A Bi-Weekly Payment Plan Checklist
If you want the advantage of bi-weekly payments and are setting it up yourself, you may want to refer to the following checklist:
1. Figure out your draft amount for each pay period.
Take your total monthly payment, multiply by 12, then divide by the number of times you’re paid each year.
2. Go to your bank in person or online and find out what they need for you to set up your automatic draft payment schedule.
3. Make sure you are ahead on your payments when starting your automatic drafts to cover any unexpected payment delays and ensure there are no late payments.
4. Send your lender a letter telling them you are going pay by automatic draft, when drafts will begin, and how often they will be made. Please note that it is possible that there may still be some companies out there that don’t accept automatic drafts from a bank. If so, you can still pay on a bi-weekly schedule, you will just have to do it manually with a check. Make sure you send a copy of the payment coupon or statement with each check and put the last 4 digits of your loan number on your check for reference.
5. For the first few months, check your payment history and balance information every month with your lender. This ensures payments have been made and applied timely.
6. If you receive notice that your loan servicing has changed to another company, take steps immediately to have your drafts sent to the new company. Then follow step 5 again for the first few months.
Additional notes: Lenders sell their loans off to other lenders or servicing companies on a routine basis. A lot of my clients worry this will negatively impact their loan. This does not affect your loan in any way, it merely changes the location the payments are made to. It is helpful to know that for the first 90 days after a loan is transferred from one company to another, neither company can report any derogatory payment history to your credit report. So just make sure you have your payments sent on time to the correct place within those first 90 days.