Factor Rate to APR Calculator
Factor rates make funding look cheaper than it is. A factor of 1.3 sounds like 30%, but because you repay steadily over a few months, the equivalent yearly rate is far higher. This calculator converts any factor rate into an estimated APR.
Enter your figures below. Results update as you type.
Estimated APR73%Factor rate 1.3 over 9 months
- Total you repay
- $65,000.00
- Total cost, including fees
- $15,000.00
- Payment each business day
- $343.92
- Number of payments
- 189
- Cost as a share of the amount funded
- 30%
The APR is far higher than the factor cost suggests because the balance shrinks with every payment while the cost was fixed on the full amount at the start.
How the Factor Rate to APR calculation works
Total payback = amount x factor rate; APR = periodic rate that repays the amount received, x periods per year
$50,000 at a factor rate of 1.3, repaid every business day over 9 months, costs $15,000 and works out to about 73% APR. The same factor rate over 18 months would be roughly half that, which is why the term matters as much as the factor.
Frequently asked questions
How do I convert a factor rate to APR?
Find the total payback, divide it into equal payments over the term, then solve for the interest rate that would produce those payments on the amount you actually received. A quick estimate is the cost percentage divided by the term in years, then doubled, because your average balance is about half the amount funded.
Is a factor rate of 1.3 the same as 30% interest?
No. 30% is the total cost as a share of the amount funded, however fast you repay. Repaid over 9 months of daily payments, that cost is equivalent to about 73% APR.
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