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Rule Of 78 Interest Rebate Calculator

Work out rule of 78 interest rebate instantly with clear inputs, formula shown and shareable results.

About Rule Of 78 Interest Rebate Calculator

The rule of 78 allocates interest in proportion to the digits of the remaining months, so a 12-month contract assigns 12/78 of interest to month one. On early settlement the rebate is the sum of remaining digits over the sum of all digits — always less than a straight-line refund.

Formula

Rule of 78 rebate

Rebate = I × [k(k+1)/2] / [N(N+1)/2]

I
Total interest
k
Months remaining
N
Original term

Worked example

With the default values below, Rule Of 78 Interest Rebate Calculator returns Unearned Interest Rebate of $10,540.54. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total Interest On The Contractminimum 0
90,000
Original Term In Monthsaccepts 2–120
36
Months Remaining At Settlementaccepts 1–119
12

Results

Unearned Interest Rebate
$10,540.54
Interest Retained By The Lender
$79,459.46
Rebate As Share Of Total Interest
11.71%
Rebate Versus A Straight-Line Refund
-$19,459.46

Step by step

  1. 1Values used
  2. 2Rule of 78 rebate
  3. 3Unearned Interest Rebate= 10,540.54
  4. 4Interest Retained By The Lender= 79,459.46
  5. 5Rebate As Share Of Total Interest= 11.71
  6. 6Rebate Versus A Straight-Line Refund= -19,459.46

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.

Frequently Asked Questions

Why is the rebate less than pro rata?

Because the method front-loads interest, so the lender has already 'earned' more than a straight-line share by the settlement date.

Is the rule of 78 still permitted?

Many jurisdictions restrict or ban it for consumer credit in favour of actuarial rebates — check local rules.

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