12 months or 52 weeks? Both equal a year, but one path leads to an extra loan payment. Switching your student loan payments from monthly to weekly payments is a sleek way to sneak in some extra funds towards your loan balance, while slicing off some interest along the way! Time is on your side with this method and here’s why:
A payment a week for a year equals 52 payments, while a payment a month for a year only adds up to 48 weekly payments. A difference of an extra four weeks of payments that you can use to YOUR advantage (instead of the loan company winning on this).
Yes, paying weekly increases payments on the front end (often minimally)… BUT on the back end, it equates to making ONE EXTRA MONTHLY PAYMENT over a year! A payment that directly reduces your loan balance AND reduces loan interest.
NEED AN EXAMPLE?
Monthly payments of $200 x 12 months = $2400 paid yearly.
Weekly payments of $50 x 52 weeks = $2600 paid yearly.
What happened? You just paid an extra $200 towards the loan principal! AKA a full additional monthly payment happened! The minimal increase in the example above adds 55 cents a day to payments, BUT makes progress toward a faster loan payoff AND paying less interest overall. Now my friend… you are empowered. Empowered like a pro.
Complete these simple steps to get started:
- Verify with you loan servicer that weekly payments are accepted and get requirements.
- Take your monthly payment amount and divide it by four. (Example: $200 / 4 = $50)
- With this example, $50 is your new weekly payment amount.
- Make your new payment every week for a whole year (52 weeks of payments).
*Bonus tip: Set up weekly payment reminders to stay on track.
*Bonus bonus tip: Try weekly payments on other loans – car loans, mortgages, etc. Just be sure to confirm with the lender(s) that weekly payments are accepted and what details you need to follow.