Finance in Fifteen - An understanding of Interest Rates

In this episode, David and Trevor dig into a topic business owners are raising more and more: interest rates and what do they actually equate to in terms or cost to the business.  

Banks and other lenders alike, price interest to ensure they can cover their costs and deliver a return to the sources of the capital. But for many business owners, interest rates are still confusing, especially when they are described in different ways. APR, yield, flat rate, fixed, variable, gross, net of fees, the list goes on.

They also tackle the idea of what a “fair” rate of interest actually means. That question only makes sense once you understand the length of the borrowing, the type of finance being used, and whether all the available options have been properly considered. Most importantly, is the finance genuinely the right fit for the business?

Short-term lending products come up a lot in conversations and are often criticised publicly. David and Trevor take a balanced look at these options, explaining when higher interest products might make sense and when they probably do not.

The real focus is the cost to the business. Once the right type of finance is identified, the key questions are whether it is affordable and whether it supports the business’s goals.

This episode breaks interest rates down in plain terms. Hopefully, business owners will now have a better understand what they are being offered and the actual costs that apply...and especially if fees are included, too.