Home/Resources/Glossary/Interest Rate
Glossary Term

Interest Rate

The annual cost of borrowing, shown as a percentage of the balance.

All glossary terms

In short

An interest rate is the annual cost of borrowing, shown as a percentage of the outstanding balance. Lower rates typically favour strong credit, established time in business, and newer assets.

What drives your rate

Lenders price a rate to match the risk of the deal. The main factors include:

  • Credit profile — stronger credit generally earns lower rates.
  • Time in business — established operators are seen as lower risk.
  • The asset — newer, more marketable equipment can lower the rate.
  • Term and structure — the length of the deal and down payment affect pricing.

Rate isn't the whole cost

The interest rate matters, but it's only part of what you pay. Term length, fees, and structure all shape the total cost of financing. A lower rate over a longer term can still cost more overall than a slightly higher rate over a shorter one. Look at the total cost, not just the headline rate, when comparing offers.

Common questions

How is an interest rate different from a factor rate?

An interest rate is charged on the declining balance and expressed annually; a factor rate is a flat multiplier on the amount advanced. They aren't directly comparable without converting to a common basis.

Can I get a lower rate later?

Refinancing can lower your rate if your credit or the market has improved. Whether it saves money overall depends on the new term and any fees.

General information only. This page is educational and does not constitute financial, legal, or tax advice. All financing is subject to credit review and lender approval. Rates, terms, and eligibility vary by applicant, asset, and lender, and are not guaranteed. Any figures or examples are illustrative. Please speak with a qualified advisor about your specific situation.