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From: rjh@ihuxj.UUCP (Randolph J. Herber)
Newsgroups: net.consumers,net.misc
Subject: Re: What is "rule of 78's"?
Message-ID: <438@ihuxj.UUCP>
Date: Thu, 22-Mar-84 17:27:29 EST
Article-I.D.: ihuxj.438
Posted: Thu Mar 22 17:27:29 1984
Date-Received: Fri, 23-Mar-84 21:06:55 EST
Organization: AT&T Bell Labs, Naperville, IL
Lines: 28

A numerical example maybe will clear up the confusion about the
"rule of 78's."

AMOUNT OF LOAN:           $1,000.00
APR:                       23.99998
MONTHS TO PAY:                   12
PAYMENT AMOUNT:              $94.56 = P
LAST PAYMENT AMOUNT          $94.54
FIRST PAYMENT:               1/1984
RULES OF 78'S AMOUNT      $1.726923 = R = $134.70 / 78
 
                             AFTER    AFTER
                             PAYING   PAYING PAYMENT AMOUNT
DATE      INTEREST     REPAY    OWED  PAY OUT AMOUNT BY 78'S
12/1983      $0.00           $1000.00 $1134.70-78*R=$1000.00
 1/1984     $20.00    $74.56  $925.44 $1040.14-66*R= $926.16
 2/1984     $18.51    $76.05  $849.39  $945.58-55*R= $850.60
 3/1984     $16.99    $77.57  $771.82  $851.02-45*R= $773.31
 4/1984     $15.44    $79.12  $692.70  $756.46-36*R= $694.29
 5/1984     $13.85    $80.71  $611.99  $661.90-28*R= $613.55
 6/1984     $12.24    $82.32  $529.67  $567.34-21*R= $531.07
 7/1984     $10.59    $83.97  $445.70  $472.78-15*R= $446.88
 8/1984      $8.91    $85.65  $360.05  $378.22-10*R= $360.95
 9/1984      $7.20    $87.36  $272.69  $283.66- 6*R= $273.30
10/1984      $5.45    $89.11  $183.58  $189.10- 3*R= $183.92
11/1984      $3.67    $90.89   $92.69   $94.51- 1*R=  $92.78
12/1984      $1.85    $92.69    $0.00    $0.00- 0*R=   $0.00
TOTAL 1984 $134.70 $1,000.00