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Factor Rate to APR Converter

This calculator converts factor rates and any fees you've been quoted into an annual percentage rate (APR). It's important to know the actual costs, so you can weigh up the opportunity cost vs the cost of the loan.

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Factor to APR Summary

Principal

Interest & Fees

Interest & Fees
$9,000.00
Total Payback
$39,000.00
Interest Rate
60.83%
APR
96.64%
Repayments
6 payments of $6,500.00

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The different types of interest 

Quotes don't always speak the same language. Here's how the three measures compare.

FACTOR RATE

A decimal multiplier

Used by merchant cash advances and short-term loans, expressed as a figure like 1.3 or 1.5. The full interest is charged to the principal up front, and fees sit outside it

APR

The true yearly cost

An annual percentage rate reflects the actual yearly cost of funds. It includes the frequency of compounding and all fees and charges, which makes it the fairest basis for comparison.

INTEREST RATE

Annualised, fees aside

The annual rate charged as a percentage of the principal. Unlike APR, it leaves out compounding frequency, fees and charges.

How the calculator works — block

How the calculator works

Worked through with the default figures: a $20,000 advance at a 1.3 factor rate over 180 days with $620 in fees.

1

Work out the interest

Multiply the loan by the factor rate: 20,000 × 1.3 = 26,000, so the interest is $6,000.

$6,000 interest
2

Annualise the rate

Divide the interest by the loan: 6,000 ÷ 20,000 = 0.3, then 0.3 × 365 ÷ 180 = 0.6083, a simple interest rate of 60.83%.

60.83% simple rate
3

Model the compounding

Apply the repayment frequency to model compounding across each payment, building an amortisation schedule for an effective rate of about 110.88%.

110.88% effective
4

Add the fees

Annualise the fees: 620 ÷ 20,000 × 365 ÷ 180 = 0.0629, which is 6.29%.

+6.29% fees

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This process will not affect your credit rating in any way.