rule of 78?

Definition:
A formula used to determine rebates on interest for installment loans. For a 12month loan: 1 + 2 + ... + 12 = 78.
After the first month, 12/78th of the interest is owed, 11/78ths after the second month, etc.

EXAMPLE OF A RULE OF 78s
The following formula is the simplest method of computing the refunds by the Rule of 78s.

(U * (U + 1)) \ (T * (T + 1)) = Rule of 78s refund decimal * F = Rebate

U = Unearned term periods
T = Term periods
F = Finance Charge

Example
This example is for a 12 month contract which prepaid at 3 months (9 months unearned) with a finance charge of $100.00.

U = 9
T = 12
F = $100.00

(9 * (9 + 1)) \ (12 (12 + 1)) = (9 * 10) \ (12 * 13) = 90 \ 156 = .5769 Rule of 78s refund decimal,
.5769 * $100.00 = $57.69 Refund

Source of Information above in pdf format.

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www.filedudes.com
Software AmortizeIT download page (freeware)
A fast, easy-to-use collection of 10 financial calculators. Amortization schedule has support for: extra and skipped payments or deposits; Adjustable rates; Rule-of-78's; Canadian type loans; APR disclosure statements; evaluation of loan acceleration scenarios. Payment & compounding periods may be independently set. 10 payment periods: daily, weekly, biweekly, twice monthly, every 4 weeks, monthly, bimonthly, quarterly, semiannually & annually. Additionally, there is support for simple interest and continuous compounding. Exact day payment and interest calculations also supported.

Edit: I, ratcat is not apart or connected to filedudes nor Software AmortizeIT or its programmer(s), and not a fanboy either.

Well I hope that helps