The earliest official use of the Rule of 78s to calculate the unearned portion of a loan's finance charge was in Indiana in 1935. Most loans in 1935 were for small amounts at low interest rates for short periods of time. It reduced the cost of loan calculations in a pre-computer era and was well suited for the small, short, and low interest rate loans of the era. In the United States, the use of the Rule of 78s is prohibited in connection with mortgage refinancings and other consumer loans having a term exceeding 61 months. On March 15, 2001, in the U.S. 107th Congress, U.S. Rep. John LaFalce (D-NY 29), introduced H.R. 1054, a bill to eliminate the use of the Rule of 78s in credit transactions. The bill was referred to the House Committee on Financial Services on the same day. On April 10, 2001, the bill was referred to the Subcommittee on Financial Institutions and Consumer Credit, where it died with no further action taken. In the UK, as part of the Consumer Credit Act of 2005, the Consumer Credit (Early Settlement) Regulations 2004 (SI 2004/1483)  which does away with the Rule of 78 in consumer credit lending was issued and brought into effect on 31 May 2005. The Rule of 78s deals with precomputed loans, which are loans whose finance charge is calculated before the loan is made. Finance charge, carrying charges, interest costs, or whatever the cost of the loan may be called, can be calculated with simple interest equations, add-on interest, an agreed upon fee, or any disclosed method. Once the finance charge has been identified, the Rule of 78s is used to calculate the amount of the finance charge to be rebated (forgiven) in the event that the loan is repaid early, prior to the agreed upon number of payments. It should be understood that with precomputed loans, a borrower not only owes the lender the principal amount borrowed, but the borrower owes the finance charge as well. If $10,000 is lent and the precomputed finance charge is $3,000, the borrower owes the lender $13,000 at the time the loan is made, whereas a simple interest borrower owes the lender only the $10,000 principal and monthly interest on the unpaid principal. A simple explanation would be as follows: suppose that the total finance charge for a 12-month loan was $78.00. That figure is representative of the sum of digits by adding the numbers together, i.e., 12,11,10,9,8,7,6,5,4,3,2,1 = 78.