Rule of 78 Loan Calculator

How to use this calculator

1. Enter the loan amount, APR, and term in months for the loan you want to analyze.
2. We calculate the standard fixed-rate monthly payment and total interest for reference.
3. We then apply the Rule of 78 allocation to show how much interest is assigned to the first and last months.
4. Review the monthly payment, total interest, and the contrast between first-month and last-month interest to see how front-loaded the charges are.
5. Use this information to decide whether a Rule of 78 loan is acceptable or if you should seek a simple-interest alternative.

Inputs explained

Loan amount

The principal you are borrowing. The Rule of 78 method allocates the finance charge on this balance.

APR (%)

The stated annual percentage rate. Rule of 78 loans often quote an APR similar to simple-interest loans but back-load less of the interest into later months.

Term (months)

Number of scheduled monthly payments. The Rule of 78 uses the sum of the digits from 1 to N (for example, a 12‑month loan uses 12+11+…+1) as the denominator for interest allocation.

When to use it

• Understanding how a personal loan, auto loan, or small closed-end credit contract that uses the Rule of 78 front-loads interest.
• Comparing a Rule of 78 loan to a standard simple-interest amortizing loan before signing an agreement.
• Estimating why you might receive a small interest refund if you pay off a Rule of 78 loan early.
• Explaining to clients, students, or team members how the sum-of-digits method affects effective cost of borrowing.
• Stress-testing how shorter or longer terms change the degree of front-loading for the same loan amount and APR.

Tips & cautions

• Front-loading means that paying off early rarely refunds interest proportionally; read your loan documents carefully for precomputed interest language.
• Shorter terms still exhibit front-loading, but the effect can be especially noticeable on multi-year contracts.
• When shopping for loans, ask whether interest is calculated using simple interest or a precomputed Rule of 78 method.
• If you already have a Rule of 78 loan and plan to pay off early, use this calculator alongside your lender’s payoff quote to set expectations.
• Consider the total cost of borrowing and prepayment flexibility—not just the APR—when comparing loan offers.
• Simplified illustration; actual Rule of 78 implementations may vary by lender and jurisdiction.
• Does not show a full month-by-month schedule; it highlights first and last month interest and assumes a standard precomputed interest approach.
• Assumes a fixed APR and term; does not handle variable-rate or revolving credit products.
• Does not calculate actual early payoff refunds; real refunds may follow specific contractual or regulatory rules.

Deep dive

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