rule of 78?

**aceee** · 04-02-2008, 02:17 AM

Hey all.

Currently, i have a little spread sheet to work out interest paid per period..

Basicly.. i work out interest per unit, and multiply that by units per period.. works great.. however.. thats simple interest.. i now need to work it out with rule of 78.. have no idea where to start.. and suggestions? i tried searching the forum, dind't work

cheers

**ratcat** · 04-02-2008, 02:50 AM

How much info do you know ? Me nothing

To help you map out the equation.

Does this help?

78 Loan Calculator

General info

Rules on "78"

**aceee** · 04-02-2008, 03:04 AM

perfect... but how is the first one done?

**ratcat** · 04-02-2008, 08:47 AM

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

EXAMPLE OF A RULE OF 78s
The following formula is the simplest method of computing the refunds by the Rule of 78s.

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U = Unearned term periods
T = Term periods
F = Finance Charge

Example
This example is for a 12 month contract which prepaid at 3 months (9 months unearned) with a finance charge of $100.00.

U = 9
T = 12
F = $100.00

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Source of Information above in pdf format.

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www.filedudes.com
Software AmortizeIT download page (freeware)
A fast, easy-to-use collection of 10 financial calculators. Amortization schedule has support for: extra and skipped payments or deposits; Adjustable rates; Rule-of-78's; Canadian type loans; APR disclosure statements; evaluation of loan acceleration scenarios. Payment & compounding periods may be independently set. 10 payment periods: daily, weekly, biweekly, twice monthly, every 4 weeks, monthly, bimonthly, quarterly, semiannually & annually. Additionally, there is support for simple interest and continuous compounding. Exact day payment and interest calculations also supported.

Edit: I, ratcat is not apart or connected to filedudes nor Software AmortizeIT or its programmer(s), and not a fanboy either.

Well I hope that helps