The arithmetic, worked through
A factor rate is a multiplier applied once, not interest accruing over time. At 1.30 you repay 1.3 times what you receive, whether it takes four months or nine.
$25,000 at 1.30 = $32,500 repaid, $7,500 cost.
$50,000 at 1.30 = $65,000 repaid, $15,000 cost.
$100,000 at 1.30 = $130,000 repaid, $30,000 cost.
Move the rate and the cost moves with it: $50,000 at 1.20 costs $10,000; at 1.40 it costs $20,000. Same money, double the price.
Why the daily payment misleads
Two offers on $50,000: one repays $65,000 over 6 months, the other $70,000 over 12. The second has a much smaller daily payment and costs $5,000 more.
Daily payment is a cash-flow question. Total repayment is a price question. They get conflated constantly, usually in the direction that flatters the more expensive offer.
Ask both, but decide on the total.
What is not in the headline number
Origination or administration fees, sometimes 1 to 3 percent, occasionally taken from the advance so you receive less than the figure quoted.
ACH or processing fees per payment.
Ask for the total cost including every fee, and ask what actually lands in your account. Those are two different numbers more often than they should be.
The one question to ask every funder
“What is the total I repay, in dollars, including all fees — and what amount actually arrives in my account?”
Any hesitation answering that is information about the funder, not about the paperwork.