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Simple English definitions for legal terms

rule of 78

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A quick definition of rule of 78:

The rule of 78 is a way to figure out how much money someone can save by paying off a loan early. This is especially helpful when the loan has higher interest payments at the beginning. To use the rule of 78, you add up the numbers for all the remaining payments and divide that by the total of all the payments. Then you multiply that percentage by the total interest. This helps people see how much money they can save by paying off their loan early.

A more thorough explanation:

The rule of 78 is a method used to calculate the amount of interest a borrower can save by paying off a loan early. This method is used when the interest payments are higher at the beginning of the loan period.

For example, if a borrower has a 12-month loan and decides to pay it off after 6 months, the rule of 78 can be used to determine how much interest they will save. To do this, the sum of the digits for the remaining six payments (21) is divided by the sum of the digits for all twelve payments (78). The resulting percentage is then multiplied by the total interest.

Here's an example:

A borrower takes out a $10,000 loan with a 12-month term and an interest rate of 10%. The total interest on the loan is $1,000. After making six payments, the borrower decides to pay off the loan early. Using the rule of 78, the borrower can calculate how much interest they will save:

  • Sum of digits for remaining six payments: 21
  • Sum of digits for all twelve payments: 78
  • Percentage of interest saved: 21/78 = 0.2692
  • Interest saved: $1,000 x 0.2692 = $269.20

This means that by paying off the loan early, the borrower will save $269.20 in interest.

The rule of 78 can be a useful tool for borrowers who want to save money on interest payments. However, it's important to note that not all loans use this method of calculation, and some lenders may charge prepayment penalties for paying off a loan early.

rule of 72 | rule of the floating subtrahend

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MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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