Quick answer
The total cost of finance is every dollar you'll pay over the life of a loan beyond the amount borrowed: interest, establishment and ongoing fees, broker or legal costs, valuation fees and any early-exit charges you expect to trigger. Add it to the amount borrowed to get the total repaid. That single dollar figure is what your growth move has to earn back, and it's the fairest way to compare offers.
Key points
- Total cost of finance = everything you pay over the term, minus the amount borrowed.
- Include establishment, ongoing, valuation, legal and exit costs — not just interest.
- Compare offers on total cost and on how repayments fit your ramp-up.
- A longer term usually lowers each repayment but raises the total cost.
- Formula
- Total of all repayments and fees − amount borrowed
- Use it for
- Payback maths and comparing offers
- Ask lenders for
- Total repayable over the term, in dollars
When you’re deciding whether a growth move will pay for itself, the price of the money needs to be in the same units as the profit it will earn: dollars. That’s what the total cost of finance gives you. It strips away the marketing of any offer and answers a simple question: how much more than I borrow will I pay back, all up?
What goes into the total cost of finance?
| Component | What it is | Notes |
|---|---|---|
| Interest | The charge for borrowing over the term | Calculated in different ways by different lenders |
| Establishment fee | One-off cost to set up the facility | Sometimes added to the loan amount |
| Ongoing fees | Monthly or annual account, line or service fees | Common on lines of credit |
| Valuation fee | For property-secured loans | Paid to the valuer, sometimes via the lender |
| Legal and settlement costs | Documentation, registration, discharge | Your own and sometimes the lender’s |
| Broker or referral fees | Where applicable | Should be disclosed |
| Exit or early repayment fees | If you pay out before the term ends | Count them if you expect to repay early |
Add every item you expect to pay. Then:
Total cost of finance = (all repayments + all fees and charges) − amount borrowed
Total repaid = amount borrowed + total cost of finance
The total repaid is the number your growth move’s cumulative extra gross profit must beat. It’s the input our Growth ROI calculator asks for.
How do you get the figure from a quote?
Ask the lender or your lending specialist for:
- The total amount repayable over the term, assuming you make every scheduled payment.
- A full list of fees, including any that apply on early repayment.
- Third-party costs you’ll pay separately (valuation, legal).
If the quote shows a monthly repayment, you can check it yourself: multiply the repayment by the number of months, add fees paid separately, and subtract the amount borrowed. For lines of credit, estimate how much you’ll draw and for how long, then add line fees.
A worked comparison (illustrative)
A manufacturer needs $200,000 for a new press and is comparing two offers.
| Offer A | Offer B | |
|---|---|---|
| Term | 36 months | 60 months |
| Monthly repayment | $6,900 | $4,600 |
| Upfront fees | $3,000 | $2,000 |
| Total repaid | $251,400 | $278,000 |
| Total cost of finance | $51,400 | $78,000 |
Offer B’s repayment is a third lower, which is tempting. But it costs $26,600 more in total. Which is better depends on the press’s payback. If it boosts gross profit by $9,000 a month from month two, Offer A’s repayments are covered with room to spare and the business saves $26,600. If the press takes a year to fill with work, Offer B’s lower repayment may be the one that keeps cash flow comfortable — and the extra cost is the price of safety.
The dollar comparison makes the trade-off visible. For how the term and payback interact, see the payback period guide. And if you’d like an offer shaped around your own move, start a 60-second enquiry.
What else matters beyond total cost?
- Flexibility. Can you draw in stages, repay early without penalty or redraw? A line of credit may cost more per dollar drawn but less overall if you only use it briefly.
- Repayment shape. Some facilities allow lower early repayments while a move ramps up. Matching repayments to benefit can matter more than a small difference in cost.
- Security. Property-secured loans can allow larger amounts and longer terms. Unsecured options avoid putting property on the line.
- Speed and certainty. A facility you can arrange in time to secure the opportunity may be worth more than a cheaper one that arrives too late.
Why don’t we publish rates?
Because every growth facility is priced on the business’s own circumstances — trading history, security, the amount, the term and the plan. A headline figure on a website tells you little about what your business would be offered. We’d rather talk about the total cost in dollars for your situation, which is what your payback maths needs. For more on how growth loans are structured, see business growth loans.
Common mistakes when comparing costs
- Comparing repayments, not totals. A lower monthly repayment over a longer term usually means a higher total cost.
- Forgetting fees paid outside the loan. Valuation and legal costs are real money even if they don’t appear in the repayment.
- Ignoring exit costs. If your move might pay back early and you’d like to clear the debt, early-exit fees matter.
- Leaving finance out of the business case. A move that looks profitable before finance costs may not be after them. See ROI on borrowed money.
Get a figure you can plan around
Knowing the total cost of finance turns a growth idea into a decision you can make with confidence. Tell us what you’re funding and how it will pay back, and a real person will talk you through structures and costs that fit.
Enquiring won’t dent your credit report, and your details stay with us rather than being sent to a pile of lenders. The form is about a minute long — accurate answers mean the costs we talk about are the ones that actually apply to you. See if you qualify →
Frequently asked questions
How do I work out the total cost of a business loan?
Add up every payment you'll make over the term — all scheduled repayments plus any upfront, ongoing or exit fees and third-party costs such as valuations and legal fees — then subtract the amount you borrowed. What's left is the total cost of finance in dollars.
Why compare loans by total cost instead of rate?
Because fees, terms and repayment structures differ between offers, a headline figure on its own doesn't tell you what you'll actually pay. The total cost in dollars captures everything and sits directly against the extra profit your growth move is meant to earn.
Does a longer loan term cost more?
Usually, yes. Spreading repayments over more months lowers each payment but typically increases the total cost of finance, because you're borrowing the money for longer. The right term balances affordable repayments against total cost and matches how long the move takes to pay back.
What fees should I ask about on a growth loan?
Establishment or application fees, ongoing account or line fees, valuation and legal fees for secured loans, broker fees if applicable, early repayment or exit fees, and any default or dishonour fees. Ask for a full schedule and include the ones you expect to pay.
Should the cheapest loan always win?
Not always. A slightly more expensive facility that lets you draw only what you need, repay early without penalty or match repayments to your ramp-up can leave you better off than a cheaper loan with rigid terms.