Personal Finance

Biweekly car payment

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Deal Fanatic
Dec 11, 2008
7467 posts
4051 upvotes
Montreal

Biweekly car payment

Just bought a car last friday, and took a 72months financing with biweekly payment. The non detailed contract says the first payment starts on Sept 11, 2015, and the end of term is Sept 11, 2021.

I didnt think about this at the moment I signed the contract and Im not too knowledgeable at these things, but by taking a biweekly payment schedule, shouldn't my last payment be around 6 months earlier (march or april 2021)?

Do they just put the date Sept 11, 2021 because I took it over 6 years?
Gonna re-read the financing contract tonight before I call the dealer though, don't wanna sound like an idiot on the phone lol
11 replies
Deal Addict
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Dec 3, 2006
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GTA
72 months are 6 years no matter how your payment schedule is.

Biweekly payment schedule won't reduce your payment by 6 months (unless you are overpaying biweekly).

I think you are mistaking biweekly payment with an accelerated payment strategy (used in mortgage payment) where you pay 1/2 months' amount every 2 weeks (i.e. overpaying).
There is only a minuscule difference between biweekly and monthly in terms of total interest paid.
Deal Fanatic
Dec 11, 2008
7467 posts
4051 upvotes
Montreal
jl001 wrote: I think you are mistaking biweekly payment with an accelerated payment strategy (used in mortgage payment) where you pay 1/2 months' amount every 2 weeks (i.e. overpaying).

ahhh, this is what I thought. In the end, monthly and biweekly payment comes back just the same.
Deal Expert
Mar 25, 2005
22706 posts
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Madevilz wrote: Just bought a car last friday, and took a 72months financing with biweekly payment. The non detailed contract says the first payment starts on Sept 11, 2015, and the end of term is Sept 11, 2021.

I didnt think about this at the moment I signed the contract and Im not too knowledgeable at these things, but by taking a biweekly payment schedule, shouldn't my last payment be around 6 months earlier (march or april 2021)?

Do they just put the date Sept 11, 2021 because I took it over 6 years?
Gonna re-read the financing contract tonight before I call the dealer though, don't wanna sound like an idiot on the phone lol
Not directly related but two things:
1. Unless you have a reason to pay biweekly, I would opt for monthly. You get to hold onto your cash longer, but of course consider any interest rate changes.
2. 6 years is a long term and you will be underwater for most of it. Beware any insurance payout will likely be less than the balance, especially important after the depreciation waiver expires.
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May 11, 2008
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Madevilz wrote: ahhh, this is what I thought. In the end, monthly and biweekly payment comes back just the same.
Well hopefully it works out the same.
12 monthly payments should roughly equal 26 bi-weekly (depends on interest rate but today's low rates should have them about equal).
Deal Addict
May 3, 2006
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Milton
Kasakato wrote: Not directly related but two things:
1. Unless you have a reason to pay biweekly, I would opt for monthly. You get to hold onto your cash longer, but of course consider any interest rate changes.
2. 6 years is a long term and you will be underwater for most of it. Beware any insurance payout will likely be less than the balance, especially important after the depreciation waiver expires.
Could be worse, he could have taken those 96 month terms floating around
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Deal Addict
Jun 10, 2008
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Kasakato wrote: Not directly related but two things:
1. Unless you have a reason to pay biweekly, I would opt for monthly. You get to hold onto your cash longer, but of course consider any interest rate changes.
2. 6 years is a long term and you will be underwater for most of it. Beware any insurance payout will likely be less than the balance, especially important after the depreciation waiver expires.
Hi - could you explain the bold portion a little more... not sure I understood.
Deal Expert
Mar 25, 2005
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barricuda wrote: Hi - could you explain the bold portion a little more... not sure I understood.
Sure. Say your depreciation waiver expires after 2 years. You owe 66% of the car as the term is in the start of year 3 of 6. The car was $30 new and depreciated 50% over those two years, meaning it's worth $15. If you were to total it, insurance will pay out $15, however you still owe $5 and that would be due after the write off and must come out of your pocket. Of course the numbers are made up, however that's the principal.

There is nothing inherently wrong with an underwater loan. Just be mindful of the risks and have the cash on hand should you need it. A lower monthly payment does not necessarily mean you should be spending more.
Deal Addict
Jun 10, 2008
1206 posts
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Kasakato wrote: Sure. Say your depreciation waiver expires after 2 years. You owe 66% of the car as the term is in the start of year 3 of 6. The car was $30 new and depreciated 50% over those two years, meaning it's worth $15. If you were to total it, insurance will pay out $15, however you still owe $5 and that would be due after the write off and must come out of your pocket. Of course the numbers are made up, however that's the principal.

There is nothing inherently wrong with an underwater loan. Just be mindful of the risks and have the cash on hand should you need it. A lower monthly payment does not necessarily mean you should be spending more.
Thanks. Is the insurance company depreciating the car 50% over 2 years? Is there any info online on how they depreciate various models or is that very different based on insurers? Don't you have to pay extra for deprec. waiver? Sorry for all the questions.... Last time o owned a car was 8 years ago and it was south of the border and it was a second hand car... Some of this has changed since then, lol
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Jul 30, 2007
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Toronto
the term is simply the term which runs thru for 6 yrs. What matters is the bi-weekly payment calculation. If you need, you can build your own spreadsheet and follow thru and check off the amount paid thru your bank account for your record keeping.
Deal Expert
Mar 25, 2005
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barricuda wrote: Thanks. Is the insurance company depreciating the car 50% over 2 years? Is there any info online on how they depreciate various models or is that very different based on insurers? Don't you have to pay extra for deprec. waiver? Sorry for all the questions.... Last time o owned a car was 8 years ago and it was south of the border and it was a second hand car... Some of this has changed since then, lol
The market value of the car depreciates with the market, the insurance company just estimates the value and pays it upon a total claim. It varies by model by year, but you can always look at used cars to get a sense of how quickly it will drop. In theory the market value and depreciation should be consistent across insurers however it's going to vary with company policies and what happens to be the benchmark at the time- this is why negotiating is important when it's totalled. Yes, there is an additional premium for adding coverage.
Deal Addict
Jun 10, 2008
1206 posts
392 upvotes
Kasakato wrote: The market value of the car depreciates with the market, the insurance company just estimates the value and pays it upon a total claim. It varies by model by year, but you can always look at used cars to get a sense of how quickly it will drop. In theory the market value and depreciation should be consistent across insurers however it's going to vary with company policies and what happens to be the benchmark at the time- this is why negotiating is important when it's totalled. Yes, there is an additional premium for adding coverage.
Thanks for all the info.

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