The rule of 78s is a commonly used method of calculating the

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The rule of 78s is a method used to determine prepayment penalties. It is based on the assumption that interest charges are spread evenly over the life of a loan, so prepaying the loan will result in a loss of future interest payments for the lender. The rule of 78s allows the lender to calculate a penalty that is proportional to the amount of interest that would have been paid in future months, had the loan been paid off as originally scheduled.

The Rule of 78s Is a Commonly Used Method of Calculating