Work out rule of 78 interest rebate instantly with clear inputs, formula shown and shareable results.
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.
Rule of 78 rebate
Rebate = I × [k(k+1)/2] / [N(N+1)/2]
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.
Because the method front-loads interest, so the lender has already 'earned' more than a straight-line share by the settlement date.
Many jurisdictions restrict or ban it for consumer credit in favour of actuarial rebates — check local rules.