OmniCalcsRule of 78 Calculator
See how a precomputed loan allocates interest by the Rule of 78 — month by month.
How to Use This Rule of 78 Calculator
Enter the total finance charge (the interest built into the loan), the term in months, and which month you want to inspect (1 is the first month).
- Interest in this month — that month's share of the finance charge.
- Unearned remaining — interest not yet earned at the start of that month (what a rebate might refund if you pay off early).
Practical Example
A 12-month loan with a $1,200 finance charge. Sum of digits S = 12×13/2 = 78.
- Month 1 weight = 12, so interest = 1200 × 12/78 ≈ $184.62
- Unearned at the start of month 1 = the full $1,200
What Your Results Mean
- This month's interest — more in early months, less later, unlike simple-interest amortization.
- Unearned remaining — the rebate if the loan is paid off at the beginning of the selected month.
- Sum of digits — n(n+1)/2; for 12 months this is 78, the origin of the name.
Frequently Asked Questions
Why is it called the Rule of 78?
For a 12-month loan the month weights 12+11+…+1 add to 78. The same idea scales to any term n with S = n(n+1)/2.
Is this the same as a standard amortizing loan?
No. Standard loans apply a constant rate to the remaining balance. Rule of 78 precomputes a finance charge and front-loads it.
Why would I care about unearned interest?
If you pay the loan off early, many Rule of 78 contracts refund only the unearned portion, which is smaller than on a simple-interest loan.
Is the Rule of 78 still used?
It is restricted or banned for many consumer loans in the US, but it still appears on some short-term contracts. Check local law.
Does month 1 mean the first payment?
Yes. Month 1 is the first month of the term and receives the largest weight n.