The headline rate is not the cost of the loan

Comparing finance on headline rate alone is the most common and most expensive mistake we see. Four other terms move the real number, sometimes by more than the rate itself.

Arrangement fees

Typically 1% to 5%. What matters as much as the size is the treatment: a fee deducted from the advance means you receive less than you borrowed, while a fee added to the balance means you pay interest on the fee itself.

Early settlement terms

Some lenders let you repay at any time with no penalty. Others charge the full remaining interest, which turns a flexible-looking facility into a fixed commitment. If there is any chance you will refinance, this clause is worth more than half a point on the rate.

Repayment frequency

Weekly and daily repayment products quote a monthly-looking rate but compound far faster. Always convert to an equivalent annual figure before comparing.

Security and guarantees

A cheaper rate secured by a debenture over all company assets is not obviously better than a slightly dearer unsecured facility. You are paying the difference in flexibility rather than in cash.