Today we’re looking at  a personal loan of $20,000 over a three year period at a 13% interest rate. The payment frequency is biweekly (every 2nd week). Going biweekly for a loan like this is a smart way to go. This a cash loan that is secured but the borrowers have poor credit rating. Not abnormal these days – that’s for sure.

The results are below;

Total amount to be paid: $23,949.97
Total amount of interest $3,949.97
Payments: $306.21 biweekly

A typical 20,000 dollar loan would be for a car, truck, motorcycle, educational, or home improvement. Of course some borrowers just want to see what it’s like to blow 20 grand on traveling and partying – this is of course not the normal borrower, but it does happen – it’s a crazy mixed up world out there kids.

So you can see that our borrower is paying 612.42 a month in total right? Wrong. The advantage a biweekly payment schedule is is that you pay down your debt, or “service your debt” faster than monthly payments. Here is math;

Biweekly

• 26 biweekly payments in the year
• 306.21 per week

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Total of $7961.46 against the principal debt in one year of making payments

Monthly

Total amount to be paid = $24,007.58
Total amount of interest = $4,007.58
Payments once a month = $657.74

• 12 payments in a year
• 657.74 per payment

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Total of $7892.88 against the principal debt in one year of making payments

Note the difference in the amount of interest paid over the 1 year period, and notice the difference in how much was paid off the principal loan.

• $20,000 Personal Loan – To Pay Back in 3 Years – 13%

A LOAN CALCULATOR; Enter your loan amount, how many years, the interest rate, and payment frequency (14 for biweekly, 30 for monthly, 7 for weekly. Very helpful so you know exactly what the loan will cost you in interest payments and you will know the total COB (cost of borrowing).

Loan Amount:

Interest:

Years:

Days between payments:
30 for a Month, 7 for Week
and 14 for Bi-Weekly. Easy!