Why "cost of capital" and "APR" are different questions
A lender who says "you pay back $69,000 on $50,000 — that's 38%" is telling the truth about the total cost and misleading you about the price. The 38% would only be an annual rate if you kept the money for a full year and repaid it in one piece at the end. With daily payments over nine months, you don't: on average you're holding less than half the money for less than a year, which pushes the effective annual rate far above the sticker number. That's what this calculator computes — the APR-style rate that makes the payments worth the funds you actually received, the same way any loan APR is defined.
The three questions to ask any lender
- What is the total payback in dollars, and what do I net after fees? Both numbers in writing. The gap between them is the true cost of the money.
- What is the payment schedule? Daily withdrawals hit cash flow completely differently from a monthly installment of the same total. Two hundred daily debits can quietly become the biggest line item in your operating budget.
- Is there a prepayment benefit? On most MCAs and factor-rate products the payback is fixed — paying early saves nothing and only raises the effective APR. On amortizing loans, early payoff genuinely reduces interest.
Frequently asked questions
Is this calculator really free?
Yes. It runs entirely in your browser — nothing you type is sent to a server, stored, or shared. Your inputs are saved locally on your own device so they're still there next visit.
What's a factor rate, and why isn't it an interest rate?
A factor rate (like 1.38) is a multiplier on the advance: borrow $50,000, repay $69,000, full stop. It ignores time entirely — repay in 6 months or 18 and the dollar cost is identical. Interest rates are prices per unit of time; factor rates are not, which is why a "1.38" can be a triple-digit APR. Full explanation here.
Why is my effective APR so much higher than the "rate" I was quoted?
Three usual reasons: fees were deducted upfront (you pay interest on money you never received), payments start immediately (you never hold the full balance), and the quoted number was a factor rate or "simple interest" figure rather than an annualized one. All three are standard practice in merchant cash advances and short-term online loans.
Is a high-APR advance ever the right choice?
Occasionally — when the money bridges something short and certain (a purchase order with a signed contract behind it) and cheaper capital genuinely isn't available in time. The mistake isn't taking expensive money knowingly; it's taking it without knowing, or using nine-month money to fix a permanent working-capital gap.
This tool is for education and comparison only. It is not financial, legal, or tax advice, and it isn't a substitute for the disclosures in your actual loan documents. Verify every figure against the contract before signing.