RULE OF 78
rule of 78.A method for computing the amount of interest that a borrower saves by paying off
a loan early, when the interest payments are higher at the beginning of the loan period. • For
example, to determine how much interest is saved by prepaying a 12-month loan after 6 months,
divide the sum of the digits for the remaining six payments (21) by the sum of the digits for all
twelve payments (78) and multiply that percentage by the total interest. — Also termed rule of the
sum of the digits. [Blacks Law 8th]