In BC, what should I know about bi-weekly vs monthly payments for car loans?
In British Columbia, choosing between bi-weekly and monthly payments for a car loan can significantly impact your total interest paid and loan term. Monthly payments are straightforward, occurring 12 times a year. However, the 'accelerated bi-weekly' option, common across Canadian auto finance, involves making 26 payments annually, each equivalent to half of a standard monthly payment. This effectively means you make one extra monthly payment per year (26 bi-weekly payments / 2 = 13 monthly payments worth).
This matters because, with interest typically calculated daily on the outstanding principal, paying down your loan more frequently and making that extra payment accelerates the principal reduction. Consequently, you'll shorten your loan's amortization period and substantially reduce the total interest paid over the life of the loan, a notable advantage in today's market conditions. Furthermore, bi-weekly payments often align better with typical Canadian pay cycles, making budgeting easier. Always confirm with your lender that you are opting for the 'accelerated' bi-weekly schedule to realize these financial benefits.