FAQs

A factor rate is expressed as a decimal and is the amount of the total loan that the borrower will need to finalise the loan amount requested.

Factor rates are quoted by some lenders on typically short-term, 6-12 month business loans.

The APR is the Annual Percentage Rate. This is shown as an annual percentage and includes the interest rate or factor rate, plus the relevant fees and charges and compounding effects

Lenders may quote and/or advertise an interest rate which does not include fees and charges. The APR does include lender fees and charges.

A factor rate does not include fees and does not represent an annual interest rate. Converting a factor rate to APR is considered more useful for comparing loans.

A factor rate is a decimal not a percentage. It is used to calculate the amount of interest charged on a loan. A factor rate is not an annual interest rate.

A factor rate will be quoted by a lender when a loan application is made.

An APR is the annual interest rate on a loan when all fees and charges are included. The factor rate does not include fees and charges and is not an annual rate. It is a flat rate or figure used to determine the full amount payable on a loan prior to fees and charges being included.

When quoted a factor rate, multiply the rate by the loan amount to arrive at the total amount to repay the loan, understanding that fees and charges will also apply.

Fees and charges vary with lenders, with applicants and with different loans. Fees and charges will be provided by the lender.