2 min read
Illustrative only. Assumes a fixed rate and equal monthly repayments (annuity). Your actual offer depends on Credicorp’s assessment of your company.
The three tools
A cap sets a ceiling: above it, you are protected. A floor sets a minimum: below it, the rate stops falling. A collar combines the two, keeping your rate inside a band.
What each costs
A cap is bought for a premium — insurance against rises, with full benefit from falls. A collar is often cheaper, because selling the floor helps fund the cap, but you give up the lowest rates. A standalone floor is the lender’s protection, not usually yours.
When hedging beats fixing
Hedging keeps your loan variable, so you retain some benefit if rates fall, while capping the worst case. It suits larger, longer facilities where a rise would strain interest cover but you do not want to lock in a higher fixed rate.
Size the protection
Work out what a rate rise would cost first, then judge whether a cap premium is worth it. The calculator below shows the payment at different rates.
Where Credicorp fits
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
See when fixing makes sense and rate cap.
Frequently asked questions
Do I need a cap on a small loan?
Rarely. Caps carry a premium and suit larger, longer facilities where a rise would materially hurt. On a small loan, fixing or simply stress-testing is often enough.
What is the downside of a collar?
You give up the lowest rates. In exchange it is cheaper than a standalone cap and still protects you from big rises.
Is hedging the same as fixing?
No. Hedging keeps the loan variable but limits its movement. Fixing replaces the variable rate with a locked one for a period.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.