This is a method for calculating the amount of unused premium that takes into account the fact that more insurance coverage is required in the early months of the loan, since the payoff of the loan is greater. As the loan is paid off, less coverage is being paid for, so the refund percentage decreases.

A practice, called the Rule of 78, means that lenders front-load the interest they charge on a short-term loan to guarantee their profit if you pay off your loan before the end of its term. In other words, you pay most of the interest before you begin to make substantial repayment of principal. For example, on a one-year loan, you’d pay 15% of the [..]

Definition A formula used to determine rebates on interest for installment loans. For a 12 month loan: 1 + 2 + ... + 12 = 78. After the first month, 12/78th of the interest is owed, 11/78ths after the [..]

A method of amortising interest across the payments made over the life of a loan, used by almost all Australia vehicle financiers for commercial car finance facilities.

Rule of 78 is a means of calculating an interest rebate on a prepaid installment loan where the interest is added to the loan balance upfront. The number 78 comes from the sum of 1 through 12, for the [..]

Under a Rule of 78 loan, the interest over the entire life of the loan is divided into 78 equal pieces. The first monthly payment consists of 12 of these pieces, the next of 11 pieces and the rest pri [..]

 A mathematical formula used in figuring a rebate of unearned charges or premium, when these charges were pre-computed and pre-paid. Once referred to as "78 ways we get to keep your money&quo [..]