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

In Ontario, understanding the nuances between bi-weekly and monthly car loan payments is crucial for optimizing your financing. A standard bi-weekly payment schedule involves 26 payments per year, where each payment is roughly half of what a monthly payment would be. However, the more advantageous option for many is the "accelerated bi-weekly" payment, which calculates your bi-weekly amount by taking your monthly payment, dividing it by two, and then making that payment 26 times a year. This effectively results in 13 full monthly payments being made over the course of a year, rather than the standard 12.

This distinction matters significantly because car loan interest in Canada is typically calculated daily on the outstanding principal balance. By making more frequent and slightly larger payments with the accelerated bi-weekly option, you reduce your principal balance faster, leading to less interest accruing over the life of the loan. For consumers in Ontario, especially considering current and projected 2025 market conditions where interest rates may remain elevated, this strategy can lead to substantial savings on total interest paid and shorten your loan's amortization period by several months. Furthermore, bi-weekly payments often align seamlessly with bi-weekly paycheques, simplifying personal budgeting.

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