How can I cut the cost of borrowing? — Answers

2 min read

Lower the rateStrengthen the case

Shorten the termLess interest

Cut the feesNegotiate, pay up front

Repay fasterOverpay if you can

Lever one: the rate

The rate is set from your risk, so the way to lower it is to look less risky. Fuller filed accounts, a stronger coverage ratio, a longer trading record, and — where appropriate — offering security all pull the margin down. A competing written quote is also a real negotiating tool. See how to get a better rate and improving creditworthiness.

Levers two and three: term and fees

Choose the shortest term your cash flow can sustain — less time accruing interest means a lower total. Then attack the fees: ask for every charge itemised, negotiate the arrangement fee where you can, and pay fees up front rather than capitalising them if cash allows, so you do not pay interest on the fee. See the full list of hidden costs to watch.

Lever four: repay faster

On a reducing-balance loan, overpaying — especially early — cuts the balance interest runs on and saves money, provided there is no offsetting early-repayment charge. Even modest regular overpayments add up over a long term. Check the product allows it and that overpaying genuinely reduces the total, then use genuine surplus to accelerate.

Model each lever's effect on the true cost calculator, read the true cost guide, and for a keenly-priced quote, apply to Credicorp.

Frequently asked questions

What's the single most effective way to cut borrowing cost?

For most businesses it is lowering the rate by strengthening the application — fuller accounts, better coverage, a longer record, security where suitable — combined with choosing the shortest affordable term. Those two together move the total more than anything else. Overpaying and cutting fees add further savings, but the rate and the term are the heavy levers.

Does shopping around actually save money?

Yes, materially — because rates are individually priced and lenders vary widely, comparing several firm quotes on total repayable often reveals a meaningful spread. A competing written quote also lets you negotiate the others down. Shopping around costs a little time and gives you both a cheaper option and leverage; it is one of the most reliable ways to cut the cost of borrowing.