.96 | 24.83 years |
| Time saved | None | Less than a month | 5.16 years |
The above table shows that you can save $502.72 in total interest with bi-weekly payments. On the other hand, you can save $41,503.49 in total interest if you make accelerated bi-weekly payments. By just adding $43.68 to your bi-weekly payment amount, you're able to remove 5 years and 2 months off your loan term. But with bi-weekly payments, it only removes less than a month off your term. This example illustrates how accelerated bi-weekly payments can help pay off your debt sooner.
Likewise, we included the previous car loan table and updated it with accelerated bi-weekly payment details. You can compare the difference in time and interest savings below.
Car Loan
| Loan Details | Monthly Payments | Bi-weekly Payments | Accelerated Bi-weekly Payments |
|---|---|---|---|
| Payment amount | $615.50 | $284.08 | $307.75 |
| Total interest cost | $6,929.76 | $6,859.78 | $6,182.50 |
| Interest savings | none | $69.98 | $747.26 |
| Loan pay-off time | 5 years | 4.99 years | 4.5 years |
| Time saved | none | Less than a month | 6 months |
Based on the table, you can save $69.98 in interest with bi-weekly payments. But with accelerated bi-weekly payments, you can save $747.26 in overall interest. Bi-weekly payments remove less than a month from the 5-year loan term, while accelerated bi-weekly payments remove 6 months off the loan term. By adding just $23.67 to your bi-weekly payment, you can shorten your loan term to 4 years and 6 months.
To obtain the bi-weekly payment amount, we must use the standard amortization formula.
A = P*(r(1+r)n) / ((1 + r)n – 1)
Let's use the mortgage details below for our example.
To find the bi-weekly payment's periodic interest rate (r), we must divide 5.5 percent APR by 26 payments. Similarly, to derive the total number of payments (n), we must multiply the 30-year loan term by 26 payments.
A = P*(r(1+r)n) / ((1 + r)n – 1)
= 200,000*(0.00211538(1+0.00211538)780 / ((1 + 0.00211538)780 – 1)
= 200,000*(0.00211538(1.00211538)780 / ((1.00211538)780 – 1)
= 200,000*(0.00211538(5.1978946705771)) / 5.1978946705771 – 1
= 200,000*0.010995522428245385798 / 4.1978946705771
= 2,199.1044856490771596 /4.1978946705771
= 524.11
For this example, the bi-weekly payment is $524.11.
To save time in calculating bi-weekly payments, use our calculator above.
To solve, we'll use the standard amortization schedule formula and divide the monthly payment by 2.
A = [P*(r(1+r)n) / ((1 + r)n – 1)] / 2
Let's use the same loan details to find the accelerated bi-weekly payment amount.
To find the accelerated bi-weekly payment's periodic interest rate (r), we should divide 5.5 percent APR by 12. Likewise, to obtain the total number of payments (n), we should multiply the 30-year loan term by 12 payments.
A = [P*(r(1+r)n) / ((1 + r)n – 1)] / 2
= [200,000*(0.0045833(1+0.0045833)360) / ((1+0.0045833)360 – 1)] / 2
= [200,000*(0.0045833(1.0045833)360) / ((1.0045833)360 – 1)] / 2
= [200,000*(0.0045833(5.1873258763939)) / (5.1873258763939 – 1)] / 2
= [200,000*(0.02377507068927616187)) / 4.1873258763939] / 2
= [4,755.014137855232374 / 4.1873258763939] / 2
= 1,135.5729833834241984956198351094 / 2
= 567.79
In this example, the monthly payment is around $1,135.58. When we divide it by 2, the accelerated bi-weekly payment is $567.79.
You might consider a third-party payment processing service if your lender does not allow shifting to an accelerated bi-weekly payment schedule. However, many of these companies are scams. They usually charge $300 to $400 to setup your payment. On top of that, they may even impose monthly fees. This is costly and unnecessary. These companies usually make monthly payments on your behalf, which nulls the benefits of an accelerated bi-weekly payment plan.
If your lender does not allow an accelerated bi-weekly payment schedule, there are other options. According to the Consumer Financial Protection Bureau, you can achieve the same goal as accelerated bi-weekly payments if you employ the following strategies.
A bi-weekly payment schedule is a good way to manage your loan payments especially if your pay period coincides with a bi-weekly schedule. This way, you always have money to cover your mortgage or car loan. Bi-weekly payments also provide modest interest savings.
On the other hand, accelerated bi-weekly payments allow you to shorten your loan term and save a lot on interest. This is a good option to take if you intend to pay off your debt sooner. Just make sure to contact your lender to check if they allow accelerated bi-weekly payments. Some lenders impose fees and costly prepayment penalties, in which case, it's probably better to increase your monthly payments or make lumpsum payments to your loan.
Need to assess different types of loans? Use our compare loans calculator and read our guide.
Jose Abuyuan is a web content writer, fictionist, and digital artist hailing from Las Piñas City. He is a graduate of Communication and Media Studies at San Beda College Alabang, who took his internship in the weekly news magazine the Philippines Graphic. He has authored works professionally for over a decade.
