                                 CODE OF VIRGINIA

THE RULE OF 78 (§ 6.2-403)

A. The Rule of 78 is so named because the integers one through 12 added together
total 78.

B. The amount of the rebate of unearned interest to be credited upon the
acceleration or anticipation of a loan on which such rebate is required to be
calculated under the Rule of 78 shall be calculated as follows:

   1. Determine the denominator of the fraction, to be used as provided in
   subdivision 3, by adding the integers corresponding to the number of months
   over which the loan is to be repaid according to its terms, which in the
   example of a four-year loan would be the sum obtained by adding all of the
   integers in the series one through 48.

   2. Determine the numerator of the fraction, to be used as provided in
   subdivision 3, by adding in inverse sequence the integers corresponding to the
   number of months remaining on the loan after payment is anticipated, which in
   the example of a four-year loan anticipated after the third month, would be
   the sum obtained by adding all of the integers in the series 45 through one.

   3. Multiply the original amount of interest that would have been paid over the
   life of the loan by a fraction that has as its denominator the number
   determined as in subdivision 1 and as its numerator the number determined as
   in subdivision 2. The product is the amount of unearned interest to be rebated
   under the Rule of 78.

C. Payment anticipated between scheduled payment dates shall not be considered
but instead the succeeding scheduled payment date shall be used in determining
the amount of unearned interest to be rebated under the Rule of 78 pursuant to
this section.

HISTORY: 1987, c. 622, § 6.1-330.86; 2010, c. 794.