Two pieces of advice get passed around a lot. Pay every two weeks. Or make one extra payment a year. They sound like different plans with different rules. On paper they come out to the same extra money, and the calculator can show you what that money does to your loan.
Why the two plans match
A year has 52 weeks. If you pay half your monthly payment every two weeks, you make 26 half payments. Twenty-six halves are 13 full payments. A monthly schedule only asks for 12.
That 13th payment is the whole effect. Biweekly gets there in small pieces. One extra payment a year gets there in a single lump. Either way, one extra full principal and interest payment goes toward the loan each year.
The timing inside the year is a little different. Biweekly money arrives in pieces as the year goes, and a once-a-year payment arrives all at once. The calculator spreads both evenly across 12 months, so it shows them as one result.
The lookalike that does not move the date
Some plans split your monthly payment in half and draft it twice a month. That sounds like biweekly. It is not.
Twice a month is 24 half payments a year, which is 12 full payments. That is your normal payment, cut in two. Nothing extra reaches the loan. Extra Monthly Payment loads at 200, so New Payoff Date is already shorter than your original term until you set that field to 0 and read it again.
So check the calendar on any plan you are offered. Every two weeks and twice a month are different schedules, and only the first one adds a payment.
Here is an example. Say the base principal and interest is $1,800 a month. This example is not your loan, and it is not a BankPricer rate. It only shows the arithmetic.
One extra payment a year is one more $1,800. Spread across twelve months, that is $1,800 divided by twelve, or $150 a month. In this example, $150 is what you would type into Extra Monthly Payment, after you have read your own Base P&I. It is not the 200 the field loads with. Your own figure comes from your own Base P&I divided by twelve.
Now look at every two weeks. Half of $1,800 is $900. Paying $900 every two weeks means twenty-six payments in a year, and twenty-six times $900 is $23,400. Paying $1,800 once a month means twelve payments, and twelve times $1,800 is $21,600. The gap between $23,400 and $21,600 is $1,800, which is one full monthly payment. That gap is the extra payment, and spread across twelve months it is the same $150.
Twice a month is different. It means twenty-four payments of $900, and twenty-four times $900 is $21,600. That matches the monthly total exactly. Nothing extra goes to the loan, so there is nothing extra to type into Extra Monthly Payment.
Turn your plan into one number
The Extra Payments tab has no biweekly switch and no field for one extra payment a year. It has one box for an extra amount paid every month. Here is how to fill it.
Open the Extra Payments calculator and fill in these fields:
- Loan Amount. The loan amount from your own quote.
- Interest Rate. The box may already have a number in it. Replace it with the rate on your own quote. Whatever sits there when the page loads is not your rate, and it is not a BankPricer rate.
- Loan Term. Pick 30, 20, or 15 Years to match your quote.
- Extra Monthly Payment. Set this to 0 for a moment, then read Base P&I in the results. That is your monthly principal and interest.
Now divide your Base P&I by 12. Round to dollars and cents. Type that figure into Extra Monthly Payment.
That one figure stands in for both plans. A true biweekly schedule and one extra payment a year land on the same monthly amount, so they show the same New Payoff Date.
Reading your result
New Payoff Date is shown as a length of time in years and months. It is the term left to run with your extra payment. It is not a calendar day. To find the month you would finish, count that length forward from your first payment.
The badge reads Payoff N years early, with your own number in place of N. Interest Saved is the gap between Base Total Interest and New Total Interest. Those are your numbers, from your rate, and this post does not guess them for you.
Interest figures here assume you keep the loan for the full term at the rate you typed, with no refinance.
What the calculator cannot see
The tab models one thing: an extra amount added on top of principal and interest every month. It does not model a biweekly draft as a separate plan.
Some biweekly programs charge a setup fee. The calculator cannot see that fee, so it is not subtracted anywhere in your result. Some programs also collect your half payments and hold them until a full payment is due, instead of sending each piece to the loan right away. The calculator cannot see that hold either. If your plan works that way, ask when the extra money actually reaches principal, because that is what moves the date.
A second pair of eyes
Bring your run. I can walk through your Base P&I and the monthly figure you typed, then go over how your own plan sends extra money to principal before you sign up for anything.
A calculator result is not a commitment to lend.