Rule-of-78s Loan Calculator
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Rule-of-78s calculator help...
Rule-of-78s loans are declining in use, but should you need to create a schedule for one, use this calculator. You can check out our "Reading Room" for an article about how a Rule-of-78s loan works.
This calculator will solve for any one of four possible unknowns: "Amount of Loan", "Number of Payments" (term), "Annual Interest Rate" or the "Periodic Payment".
Enter a '0' (zero) for one unknown value.
The term (duration) of the loan is a function of the "Number of Payments" and the "Payment Frequency". If the loan is calling for monthly payments and the term is four years, then enter 48 for the "Number of Payments". If the payments are made quarterly and the term is ten years, then enter 40 for the "Number of Payments".
Normally you would set the "Payment Method" to "Arrears" for a loan. This means that the monies are lent on one day and the first payment isn't due until one period after the funds are received.
If the first payment is due on the day the funds are available, then set "Payment Method" to "Advance". This is typical for leases.
Join the conversation. Tell me what you think.
Annette says:
It is very helpful to be able to change the date format, thank you – would it also be possible to change the financial year format – presently this shows as calendar year but we need financial year July to June. Also, being able to set the commencement date would be beneficial – in this case, the calculator has assumed that the first payment date will be the 1st of June when it will actually be commencing in May.
Karl says:
The amortization schedule calculator will allow you to set the loan date and the first payment date. The Rule-of-78s is an option under Amortization Method
And this is where I get to plug one of the commercial programs. 🙂
The C-Value! program will let you save a schedule and let you change the start of the fiscal year. Same for SolveIT!. They are $19.95 and $24.95 respectively.
ASHLEY says:
I USED THE AMORTIZATION SCHEDULE SO I COULD GET THE EXACT PAYMENT DATES I WAS NEEDING FROM 2013, HOWEVER WHEN I DO THAT IT GIVES ME A DIFFERENT AMOUNT FOR THE INTEREST DUE AND TOTAL OF ALL PAYMENTS.
HOWEVER, THE AMOUNTS ON THE CONTRACT I HAVE MATCH WHAT THE RULE OF 78’S LOAN CALCULATOR GAVE ME
Karl says:
There are several possible reasons for this, but the first thing I’m wondering about is if you had the amortization schedule set to "Rule-of-78s?" That setting is in the "Amortization Method" dropdown.
AL-AQAL says:
Banks applying this rule are increasing their income in the beginning while constantly reducing lesser to lesser to the following periods. This will impact profitability uniformity to of the loan amount, i.e. good harvest in the start and low return in subsequent years.
Albert says:
The above number looks like constant instalment
Armando says:
How do I show how someone can take years off their mortgage by paying their payment 5 days early. How much will they save. I can’t adjust dates of payments?
Karl says:
You wouldn’t be able to do that with this calculator. You could use this one, the Ultimate Financial Calculator as it will let you set any date for any payment.
Interesting that you brought this idea up. I was thinking about this exact thing last week and in fact I was going to do the calculation and perhaps write up a brief post for The Reading Room. The one thing I realized however is this – say the payments are due on the 10th of each month. It’s not enough to pay every payment on the 5th of the month. If you do that, then only the first payment is 5 days early. The subsequent payment still have a full period of interest that will have accrued and there won’t be any savings, even though you may have paid the lender early.
I would be interested to know what you discover.
Kathleen says:
How do I figure out my interest savings and payoff date if I made a principal only payment of $100 every week on a $6400 loan with 54 monthly payments of $240.77 ?
Karl says:
I can’t get you to an exact number if the loan is utilizing the "rule-of-78s" method for amortization. This due most to the fact there is not a standard way for calculating the interest due in the periods after the extra payments are made. It seems to be up to the lender how this is done.
However, if you are satisfied with a close approximation for this calculation, you can use this financial calculator. One on the page, scroll down to the tutorials and see #1 to get an overview and then there are two specific ones about extra payments.
Note, this calculator will let the user enter extra payments on any date and still have regular monthly payments. This will also accommodate your need for scheduled weekly extra payments combined with regular monthly payments. If you have any questions, you can ask them on the above linked page.
Kylie says:
Hi is there anyway to change the actual date on this Calculator please?
Its currently defaulting to 1/5/2018
Thanks in advance
Karl says:
Hi Kylie, not with this calculator.
However, you can use this amortization schedule calculator. It supports Rule-of-78s schedules and it also allows you to set the start date.
The Rule-of-78s setting is under "Amortization Method".
Mirella says:
HI there
I am using your rule of 78 calculator and I can’t seem to see where I put in the balloon payment at the end of the period???? I also cant seem to change the dates?
Karl says:
Those are advanced features that the Rule-of-78s calculator does not have.
Please use either the loan calculator or the Ultimate Financial Calculator.
The loan calculator is easier to use, but not quite as flexible. You’ll find the Rule-of-78s under the "Amortization Method." The dates are under "Options." Calculate the payment and then set the number of periods to when the balloon is due.
If you try the UFC, scroll down the page to the tutorials.
Scott says:
Thank you So Much for this Calculator!!!
I have taken a Rule of 78s loan and afterwards I used this calculator to print and show the lender what they were doing to me with the interest. I was able to take advantage of the 7 Day return window with OneMain Financial and saved almost $10,000 in Interest by returning their money and NOT Taking their precomputed interest loan.
This Calculator is the best I’ve found online. And the print function of the Payment Schedule and Loan Summary is amazing.
Thank you so much for this. Really appreciate it! 🙂
Scott
Karl says:
That’s a great story. Thank you for letting me know!