It depends on how the loan is set up and the lender's policy towards early payments. IF the loan is set up with a monthly payment then the payment amount can be computed based on that formula where n=12. If the loan is set up as a biweekly loan (which would be unusual), they would use 26.

There are two ways that I have seen lenders apply biweekly payments towards a loan with a fixed monthly payment:

1. They "hold" the payment and apply the full monthly payment once the remainder of the payment is received, so you don't really save anything. Any amount over the normal monthly payment is applied fully toward principal, reducing interest going forward.
2. They calculate the accrued interest up do the date of the payment using a daily rate (typically annual rate/365), and the rest of that payment goes towards principal. The next biweekly payment will have slightly less interest than the first since the principal amount is slightly lower.

There may be other methods, but in either case the big benefit to you is not the interest savings, but the "Extra" monthly payment each year (26 half payments per year instead of 12 full payments). I have done biweekly payment before because it fit my income stream better, and the bank used the first method so there was no interest savings - the big benefit was the "extra" 13th payment. I could have simply done the extra payment manually, but it was nice to have the half payment line up with my income frequency.

It depends on how the loan is set up and the lender's policy towards early payments. If the loan is set up with a monthly payment then the payment amount can be computed based on that formula where n=12. If the loan is set up as a biweekly loan (which would be unusual), they would use 26 and the biweekly payment would be slightly smaller.

There are two ways that I have seen lenders apply biweekly payments towards a loan with a fixed monthly payment - both used half of the fixed monthly payment as the biweekly payment amount:

1. They "hold" the payment and apply the full monthly payment once the remainder of the payment is received, so you don't really save anything. Any amount over the normal monthly payment is applied fully toward principal, reducing interest going forward.
2. They calculate the accrued interest up do the date of the payment using a daily rate (typically annual rate/365), and the rest of that payment goes towards principal. The next biweekly payment will have slightly less interest than the first since the principal amount is slightly lower.

There may be other methods, but in either case the big benefit to you is not the interest savings, but the "Extra" monthly payment each year (26 half payments per year instead of 12 full payments). I have done biweekly payment before because it fit my income stream better, and the bank used the first method so there was no interest savings - the big benefit was the "extra" 13th payment. I could have simply done the extra payment manually, but it was nice to have the half payment line up with my income frequency.