Factor rates quote total payback (e.g., 1.35×). To approximate APR, we compute the internal rate of return (IRR) of the remittance schedule. It’s an estimator for education; state disclosure rules (e.g., California SB‑1235 and New York DFS) define standardized methods for official disclosures.
What drives the APR estimate
- Advance amount and factor rate (total payback)
- Term in days/weeks/months and remittance frequency
- Fixed remittance vs % of card receipts (variable cash flows)
Try the calculator
Estimate costs and compare options in a minute.
Example
Assume $50,000 at a 1.35× factor ($67,500 total) with 22‑week daily remittances. Using IRR on the cash‑flow schedule yields an estimated APR that can be compared to loan options. If remittances are a % of card receipts, the timing varies and the APR range broadens.
FAQs
FAQ
Is a factor rate the same as APR?
No. Factor rate is total payback. APR depends on cash-flow timing and is computed from the payment schedule (IRR).
Do states require specific disclosures?
Yes. California SB-1235 and New York DFS require standardized disclosures for commercial financing. Official disclosures may differ from educational estimates.
Can I lower my cost?
Shorter terms, early-pay discounts (if available), and refinancing into lower-cost products can reduce total cost.