Tool · Precomputed interest

What is my payoff on a precomputed loan?

Common on car loans and finance-company loans. The finance charge is fixed at signing, so paying off early means a rebate of the part not yet earned, and the rebate method decides your payoff. Enter the contract and how many payments you have made. See the payoff under the Rule of 78s and under simple interest, and how far apart they are today.

Reviewed 23 September 2026 · Method: precomputed interest and the Rule of 78s · Example values are fictional

Result

$15,000.00 at 18% for 60 months, 18 payments made.

Your payoff is about $12,122.32 under the Rule of 78s.$15,997.86 is left on the schedule; the rebate of unearned interest takes it down to the payoff. The Rule of 78s keeps $316.64 more of the finance charge than a simple-interest loan would have charged by now.

Run the full term

42 more payments of $380.90

Still to pay: $15,997.86
Interest still to pay: $3,875.54
Paid off in: 42 months

+$4,192.18 more

Pay off now, Rule of 78s

sum-of-the-digits rebate

Payoff today: $12,122.32
Rebate: $3,875.54
Interest kept by lender: $3,978.54

+$316.64 more

Your contract, as entered

Pay off now, simple interest

actuarial rebate

Payoff today: $11,805.68
Rebate: $4,192.18
Interest kept by lender: $3,661.90

Lowest cost

Your payoff is about $12,122.32 under the Rule of 78s. After 18 of 60 payments, $15,997.86 remains on the schedule. Paying off now earns a rebate of $3,875.54 under the Rule of 78s, or $4,192.18 under the actuarial method, a difference of $316.64.

Line	Run the full term42 more payments of $380.90	Pay off now, Rule of 78ssum-of-the-digits rebate	Pay off now, simple interestLowest costactuarial rebate
Amount financed	$15,000.00	$15,000.00	$15,000.00
Finance charge for the full term	$7,854.08	$7,854.08	$7,854.08
Paid so far	$6,856.22	$6,856.22	$6,856.22
Remaining scheduled payments	$15,997.86	$15,997.86	$15,997.86
Rebate of unearned interest	$0.00	$3,875.54	$4,192.18
Interest kept by the lender	$7,854.08	$3,978.54	$3,661.90
What you still pay	$15,997.86	$12,122.32	$11,805.68
Total cost of the loan	$7,854.08	$3,978.54	$3,661.90

Payoff after each payment

Payoff, Rule of 78sPayoff, simple interest

Show the math

The contract
  Amount financed      = $15,000.00;  contract rate 18%;  60 monthly payments
  Monthly rate r       = 18% ÷ 12 = 1.5%
  Payment              = amount × r × (1+r)^n ÷ ((1+r)^n − 1) = $380.90
  Finance charge       = 60 × 380.9014 − $15,000.00 = $7,854.08   fixed at signing
  Total of payments    = $22,854.08

After 18 payments, 42 remain
  Paid so far          = 18 × payment = $6,856.22
  Remaining payments   = 42 × payment = $15,997.86   (what a precomputed statement often calls the balance)

Rule of 78s rebate
  Sum of the digits    = 1 + 2 + … + 60 = 1830;  remaining digits = 1 + 2 + … + 42 = 903
  Unearned interest    = finance charge × 903 ÷ 1830 = $3,875.54
  Payoff               = $15,997.86 − $3,875.54 = $12,122.32

Actuarial rebate (simple interest)
  Balance owed         = what a level-payment loan at 18% still owes after 18 payments = $11,805.68
  Unearned interest    = $15,997.86 − $11,805.68 = $4,192.18

Difference             = $12,122.32 − $11,805.68 = $316.64   extra kept by the lender under the Rule of 78s
The Rule of 78s assigns 60/1830 of the finance charge to month 1 and 1/1830 to the last month, so more is treated as earned early. The gap is widest around a third of the way through the term and closes to zero at the end.

Questions to ask your lender

Is this loan precomputed, or simple interest? I have assumed precomputed, with the finance charge of about $7,854.08 fixed at signing.
If I pay off now, how is the rebate of unearned finance charge calculated: the Rule of 78s (sum of the digits) or the actuarial method? The difference on my numbers is about $316.64.
What is my exact payoff amount as of today, through what date is it good, and does it include any fees or a prepayment penalty?
Does my statement balance show the remaining payments (about $15,997.86) or the principal owed? Which one does the payoff start from?
If I pay extra without paying off, does it shorten the loan and earn a rebate, or does it only prepay the next instalments?

Assumptions and limits

The finance charge is the level-payment interest at the contract rate over the full term, which is how precomputed contracts are usually written so that the disclosed APR equals the contract rate. If your contract states a different finance charge, use the ratio shown in the math.
Every payment is assumed on time and in full. Late fees and other charges are not included.
The Rule of 78s figure follows the sum-of-the-digits formula. Some contracts apply a small acquisition charge or a minimum earned charge on top; the contract governs.
Federal law prohibits the Rule of 78s for calculating the prepayment refund on covered precomputed consumer loans with terms exceeding 61 months made after 30 September 1993 (15 U.S.C. 1615), and a number of states restrict or prohibit it on shorter loans. The tool does not know your state; ask the lender which method applies.
Your payoff letter is the authoritative figure. This tool shows what to expect and why the number differs from your balance.

Learn more

Thinking of refinancing this loan? Enter the payoff from here as the balance in Does refinancing help?. On a simple-interest loan, see where your payments went.