We don't like Rule 78 on loans

We don't like the outdated Rule 78 on personal loans. Deregulation of the banks in the 80s swept away many strict lending rules. Somehow Rule 78 survived.

It forces banks to load repayments towards the begining of the term, like in a mortgage. So the bank will calculate the interest up front and divide it between the 12 monthly repayments.

However, the first few months' payments will only eat away at the interest and not the amount borrowed. This is all fair practice, except when it comes to early repayments.

When you settle early on a loan, you will be entitled to a "rebate of interest" but because this is not calculated on a pro-rota basis you will never get the full amount you're entitled to.