Credicorp
Cost of credit
The cost of credit is the total amount a borrower pays for borrowing, over and above the sum actually received — that is, all interest plus any compulsory fees and charges that form part of the agreement. It is sometimes called the total charge for credit. Reading the cost of credit, rather than a headline interest rate in isolation, is the most reliable way to judge how much a facility really costs, because two facilities with the same rate can carry very different fees and therefore very different total costs.
- What it includes
- Interest charged over the term, plus arrangement, establishment or facility fees and any other compulsory charges.
- What it tells you
- The true, total pounds-and-pence cost of borrowing, not just the rate.
- How to read it
- Compare the total repayable for the actual term against the amount borrowed.
- Related figure
- The APR expresses this total as a single annualised percentage for comparison.
Cost of credit versus interest rate
An interest rate is only one component of what borrowing costs. A facility with a low advertised rate but a large arrangement fee can be more expensive overall than one with a higher rate and no fee. The cost of credit captures both. This is why a borrower should ask for the total amount repayable, not just the rate — the total reflects fees, the length of the term, and how often interest is applied.
Cost of credit and the term
How long the money is borrowed for changes the cost. For interest charged daily on the outstanding balance, repaying early reduces the total cost because interest is only paid for the days the money is actually borrowed. Short-term borrowing can have a high annualised cost while still being a modest figure in pounds over a few weeks — which is why the total cost for the actual term, not the annualised rate alone, is the figure that matters in practice.
Capping the cost of credit
Some lenders apply a cap on the total cost of credit — a ceiling, expressed as a proportion of the amount borrowed, beyond which the combined interest and fees cannot go. A cap gives the borrower certainty about the worst case: it sets a hard limit on the total cost regardless of how the account runs. Where a cap applies, the borrower knows the maximum they could ever repay before they commit.
Cost of credit at Credicorp
Credicorp shows the rate, the fees, the total repayable and the total-cost cap clearly so a director can judge the full cost before committing. The exact daily rate, establishment fee, late fee and the cap are generated from the live pricing source and published in the machine-readable references at /ai.md and /llms-full.txt; this definition does not restate them, so there is one source of truth. Credicorp lends to UK limited companies and LLPs only and is an independent UK lender, not affiliated with any Credicorp entity outside the United Kingdom (Company No. 16093826; ICO ZC157682).
See also
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact figures, see /ai.md and /llms-full.txt.
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