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Factor Rate to APR Converter
Convert a factor rate into an approximate APR over any term, so you can compare a fixed-cost offer against an interest-bearing one on a common basis.
The short answer
To convert a factor rate to APR, calculate the total cost as a percentage of the funded amount, then annualize it over the repayment term. Because repayment steadily reduces the outstanding balance, the effective APR is meaningfully higher than the simple cost-over-term figure — a 1.10 factor repaid monthly over six months works out near 34%, and nearer 37% on a weekly schedule.
Approximate APR
49.1%
Cost per $100 borrowed
$20.00
Estimated by solving for the rate that equates the payment stream to the amount received. A lender's stated APR may differ depending on how fees and payment timing are treated. Compare total dollars alongside this figure — annualizing a short facility inflates the percentage while the actual dollars are lower.
| Term | Cost per $100 | Approx. APR |
|---|---|---|
| 3 months | $20.00 | 141.0% |
| 6 months | $20.00 | 72.8% |
| 9 months | $20.00 | 49.1% |
| 12 months | $20.00 | 37.0% |
| 18 months | $20.00 | 24.8% |
| 24 months | $20.00 | 18.7% |
Same factor rate, same dollar cost, six different APRs. This is why APR alone cannot tell you whether a short facility is expensive.
Key takeaways
- The same fixed cost produces a higher APR over a shorter term.
- APR is the right tool for comparing facilities of similar length.
- APR is a poor tool for judging whether a short facility is expensive.
- Always compare total dollars alongside the annualized percentage.
Why the same cost gives different APRs
APR annualizes. Repay the same money faster and the percentage rises even though the dollars fall. On monthly payments, a flat $10,000 cost on $100,000 is roughly 34% APR over six months and roughly 18% over twelve.
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Frequently asked questions
Is a high APR always a bad deal?
Not necessarily on a short facility. Annualizing a cost repaid in four months mathematically inflates the percentage while the actual dollars are lower than a longer, cheaper-looking facility. Compare total payback as well.
Keep reading
These calculators are planning tools using standard industry conventions. They are estimates, not quotes, and are not an offer or commitment to lend. Actual terms depend on a review of your business.
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