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

In Prince Edward Island, as across Canada, understanding bi-weekly versus monthly car loan payments is key to managing your finances effectively. A standard monthly payment involves 12 payments per year. However, the more common and often advantageous option is 'accelerated bi-weekly' payments. This method involves making 26 payments annually, each equivalent to half of what your standard monthly payment would be. Because there are 52 weeks in a year, this effectively means you make 13 'monthly' payments over the course of the year (26 bi-weekly payments / 2 = 13 monthly equivalents), rather than 12.

This 'extra' payment annually directly reduces your principal balance more quickly. For consumers, this translates into significant savings on the total interest paid over the life of the loan and shortens the amortization period. For example, on a typical 60-month loan, accelerated bi-weekly payments can shave several months off the term and save hundreds, if not thousands, in interest, especially relevant in the current (2025) interest rate environment. This approach also often aligns conveniently with many Canadians' bi-weekly paycheques, simplifying budgeting. While the payment frequency doesn't change provincial rules or taxes in PEI, choosing accelerated bi-weekly is a smart financial strategy to pay off your vehicle faster and reduce overall costs.