How do I work out the true cost of two offers?

2 min read

Total repayableThe one true figure

Same termsCompare like-for-like

All fees inNot rate alone

Then weigh termsERC, flexibility

Step one: get comparable totals

Ask each lender for the total amount repayable — the sum of every payment, with all fees included — on exactly the same drawdown and term. If one offer is for a different term, ask for both at a common term so you are comparing like-for-like. This single figure absorbs the rate, the fee structure, and whether the interest is reducing-balance or flat, all of which can otherwise mislead.

Step two: handle different rate structures

If one offer is a factor rate or flat rate and the other an APR, do not compare the headline numbers — convert both to total repayable, or to an APR-equivalent, first. A '6% flat' can cost more than an '11% APR'. If terms genuinely differ and cannot be aligned, compare the cost per month alongside the total so a longer, cheaper-looking loan does not hide more interest. See APR vs factor rate.

Step three: weigh the terms behind the number

Once you know which is cheaper, look at the terms that are not in the total: is there an early repayment charge? Is a personal guarantee required? How fast does it fund, and can you overpay freely? A marginally dearer loan with better terms can be the right choice. Price first, then terms — in that order.

Put two offers side by side on the true cost calculator, read the true cost guide, and for a clean quote to compare, apply to Credicorp.

Frequently asked questions

Is the loan with the lower monthly payment the cheaper one?

Not necessarily — a lower monthly payment often just means a longer term, which usually costs more in total interest. To compare cost, use total repayable, not the monthly figure. The monthly payment matters for affordability, but for judging which loan is cheaper overall, only the fully-loaded total on comparable terms gives the honest answer.

What if the two offers have different terms?

Ask each lender to quote at a common term so the comparison is like-for-like. If that is not possible, compare both the total repayable and the cost per month, and be alert that the longer loan will usually show a higher total even at the same rate. Aligning the terms first is always the cleaner approach.