have u thought if loan??
Rule of 78 Loan Calculator
http://www.reidtax.com/rule78.html
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What is Rule78 ?
http://www.askdrmoney.com/Ruleof78.htm
WHAT'S IT ALL ABOUT?
The Rule of 78 is used for car and other installment loans. It is a
method of allocating a loan's interest and principal.
The Hire Purchase Act requires use of the rule of 78 for car loans
where the car is valued at less than $55,000 without COE. (This is
about $88,000 with COE.)
The rule applies most installment payments in the early years of a
loan to payment of interest rather than principal.
Therefore, if you repay a 10 year loan in just 4 years, you will
have more than 6 years of principal to repay.
An alternative to the rule of 78 is known as monthly rest. It is
a variable rate which calculates interest charges using the
effective interest rate (EIR). With this method, you pay interest
charges only during the period that you borrow the money.
For this reason, EIR with monthly rest is considered a fairer
method of calculating interest rates, especially when the loan is
repaid before the due date.
HISTORY
Rule of 78 was popular as a short-hand method for calculating the
remaining interest on a loan in the days before financial
calculators.
In those early days, the rule of 78 was applied to all loans. Today
it remains only for car loans.
In other countries, like the US, the rule of 78 has been dropped.
It is not permitted for car loans of more than 5 years and it is
rarely used for loans less than 5 years.
BANKS: THE RULE OF 78 IS OK!
Singapore banks take the position that the rule of 78 results in a
fixed-rate loan which car-buyers prefer.
Banks also point out that the rule of 78 makes it only slightly
more expensive to repay a car loan early. As an example, take a
$90,000 7-year car loan charging 2.5 per cent flat rate
interest.
If redeemed at the end of year 3, it will cost $240 more under the
rule of 78 than it would if interest payments were calculated using
the effective interest rate (EIR) with monthly rest. (This is a
variable rate where interest rates are recalculated monthly).
While $240 on a $90,000 loan is not much, it is a substantial
amount when aggregated over many car loans.
If banks switched from the rule of 78 to EIR, the total foregone
interest would likely amount to tens of millions of dollars, which
may explain the preference of banks for using "the rule of 78 +
flat rates" for car loans.
HOW ABOUT "FIXED RATES WITH NO RULE OF 78"?
Banks state the problem as a choice between two alternatives: (i)
fixed rates -- (which use "the rule of 78 + flat rates") OR (ii)
variable rates -- (using EIR with monthly rest).
Banks overlook a third possibility: fixed rate loans using EIR
without the rule of 78.
Other familiar loans use EIR without the rule of 78, including home
loans, personal loans and credit card loans.
Take home loans. They offer two choices: variable and fixed rates
-- with fixed rate loans costing more.
Home loans also quote only the effective interest rate. They do not
quote a flat rate and do not use the rule of 78.
If applied to car loans, a buyer could choose between a 10-year
fixed rate loan costing, say, 5 per cent vs. a 10-year variable
rate loan costing 3 per cent. Both 5 and 3 per cent are effective
rates. Since these are the interest rates you are really paying,
there is no need to mention a flat rate.
It is not clear if banks will (i) follow a fixed rate model such as
this or (ii) hang on to the antiquated "rule of 78 + flat interest
rates".
When the Hire-Purchase Act is amended (by Oct 1), it will likely
give banks more leeway to set terms and conditions as they see fit.
Then, the principal of "buyer beware" will become more important
for car loans and other installment loans.
FORMULA
Assume a loan is repaid early. Here is the formula for calculating
the remaining interest to be returned to the borrower on a loan
using the rule of 78:
Rebate of interest = [(n (n+1)) / (N (N + 1))] x TI
n = the number of months remaining on the loan
N = the total loan period
TI = the total interest charged over the period of the loan
You may recognize this as the sum of the years digits formula used
in accounting to determine the rate of depreciation of
assets.
This depreciation method is not permitted under Singapore or US
GAAP (Generally Accepted Accounting Principles) because of the same
problem that arises in its use under the rule of 78: it charges
most depreciation in the early years which results in overly
aggressive depreciation of assets. 
