>Our company is about to go into a Kansas and the laws there state that rebates on loans either for early payoff or termination by repossession shall be figured by the 'acturial method'. I believe I know how to figure this for a rebate but I cannot find a published formula for this anywhere. (this is strange because almost all states use the term 'acturial method' somewhere in their statutes.) Can anyone provide a formula for figuring a rebate of interest on a precomputed loan using the 'acturial method'? Thanks!

http://www.osbckansas.org/DOCML/DOCMLLaws&Regs/Chapter%2016a.pdf

This goes through it all in detail. On page 9 and 10 you'll find.


The definition of “actuarial method” is derived from CCPA §107(a)(1)(A). The assumption underlying the actuarial method is that a periodic payment is applied first to accumulated unpaid finance charges (assuming there are no delinquency charges or other additional charges that take priority over finance charges). If the payment exceeds the
102 2001 Kansas Banking Law Book
unpaid accumulated finance charges, the remainder of the payment is applied to reduce the unpaid principal balance. The application of the actuarial method is really quite simple. First, the annualized stated interest rate is multiplied by the actual outstanding principal balance of the obligation. Next, the product of that calculation is multiplied by the actual number of days in the period in question (or by the assumed number of days in the period in a “360/360” transaction). Finally, the product of that calculation is divided by 365 (or, if agreed to by the parties, by 360). The result is the finance charge for the period in question. The consumer’s payment is first allocated to the payment of the calculated finance charge (after deducting any delinquency charges or other additional charges due during the period) and the remainder, if any, is applied to reduce the unpaid principal balance of the obligation.


Hope this helps,

S