Two offers, the same dollar amount, wildly different true cost — and the difference hides in how the price is quoted. A factor rate and an APR are not the same animal, and confusing them is how owners overpay.
What a factor rate really means
A factor rate is a flat multiplier. A $50,000 advance at 1.35 means you repay $67,500 — period, no matter how fast you pay it off. There's no “saving interest” by paying early.
Why APR tells a different story
APR annualizes the cost. Because short-term advances are repaid in months, a modest-looking factor rate can translate into a high APR. That's not automatically bad — speed and access have real value — but you should know the real number before you sign.
How to compare offers honestly
- Ask for the total payback, the term, and the daily or weekly payment in writing.
- Divide total cost by the months of term to feel the real monthly drag.
- Weigh that drag against what the money will actually earn you.
The cheapest-looking rate isn't always the cheapest money. The right question is whether the cost buys a return worth more than the cost.