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The Rule of seventy eight methodology offers extra pounds to months in the earlier cycle of a loan. It is usually employed by brief-expression installment lenders who offer loans to subprime borrowers.
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In equally different types of loans, even so, the borrower pays precisely the same level of fascination over the loan if they make payments for the entire loan cycle without pre-payment.
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The Rule of seventy eight methodology presents extra body weight to months in the sooner cycle of the loan, so a larger percentage of curiosity is paid before.