What Is Buy Rate?
The buy rate is the factor rate a funder offers a broker before the broker adds any markup, the funder's actual base cost on the deal, which the broker then marks up to set the rate ultimately quoted to the merchant.
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The buy rate is the factor rate a funder offers a broker before the broker adds any markup, the funder's actual base cost on the deal, which the broker then marks up to set the rate ultimately quoted to the merchant.
Buy Rate explained
mcarocket's glossary defines it directly: buy rate is the factor rate offered by the funder before broker markup. It works alongside the factor rate itself, the decimal multiplied by the advance amount to calculate total payback, with the buy rate representing the funder's floor before any spread gets added.
A broker's earnings on a deal can come from two places depending on how the funder relationship is structured: points, or commission, quoted per percentage of the funded amount, and the spread between the buy rate and the marked-up rate actually quoted to the merchant.
Because most merchants never see the buy rate, they have no direct way of knowing how much markup sits between the funder's real cost and what they're being charged, one more layer of the pricing opacity that runs through this market broadly, where published pricing on comparable products disagrees by as much as 10x across vendors.
Why it matters when you're buying
If you're a broker comparing offers from two funders on the same deal, compare buy rates directly, not just the final rate quoted to the merchant, since the buy rate is what actually determines your margin room before you decide how much markup the deal can bear.
Frequently Asked Questions
What is a "buy rate" in an MCA deal?
Is the buy rate the same as the factor rate the merchant sees?
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