# 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](/guides/cost-caps-explained/).
- **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](/calculators/flat-fee-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](/calculators/bridging-loan-cost/) 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](/calculators/flat-fee-apr-converter/) — put a flat fee on the same scale as a rate
- [Bridging-loan cost calculator](/calculators/bridging-loan-cost/) — cash cost and total to repay
- [Cost caps explained](/guides/cost-caps-explained/) — what a 100% cap guarantees
- [Business credit cards explained](/guides/business-credit-cards-explained/) — comparing a card APR with a flat fee
- [The three Credicorp products](/products/) — Loan, Flex and Slice in detail
- [How short-term business finance is priced](/articles/how-short-term-business-finance-is-priced/) — the cost drivers behind the figures

[Compare Loan, Flex and Slice at credicorp.co.uk →](https://credicorp.co.uk/compare/)