Which characteristic is true for loans that use the Rule of 78s?

The characteristic that is true for loans using the Rule of 78s is that more interest is paid in the earlier stages of the loan. The Rule of 78s is a method of calculating interest on loans where the total interest charge is front-loaded, meaning that a greater portion of the total interest is paid off in the earlier months of the loan term. As a result, if a borrower pays off the loan early with this method, they will not benefit significantly from the interest savings because a larger amount of interest has already been paid in the earlier payments. This approach contrasts with loans that follow a standard amortization schedule, where interest is calculated based on the remaining balance, allowing borrowers to save interest when paying off early. The structure of the Rule of 78s makes it inherently disadvantageous for borrowers who intend to pay off their loans sooner than the full term.