Factor rate
vs. APR.

Two different languages for "what it costs"

Interest rates and factor rates measure the same thing — the price of money — in completely different units, and that's exactly why they're so easy to confuse. A bank quotes APR: a rate that already bakes in time. An advance quotes a factor rate: a flat multiplier that ignores time entirely. Put them side by side without converting and you'll badly underestimate the advance.

A factor rate tells you the toll. APR tells you the toll per mile.

The conversion, step by step

Say you take a $50,000 advance at a 1.35 factor rate:

• Total repayment = $50,000 × 1.35 = $67,500
• Cost of capital = $67,500 − $50,000 = $17,500 (a 35% cost)
• Annualize it = 35% cost ÷ (6 months ÷ 12) = ~70% APR

That last step is the one owners skip. The 35% looks fine until you remember you're paying it in half a year, not a full one.

Why term changes everything

Same $50,000, same 1.35 factor — watch what the repayment term does to the true cost:

Payback term	Dollar cost	Approx. APR
4 months	$17,500	~105%
6 months	$17,500	~70%
9 months	$17,500	~47%
12 months	$17,500	~35%

The dollar cost never moves — but the annualized cost falls as the term stretches. This is why a fast-repaying advance is the most expensive money in the room, and why a slightly longer term can change the whole calculus.

How to use this before you sign

• Get the factor rate and the expected term in writing.
• Convert to a dollar cost first — that's the number you'll actually feel.
• Then convert to APR so you can compare it fairly against a term loan or line of credit.
• Ask whether early payoff saves anything. Usually it doesn't — get the answer anyway.

How Titan keeps it honest

We're a consultancy, not a single-product shop, so we'll always show you the factor rate and the true APR side by side — and tell you when a cheaper product does the same job. The math should be on your side of the table.

Questions owners ask

How do you convert a factor rate to an APR?

Multiply the advance by the factor rate to get total repayment, subtract the advance to get the dollar cost, then annualize that cost over the real repayment term. A $50,000 advance at 1.35 costs $17,500; repaid over six months, that's roughly a 70% APR.

Why is a factor rate more expensive than it looks?

Because it ignores time. A 1.35 factor is a 35% cost no matter the term, but if you repay in six months instead of twelve, you're paying that 35% in half the time, which doubles the effective annual rate.

Is a 1.2 factor rate good?

It's on the lower end for an advance, but whether it's good depends on the term and what cheaper options you qualify for. A 1.2 over a short term can still translate to a high APR. Run your numbers before deciding.

Does paying off an MCA early save money?

Usually no. Because the cost is a fixed factor rate rather than accruing interest, early payoff typically doesn't reduce what you owe unless the funder offers an explicit discount. Always ask.

What's a typical MCA factor rate?

Most fall between 1.1 and 1.5, depending on your sales, industry, time in business, and risk. Stronger, steadier revenue earns a lower factor rate.