Factor rate calculator: the true cost of an advance
Funders quote a factor rate because it sounds small. Enter your offer below and see the total cost, the daily payment, and the effective annualized rate — the number you'd use to compare it against any other financing.
- Total you repay
- $67,500
- Cost of the advance
- $17,500
- Payment per business day
- $535.71
- Effective annualized rate (approx.)
- 126%
Computed from the actual payment stream (252 business days/year). This is why a “1.35” factor is not 35% APR: the balance declines while the fee stays fixed.
Benchmark: holding the full $50,000 on a 25% APR line of credit for the same period would cost about $6,250 in interest — 2.8× less than this advance’s fee. If you can qualify for the cheaper product and wait a few days, price that first.
Estimates for education, not a quote or offer. Actual terms come from the funder's agreement — always read the total payback amount, the repayment schedule, and any prepayment terms before signing.
Factor rates, straight answers
Why is the effective APR so much higher than the factor rate?
A 1.35 factor looks like "35%," but you repay the balance daily while the fee stays fixed. Halfway through the term you've repaid half the money yet still owe the full fee — so the annualized cost of the money you actually have runs far higher. The calculator solves the real rate from the payment stream.
Does paying an advance off early save money?
Usually not — the total payback is fixed by the factor rate, so early payoff raises your effective APR (same fee, less time). Some funders offer prepayment discounts, but only if they're written into the agreement before signing. Ask.
What's the difference between a fixed daily debit and a card split?
A fixed debit pulls the same amount every business day regardless of sales. A card split (or lockbox) takes a set percentage of each day's card sales — slow days mean smaller payments, and the payoff date flexes. For card-heavy businesses the split is usually the safer structure.
Is a merchant cash advance ever the right choice?
It can be — when the money creates more value than it costs (a revenue-critical repair, inventory with strong margin) and cheaper products are out of reach on timing or credit. The point of this calculator is to make that trade visible before you sign.
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