Mom Confessions
I recently purchased a new vehicle. I went online to a loan calculator and figured out how long the loan would take to pay off while making a single, monthly payment versus making two smaller monthly payments, and it will save me nearly 16 months off of the life of my loan, and save me hundreds of dollars in interest.
also, just by paying $10 more per payment saves me even more in the maturity of my loan, and saves in interest.
The bank I went through for my car loan has online loan payment scheduling to automatically come out each paycheck I have, throughout the life of the loan.
You can do this if you have a home mortgage, or even a business mortgage. We figured if we do two smaller monthly payments on our home, it saves a CRAP LOAD in extra interest, and shaves off nearly SEVEN YEARS of our loan!
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx
Try it! Use the link above to plug in your current numbers, then plug in your twice-monthly numbers to see how much you'll save!
Replies
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Now that the holidays are over, we have decided to pay extra on our mortgage every month
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I pay like $20 more a month on my car loan.
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I heard that too, but that it wasn't twice monthly--but every two weeks. Doesnt seem much different, except for the fact that some months have five weeks and by paying every two weeks you make an extra couple payments a year.
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Quoting brittany208:
I heard that too, but that it wasn't twice monthly--but every two weeks. Doesnt seem much different, except for the fact that some months have five weeks and by paying every two weeks you make an extra couple payments a year.
Yeah, that's correct, as well.But by making two smaller payments that equal that larger payment, you're shaving off interest owed.
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Quoting Anonymous:
Quoting brittany208:
I heard that too, but that it wasn't twice monthly--but every two weeks. Doesnt seem much different, except for the fact that some months have five weeks and by paying every two weeks you make an extra couple payments a year.
Yeah, that's correct, as well.But by making two smaller payments that equal that larger payment, you're shaving off interest owed.
very true. and if you have a loan for a large amount of money or time, that could really add up. Our mortgage is auto-debited right now, but when we refiance, I might just have to look into doing this.
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im thinking how many years is your loan term for? geez
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You can do it, but's it's really hard. You could accomplish the same thing by making one extra payment a year. So if you don't do the every other week thing, just make an extra payment when you get your tax check back or something.
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Bump -
You need to be aware that some loans have a pre-payment penalty. This means if you pay the loan off early you will be charged a penalty. When I financed my home I made sure I didn't have this on it. I read every piece of paper they gave me. I used to sell Real Estate so I know what to look out for.
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Good thinking! :)