How do I compare two business loan offers fairly?

2 min read

Total repayableThe fair basis

FeesAdd them in

TermAffects total

GuaranteeA real factor

Why the rate alone misleads

Two offers with the same rate can cost very different amounts once fees, term and structure differ. A longer term lowers the monthly payment but raises the total; a low rate with a big arrangement fee can beat a higher rate with none. The only fair comparison is the total amount repayable, which the repayment calculator gives you.

The factors beyond cost

Even at equal cost, offers differ. Does one require a personal guarantee and the other not? Is one flexible on early repayment and the other penalising? Does one fund faster when you need speed? These can matter more than a small cost difference, as the existing choosing answer covers.

A clean comparison method

Line the two up side by side with the comparison checklist: total repayable, all fees, term, early-repayment terms, guarantee requirement, and speed. Score each on what matters to your situation. The cheaper headline is not always the better deal — the whole package is what you are choosing.

Frequently asked questions

Should I always pick the loan with the lowest rate?

No. The lowest rate can carry higher fees, a longer term that raises the total, or a required guarantee. Compare the total amount repayable and the whole package, then decide what fits your priorities.

How do I compare a short-term and a long-term offer?

Look at both the monthly payment and the total repayable. A longer term eases monthly cash flow but costs more overall; a shorter one costs less in total but demands higher payments. Match the trade-off to your cash flow.