The Rule of 78's is also known as the "sum of the digits". The rebate would calculate as 41.67% of the total finance charges or $500.04. This is by far the simplest of the rebate methods.Ī 24 month installment contract with a total interest amount of $1,200.00 is paid off after 14 months.
Using the Pro-Rata rebate method, the rebate amount will be calculated according to the percent of the term remaining. However, each method will calculate the rebate amount differently. If you are unsure of which rebate methods are allowed by your state, you will need to check with your local authorities.Īll of the rebate methods rebate a percentage of the pre-computed finance (and insurance) charges on installment terms documents. Note: The rebate methods allowed can vary from state to state and possibly local regulations might come into play. The rebate amount is calculated using three possible rebate methods (Pro-Rata, Rule of 78's, or Actuarial.) When setting your Profit Center Preferences for Installments, you will need to specify which of these rebate methods your company will use.
#ACTURIAL INTEREST LOAN CALC FULL#
If the consumer pays the contract in full before the contract matures (expires), you will be required to rebate the unearned portion of the finance (and insurance) charges indicated on the signed contract. The finance (and insurance) charges are included as part of the calculated contract total. Installment terms sales (such as an auto loan) have pre-computed interest. The Installment terms type is used when you are offering in-house credit.