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Rule of 78 Calculator

See how a precomputed finance charge is weighted toward earlier payments and estimate the unearned interest remaining after a selected payment.

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Rule of 78 formula

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The sample values are calculated automatically. Enter your own information for a new estimate.

These calculators provide mathematical estimates for education and planning. Loan agreements, lender practices, fees, taxes, payment dates, and rounding can change actual results.

How the calculation works

Rule of 78 Calculator explained

The Rule of 78 is a precomputed-interest method. The digits from 1 through the number of payments are added, then the finance charge is assigned using descending weights.

For a 12-payment loan, the sum of the digits is 78. Payment 1 receives a weight of 12/78, payment 2 receives 11/78, and the final payment receives 1/78.

Because more interest is assigned early, an early payoff can leave less interest to rebate than a simple actuarial schedule would.

Related Power of Interest guides

How a Rule of 78 early-payoff rebate is calculated

The Rule of 78 assigns larger interest weights to the earlier payments of a precomputed loan. If the loan is paid off early, the remaining descending weights are used to estimate the portion of the finance charge that has not yet been earned. That unearned amount is the mathematical interest rebate shown by this calculator.

For a 24-payment loan, the denominator is 1 + 2 + … + 24 = 300. After 10 payments, 14 payment weights remain. The calculator uses those remaining weights to estimate unearned interest and then subtracts that rebate from the remaining scheduled amount.

See the Rule of 78 FormulaCompare with a Standard Loan Payoff

Important limitation

This calculator is for loans that actually use a precomputed finance charge and Rule of 78 allocation. It is not the same as an actuarial simple-interest payoff calculation. Contract terms, applicable law, fees, payoff-day interest, and lender adjustments can change the official payoff amount.

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Frequently asked questions

Is the Rule of 78 the same as simple interest?

No. Simple interest is calculated on the outstanding principal over time. The Rule of 78 allocates a finance charge that was computed in advance.

Is the calculator an official payoff quote?

No. It estimates the mathematical rebate and payoff. The lender may include payoff-day interest, fees, or contract-specific adjustments.

Why is more interest assigned to early payments?

The descending weights are largest at the beginning of the schedule, so the early payments receive a larger share of the total finance charge.