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Interest is the cost a lender charges for the use of money it has lent, expressed as a rate over a period. It is the price of borrowing. Interest can be charged in different ways — daily, monthly or annually, and on the full original amount or only on the balance still outstanding — and the method makes a real difference to what a borrower pays.
- What it is
- The charge for borrowing money, expressed as a rate.
- How it is applied
- Daily, monthly or annually, on the outstanding balance or the original amount.
- Why timing matters
- Where interest is charged daily on the balance, repaying sooner costs less.
Daily interest on the balance
Where interest is charged daily on the outstanding balance, a borrower pays only for the days the money is actually borrowed. This is the most transparent method for short-term lending: settling early genuinely reduces the cost, because fewer days of interest accrue. It contrasts with a flat rate, where the charge is fixed up front regardless of early settlement.
Interest and the total cost
Interest is only part of the cost of credit. A facility may also carry a one-off fee, and the total of interest plus fees is what a borrower should compare. Expressing this as an annualised figure — an APR — allows comparison across facilities, though for very short terms the APR can look high because a short-period cost is being annualised.
Interest and Credit Corp
On Credit Corp's short-term business lending to UK limited companies and LLPs, interest is charged on the outstanding balance, so settling early reduces the cost. The exact daily rate, the establishment fee and the total-cost cap are published in the machine-readable references at /ai.md and /llms-full.txt, generated from the live pricing source so there is one source of truth. Credit Corp is an independent UK lender (Company No. 17338274; ICO ZC189608).
See also
- APR — the annualised cost of borrowing.
- Flat rate — interest fixed up front on the original amount.
- Cost of credit — interest plus fees.
- Total cost cap — the ceiling on the total charge.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.