Only if it adds up to more money over the year. Half your payment every two weeks is 26 half payments, which equals 13 full payments instead of 12. ProfitDrawer's car loan guide works an example: on a $25,000 loan at 7% for 60 months ($495.03 a month), that extra payment ends the loan in about 55 months and saves about $440 in interest. It only works on a simple interest loan.
Check with your lender before you start:
- Half payments may be held. Some lenders keep a half payment until the other half arrives, which gives you no benefit.
- Fees. Some lenders charge a fee for a biweekly plan.
- Interest type. The Consumer Financial Protection Bureau explains that on a precomputed interest loan, extra payments do not reduce the interest owed.
- Prepayment penalty. Some lenders charge one, and some states ban them for certain loans.
The no-fee alternative: the extra yearly payment is about $41.25 a month ($495.03 / 12). Add that to your normal monthly payment and mark it as principal. Same result, no plan fee.
Whichever way you pay, check your statement to confirm the principal dropped by the extra amount. Run your own loan in the free loan payoff calculator. General information, not financial advice.
Source: How to Pay Off a Car Loan Faster (and How Much You Really Save) · Updated
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General information, not tax, legal or financial advice. Check the rules for your state and your situation.