I will make a short article about a topic that creates a lot of confusion when it comes to converting a bi-weekly payment to a monthly one. Especially since we launched our new Lease Takeover Marketplace, the "monthly way" of standardizing payments has shown up how arbitrary this topic is.
A Year Has 12 months or 52 Weeks
So it is pretty simple. Monthly means 12 payments and bi-weekly means 26 (or 52/2). But, the truth is that most people confuse bi-weekly payments to be half the monthly one, and that is not right. See the following example:
- If you pay 200CAD bi-weekly, your first impression will be that the monthly payment is two times that: 400 per month.
But we have to do the math:
- Monthly Payment = ( bi-weekly x 26 ) / 12
- Monthly Payment = ( 200 x 26 ) / 12
- Monthly Payment = ( 5,200 ) / 12
- Monthly Payment = ( 5,200 ) / 12
- Monthly Payment = 433,34 CAD
That's it. Each time you want to calculate it, remember that. It is not two times the bi-weekly. And the same goes for the weekly payments. Do not multiply it by 4, do it 52 times first and then divided by 12.
The Conversions
I'll leave the formulas here:
- Monthly Payment = Monthly Payment
- Monthly Payment = ( bi-weekly x 26 ) / 12
- Monthly Payment = ( bi-monthly x 24 ) / 12 (bi-monthly payments are very rare)
- Monthly Payment = ( weekly x 52 ) / 12
