The Rule of 78 is a method of approximating interest in an amortization schedule. It is a straight-line approximation where 12/78 of the total interest of a loan payable in 12 periods is paid in the first period, 11/78 is paid in the second period, 10/78 in the third period and so on.
When using rules of 78, Loanalyst uses the bonds outstanding method if the payment start date is more than one period from the loan start date. For example, 24/90 of the total interest for a loan payable in 12 periods is paid in the first period, if payment start date is two periods from the loan start date.
If we compute the loan from the normal example using the rules of 78 method we get the results below:
Notice the difference in interest paid allocation for rule of 78 and bonds outstanding method where payment start date is two periods from the loan start date.