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Flat fees versus APR.
A flat fee and an APR describe the cost of borrowing in two different languages. On a very short term they can point in opposite directions — a low cash cost can carry a startling APR, and a high APR can mean only a few pounds. This guide explains the difference, why APR can mislead over days rather than years, and how to compare a Credicorp product like for like.
What each one measures
One is a price in pounds. The other is a rate, annualised.
A flat fee is a fixed charge for the borrowing, set as a percentage of the amount and not varying with time. Credicorp Slice is priced this way: a 6% flat fee on a supplier bill. Borrow £600 and the fee is £36, whether you repay over four weeks or eight. The cost is known the moment you sign, in pounds, and it does not move.
An APR — annual percentage rate — expresses the cost of borrowing as a yearly rate, taking interest and most fees and compounding them across a full year. It exists to let borrowers compare products of different sizes and terms on one scale. Daily-interest products such as the Credicorp Business Bridging Loan and Credicorp Flex charge 0.25% per day on the balance, which can also be expressed as an APR.
The two are not wrong, but they answer different questions. A flat fee answers "what will this cost me, in pounds?" An APR answers "what would this cost per year if it ran for a year?" For very short-term borrowing, that second question is largely hypothetical — and that is where APR starts to mislead.
Why APR can mislead on a very short term
Annualising a few days' borrowing magnifies a small cost into a large-looking rate.
APR was designed for borrowing measured in months and years — a mortgage, a car loan, a multi-year SME term loan. To annualise the cost of a loan that lasts a fortnight, the calculation has to assume the same cost is incurred again and again, cycle after cycle, for a whole year. That assumption rarely matches how short-term borrowing is actually used.
The effect is most extreme with a fixed fee. Suppose a £600 bill carries a £36 flat fee over six weeks. In cash terms the cost is £36 — knowable, capped, and the end of it. Express the same £36 as an APR and, because the calculation pretends the fee recurs every six weeks for a year, the headline rate runs into the hundreds of per cent. Nothing about the actual cost has changed. Only the unit of measurement has.
This is why a representative APR on a very short product can be a poor guide to whether it is good value. A borrower who fixes only on the APR may reject a product that costs a few pounds, or fail to notice that a lower-APR product over a longer term costs more in total cash. For short-term borrowing, the figure that matters most is the total pounds repaid and the cost cap — not the annualised rate on its own.
A like-for-like comparison
Illustrative figures using the operator's published terms. Repaid on schedule; always confirm the live cost at the point of application.
| Product | You take | Over | How it is priced | Cash cost |
|---|---|---|---|---|
| Credicorp Slice | £600 bill | 4 instalments | 6% flat fee | £36.00 |
| Bridging Loan | £300 | 30 days | 0.25%/day + £5 fee | £27.50 |
| Bridging Loan | £500 | 60 days | 0.25%/day + £5 fee | £80.00 |
| Credicorp Flex | £200 drawn | 20 days | 0.25%/day (+£5 first drawdown) | £15.00 |
Read across, not up and down. The honest comparison between a flat-fee product and a daily-interest one is the cash cost for the amount and the term you actually need — not a headline rate. Every Credicorp product is also capped so the total cost never exceeds 100% of the amount borrowed, which puts a hard ceiling on the figure in the last column.
Slice is a 6% flat fee with no interest. Interest on the Loan and Flex is 0.25% per day on the outstanding or drawn balance; the £5 establishment fee is one-time.
How to compare like for like
A short routine that works across flat-fee and interest products.
- Fix the amount and the term. Decide how much you need and for how long. Cost is meaningless until both are pinned down.
- Work out the total pounds repaid. For a flat fee, it is the amount plus the fee. For a daily-interest product, it is the principal plus interest over the term, plus any one-time fee.
- Check the cost cap. A 100% cost cap means the charge can never exceed the amount borrowed, whatever happens. See our guide to cost caps.
- Convert only if you need a common scale. If you genuinely need one number to compare against a card APR or an overdraft, convert the flat fee to an APR — but read the result knowing it annualises a short cost.
Two tools do the arithmetic for you. The flat-fee to APR converter turns a flat fee over a given term into an equivalent APR, so you can place it next to a card or overdraft rate. The bridging-loan cost calculator gives the cash cost and total to repay for a Bridging Loan at a chosen amount and term.
Where to go next
- Flat-fee to APR converter — put a flat fee on the same scale as a rate
- Bridging-loan cost calculator — cash cost and total to repay
- Cost caps explained — what a 100% cap guarantees
- Business credit cards explained — comparing a card APR with a flat fee
- The three Credicorp products — Loan, Flex and Slice in detail
- How short-term business finance is priced — the cost drivers behind the figures