The deceptive Rule of 78 from a banks point of view
Payout your car finance early, the rule of 78 works for you. Payout your car finance later in the term, does it really make a difference using the rule of 78?
It is common for luxury car financiers in Australia to use the outdated “Rule of 78″ calculation when determining early payout amounts for clients. This method, discouraged by the ATO, penalises most early payout customers as it does not account for interest on an actuarial basis.
Some practitioners of the Rule of 78 actually claim that their method contains no penalty, when in fact most early payout customers subjected to the Rule of 78 pay considerably more than they would under an actuarial method.
If you would like to discuss your finance options with a finance consultant, please feel free to contact Platinum Car Loans on 1300 554 553.
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By Humberto Jumbo, July 30, 2010 @ 2:24 pm
I really enjoyed this post. I can tell you put in a great deal of effort and time into this post. I will be back to read more as you post more!