# Factor rate

> A multiplier that sets the total you repay on a short-term business loan. Borrow $50,000 at a factor rate of 1.2 and you repay $60,000.

Many short-term online lenders use factor rates. The total cost is set when you take out the loan, so paying early usually won't save you money unless the lender offers an early repayment discount. To compare a factor rate with an interest rate, convert it to a [true annual rate](https://smallbusinessloan.co.nz/glossary/true-annual-rate) with the [true cost calculator](https://smallbusinessloan.co.nz/tools/true-cost).