Interest is the cost of using the lender’s money over time. Fees are separate charges for arranging, administering or ending the agreement. Together they decide what you actually repay. A low headline rate carrying heavy fees can cost you more than a higher rate with none, so the two have to be read together.
When you compare offers, look past the monthly payment. Ask what the total amount payable is over the full term, and make sure any arrangement fee, documentation fee, option-to-purchase fee or early settlement charge is inside that figure.
Fees also change the shape of a deal. Charges added at the start increase the amount you finance, so you pay interest on them too. Charges at the end can make settling early far less attractive than it first looks.
Term length pulls in the same way. A longer term lowers each payment but means you pay interest for longer, so the total cost rises. A shorter term costs less overall but puts more pressure on monthly cash flow. Neither is automatically right; it depends on what your business could still sustain if trading slowed.
What sits behind the price you are offered is risk. The type and age of the asset and how readily it could be resold; the term; the deposit or contribution you put in; your trading history and credit profile; whether a personal guarantee or other security is given; whether the agreement is regulated or unregulated; and the lender’s own appetite at the time. Change those inputs and the price changes with them.
As a credit broker with a panel of over 60 lenders, we can set out the cost structure of the options open to you. We do not charge you a broker fee — we are paid commission by the lender on completion. We are not a lender, so the decision and the final terms rest with the lender and depend on your circumstances.