Annual percentage rate — five worked examples.
An interest rate is not what a line of credit costs you. The annual percentage rate is, because it folds the setup fee back into the rate. Here is that arithmetic at five amounts, with nothing left out.
What each amount actually costs.
Every line assumes the full amount is drawn on day one and carried for the whole year, with interest paid monthly.
| Amount drawn | Interest for the year | Setup fee | Total cost of borrowing | Annual percentage rate |
|---|---|---|---|---|
| $50,000 | $3,245 | $2,499 | $5,744 | 11.49% |
| $100,000 | $6,490 | $2,499 | $8,989 | 8.99% |
| $250,000 | $16,225 | $2,499 | $18,724 | 7.49% |
| $500,000 | $32,450 | $2,499 | $34,949 | 6.99% |
| $1,000,000 | $64,900 | $2,499 | $67,399 | 6.74% |
Examples only, not an offer. Each assumes a Lendmax Flexline in first position at an interest rate of 6.49%, the full limit drawn on the first day and carried unchanged for a one-year term, interest paid monthly, and the $2,499 setup fee paid at closing. Legal fees are payable to your own lawyer and are not included above, and other fees may apply, so your own annual percentage rate will differ. Your rate, your fees and your APR are stated in your written offer before you sign anything.
Why the smaller amounts cost more
The $2,499 setup fee is the same whatever you borrow, so on $50,000 it adds about five points to the rate and on $1,000,000 about a quarter of one. A longer term spreads it further: the same $100,000 over three years works out to 7.32% rather than 8.99%, and over five years to 7.00%.
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