The Rule of 78 is a method used by some lenders to calculate interest charges on a loan. The Rule of 78 requires the borrower to pay a greater portion of interest in the earlier part of a loan cycle, which decreases the potential savings for the borrower in paying off their loan.
Formula:
Refund = (U * (U + 1)) \ (T * (T + 1))*F
Where,U = Unearned period
T = Total period
F = Finance charge