Total cost of credit means everything your company pays for a facility on top of the amount you actually borrow, taken together across the life of the agreement.
What it usually includes
- The interest or charge for credit that accrues over the term.
- Any set-up or establishment cost that applies to your product.
- Any other charges that form part of the agreed cost of the facility.
What it does not automatically include
Conditional charges that only arise if something happens — such as a late-payment charge or, on some products, an early settlement charge — are not part of the expected total cost, because they only apply in specific circumstances. They are still disclosed in your agreement so you know they exist.
Why it is a useful number
Looking at total cost of credit, rather than a single headline rate, gives you the clearest view of what borrowing will cost your company over the whole term. It is the figure to compare when weighing options.
Where to find yours
Your offer and agreement state the total cost of credit for your facility. We keep figures out of help articles because the total depends on your product, amount and term. This is exempt business lending; the Financial Ombudsman Service and FSCS do not apply.
See also: Arrears (glossary), Glossary: default charge and Complaints glossary: internal complaints process.