In AB, what should I know about bi-weekly vs monthly payments for car loans?

In Alberta, the choice between bi-weekly and monthly car loan payments significantly impacts your overall cost and loan duration. A standard bi-weekly payment schedule involves 26 payments per year, compared to 12 monthly payments. This increased frequency means you're making more payments within a year, naturally accelerating the principal reduction and slightly shortening the amortization period compared to a purely equivalent monthly payment.

The more impactful option often presented by Canadian lenders, including those operating in Alberta, is 'accelerated bi-weekly.' This method calculates your monthly payment, divides it by two, and then applies that amount every two weeks. Since there are 26 bi-weekly periods in a year, this effectively results in you making the equivalent of one extra monthly payment annually (26 payments / 2 = 13 'half' payments, or 13 full monthly payments).

This accelerated approach, especially relevant in the 2025 market where interest rates might remain elevated, can lead to substantial savings on the total interest paid over the life of the loan and allows you to pay off your vehicle much faster. For consumers, this means building equity sooner and reducing your financial commitment quicker. While the individual payment amount is smaller and often aligns conveniently with bi-weekly paycheques, the cumulative effect of that extra annual payment significantly reduces the principal balance more rapidly, thereby reducing the amount of interest accrued over time. These principles are standard practice across Canada, including Alberta, and are a key consideration for savvy borrowers.