Loan Interest Savings Calculator
Calculate how much interest and time you can save by switching from standard monthly payments to a biweekly payment schedule. Biweekly payments accelerate your loan payoff by applying the equivalent of one extra monthly payment each year.
The Power of Biweekly Loan Payments
Making biweekly payments is one of the most effective strategies for debt reduction. By paying half of your monthly mortgage or loan payment every two weeks, you end up making 26 half-payments a year. This equals 13 full monthly payments instead of the usual 12.
How Does the Savings Calculator Work?
The calculator uses standard financial formulas to determine your monthly principal and interest. When you switch to biweekly, it recalibrates the interest compounding and applies the extra payment toward the principal balance. This "extra" payment significantly reduces the total interest accrued over the life of the loan.
Why Choose Biweekly Payments?
- Lower Interest: You pay significantly less over time because the principal balance drops faster.
- Shorter Term: Most 30-year mortgages can be paid off 4-6 years early using this method.
- Budget Friendly: Many people find it easier to align loan payments with their biweekly paychecks.
Mathematical Formula
The standard monthly payment is calculated using the formula: $M = P \frac{r(1+r)^n}{(1+r)^n - 1}$ where $P$ is principal, $r$ is monthly interest rate, and $n$ is number of months.
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