Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site dciem.UUCP Path: utzoo!dciem!ntt From: ntt@dciem.UUCP (Mark Brader) Newsgroups: net.consumers,net.misc Subject: Re: What is "rule of 78's"? Message-ID: <795@dciem.UUCP> Date: Wed, 21-Mar-84 12:37:36 EST Article-I.D.: dciem.795 Posted: Wed Mar 21 12:37:36 1984 Date-Received: Thu, 22-Mar-84 13:22:40 EST References: <1070@proper.UUCP> <709@houxz.UUCP>, <350@cyb-eng.UUCP> Organization: NTT Systems Inc., Toronto, Canada Lines: 10 Now that the Rule of 78 has been explained, I would like to add one point. The difference between the rule and the really correct interest calculation is not that large, *if* the loan is in fact being paid off in 12 payments (which is where the 78 comes from, remember: 1+2+...+12). But if it is a longer-term loan that is paid off in, say, 36 or 60 payments, the difference between "Rule of 78" -- which is called that anyway -- and the correct calculation becomes much larger when you pay it off after about half the term. Mark Brader