Loan Product Types in Intro XL

First and foremost: Always confirm with your state’s regulatory body which loan products are permitted.
Federal law prohibits pre-computed interest using the Rule of 78s for loans longer than 61 months, and 17 states ban such loans entirely.

Intro XL supports two primary interest calculation types:
Daily Simple Interest (without a grace period) and Pre-Computed Interest with the following rebate/refund options:

1. Rule of 78s Rebate – Interest rebate calculated using the Rule of 78s method.
2. Actuarial Method – Based on the original amortization schedule (rarely used in practice).
3. Hybrid Method – Automatically applies whichever is more favorable to the borrower: simple interest or actuarial.

Simple Interest Loans

Simple interest loans accrue interest based on the outstanding principal balance.
Accrual can be daily, monthly, or annually.

• Daily accrual means interest is calculated and added to the balance each day.
• Interest owed changes whenever the principal changes (e.g., after payments).

Pre-Computed Interest Loans

With pre-computed loans, the total interest for the loan term is calculated upfront and added to the principal to form the Account Balance.
When a borrower prepays, they are entitled to a refund (or “rebate”) of unearned interest. State law typically dictates how this refund is calculated.

This must be clearly disclosed in loan documentation.

Simple Interest vs. Pre-Computed – Key Differences

Industry Perception

Pre-computed loans have been criticized mainly due to the Rule of 78s methodology.
However, for borrowers who regularly pay a few days late, pre-computed loans can result in lower total costs compared to simple interest loans.