Line of Credit Cost Calculator
Fees on the facility, interest on the balance.
Annual cost
$6,700
16% on the amount actually used
The headline rate is 11% and the effective rate on money you actually used is 16%, because commitment and arrangement fees are paid on the facility rather than the balance. A facility sized well above your real need is expensive insurance.
How the Line of Credit Cost Calculator works
Commitment and arrangement fees are paid on the facility rather than the balance, so a line sized well above your real need is expensive insurance. The effective rate on money you actually used is always above the headline.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How does a line of credit cost work?
Interest on the drawn balance, a commitment fee on the undrawn portion, and usually an annual arrangement fee. Only the first depends on how much you borrow.
How big should the facility be?
Large enough for the peak need and no larger. Every unused pound carries a commitment fee, so over-sizing costs money every month for insurance you never claim.
Is a line better than a term loan?
For fluctuating working capital, yes — you only pay interest on what you use. For a fixed investment, a term loan is usually cheaper and more predictable.
What is the effective rate?
Total annual cost divided by the average drawn balance. It is always above the headline interest rate, and the gap widens the less of the facility you use.