Making Monthly Payments Weekly
Brent and I have a car loan and we make our payments weekly instead of the traditional monthly. When we got the loan, the banker told us that this would save us some money, so we said okay. I always wondered exactly how much money we would save, so today I sat down and figured it out.
Our loan was for about $14k
Weekly payments - total of $1530 interest - loan would be paid off in 3 years and 10 months
Monthly payments - total of $1975 interest - loan would be paid off in 4 years and 8 months
Wow. That is a significant savings - almost $450 - with zero extra work.
We are not paying any extra than if we were making monthly payments. The banker just took our monthly payment and divided it by four. It comes automatically out of our account so it is the easiest debt we have ever had to pay off.
This was just for a $14k car - can you imagine the money you would save if you did this with your mortgage?
Our loan was for about $14k
Weekly payments - total of $1530 interest - loan would be paid off in 3 years and 10 months
Monthly payments - total of $1975 interest - loan would be paid off in 4 years and 8 months
Wow. That is a significant savings - almost $450 - with zero extra work.
We are not paying any extra than if we were making monthly payments. The banker just took our monthly payment and divided it by four. It comes automatically out of our account so it is the easiest debt we have ever had to pay off.
This was just for a $14k car - can you imagine the money you would save if you did this with your mortgage?
Labels: Saving Money
posted by Tracy at 6:13 PM
2 Comments:
Hey, good strategy! Another thing that you can do to be sure that you are getting out of debt as quickly as possible, make sure that you note that you want anything over your minumum payments to go towards "principal", especially witha mortgage...
if not, some banks just use the extra to "pre-pay" the next minimum and you do not get the full impact of paying early...
keep it up
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Actually you are paying more. 12 months equals 48 payments if divided by the week, but you are paying on a weekly basis which means you actually make 4 extra payments a year (or an extra month) It is the 4 extra payments that reduces the interest charges so much - much the same as with a bi-weekly mortgage.
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