Would you explain, please, what an actuarial loan is?
When the term "actuarial" is applied to lending, it refers to a method of calculating the rebate or refund of precomputed finance charges. Some loan contracts call for simple interest (interest is earned in arrears and is not included in the amount of the note). Other contracts are signed for an amount that includes the interest (precomputed interest or add-on interest). If the borrower pays off a loan written with precomputed interest early, consumer protection laws mandate that the borrower will receive a refund or rebate of the unearned portion of the precomputed interest.
Rebates can be figured under several methods. State law may limit the methods that can be used by a given lender. As a general rule, rebates calculated under the actuarial method are more favorable to the borrower than rebates calculated under another method called the "Rule of 78s."
If you are signing a loan contract that included precomputed interest, check to see what rebate method will be used in the event of an early payoff. The actuarial method (or U.S. Rule) is what you should be looking for.
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When the term "actuarial" is applied to lending, it refers to a method of calculating the rebate or refund of precomputed finance charges. Some loan contracts call for simple interest (interest is earned in arrears and is not included in the amount of the note). Other contracts are signed for an amount that includes the interest (precomputed interest or add-on interest). If the borrower pays off a loan written with precomputed interest early, consumer protection laws mandate that the borrower will receive a refund or rebate of the unearned portion of the precomputed interest.