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From: dan@wyse.wyse.com (Dan Weaver x2554)
Newsgroups: comp.sources.wanted
Subject: Rule of 78's
Keywords: loan, amortization
Message-ID: <2368@wyse.wyse.com>
Date: 16 Aug 89 16:45:35 GMT
Organization: Wyse Technology, San Jose
Lines: 33


  Does anyone have a program that will show amortization schedules
for loans that use the Rule of 78's?  Every time I talk to a finantial
institution about the Rule ot 78's they say something like "It's too
complicated for you to understand."  I may not have a PHD is business
computation but I think I could understand it if someone took the
time to explain it.

Background:
  The Rule of 78's is used to calculate interest payments for loans
that are payed off early.  78 is the sum of the first 12 digits.
The Rule states that in the first month 11/12 of the interest is
payed, the second month 10/12 and so on down to 1/12 for the last
payment.

  I believe the Rule of 78's was designed to make it easier for a
bank to calculate the interest.  Even with the many computers found
today, the Rule of 78's persists because it will charge the customer
more than if the interest was compounded monthly.

Request:
  What I don't know is how this Rule is applied to multi-year loans.

  Any sources that do this sort of thing would be appriciated.  Also
any references on the Rule of 78's would be nice.  One final thing
if this is the wrong news group for posting please give me some
other names.

Thanx,
Dan Weaver
Wyse Technology                 VOICE: (408) 473-2554
3471, N. First Street           ARPA:  dan@wyse.com
San Jose, CA 95134              UUCP:  ...!{uunet}!wyse!dan