The Advantages of Bi-Weekly Car Loan Payments
These days, cars are more essential than ever if you intend to have a job and a life outside a job in most areas of the United States. However, despite the current economic climate, cars have not gotten any cheaper; on the contrary, they seem to be more expensive than ever. Even a budget vehicle such as a Kia Rio or Ford Fiesta will set you back by at least $13,000 if you buy it new. As most people don’t have that much in savings, an option that many may wish to consider are bi-weekly car loan payments. Bi-weekly car loan payments offer many advantages over other kinds of loans and car payments; these advantages will be discussed below in this article.
The advantage of car loans in general is that they allow you to purchase cars that you otherwise would not have been able to purchase due to a lack of fiscal resources. As a result, you get to drive the car you want instead of having to settle for public transportation or a used vehicle. The disadvantage of car loans lies in the interest rates and monthly payments; the privilege of being able to drive a new and shiny car is that if you buy the car on credit, you may have to pay considerably more than the amount the car is worth due to interest. This is where bi-weekly payment plans come in.
When you pay for a car loan through bi-weekly car loan payments, instead of making a single car loan payment each month, as you would with a traditional monthly payment plan, you can make half of a monthly payment for the car every two weeks. As a result, instead of making twelve payments, you make thirteen full payments, or twenty six half payments each year. As a result, you make an extra payment each year. The money that you contribute through this extra payment is more money that can be used to reduce the principal balance of your car loan. The principal balance, of course, is the amount you initially take out for the loan.
Because the calculations of future interest are based on the amount remaining in the principal balance, the more money you can put toward paying off the principal balance, the less total money you are likely to pay in interest over the life of the loan. You are also likely to spend less time paying off the car loan in its entirety. In other words, when you use a bi-weekly car loan payment plan instead of a traditional monthly car loan payment plan, not only can you pay off your total car loan in less time, you will save a lot of money in the process through paying less money to repay the interest you accumulate.
In conclusion, with the increasing necessity of cars in today’s world for both professional and personal uses and the difficult current economic climate, having a car has become both more essential and more challenging than ever. Car loans are an effective way for people to be able to afford cars even if they have limited means. However, interest rates in traditional car loans can make them prohibitive and more costly in the long run. Fortunately, bi-weekly car loan payments exist as an alternative and more cost effective option.