Every bank quoted a different rate. None quoted the real one.

Every bank quoted a different rate. None of them quoted the real one.

I run finance for a D2C brand. We recently closed a new ₹10 Cr working capital facility. The bank we eventually chose started at an effective cost of 13.68%. Closed at 11.06%. ₹26L/year saved — recurring.

The negotiation wasn't on the rate. Three principles for any operator running a credit process.

1. The cost of credit isn't the interest rate. It's the IRR.

Banks quote you Rate of Interest. That's one of three components of what credit costs:

• Interest rate (the headline)
• Processing fee (1–2% upfront on the facility)
• FD margin (cash locked with the bank, earning ~6.75% while you pay 9–10% on the full limit)

Roll them into one number — IRR, the rate that equates real cash inflows with interest outflows. IRR is the only honest cost of credit. In our process, headline rates across seven banks spanned 8.30%–12.25%. IRRs spanned 9.71%–14.14%. The cheapest headline rate (8.30%) was not the cheapest deal — half the capital was locked in FD at deposit rates while we paid on the full limit. Cheap rates with locked capital are expensive in disguise.

2. Every line item is a separate lever.

Banks split your cost across rate, PF, and FD margin because each looks small in isolation. 1% PF sounds modest. 30% FD margin sounds standard. 75 bps spread sounds market. Your job is to roll them back together and trade across them. Two structures on the same facility:

• Spread 0.90%, PF 0.75%, FD 25% → IRR 11.09%
• Spread 0.90%, PF 0.50%, FD 30% → IRR 11.06%

Effectively the same cost. Different structure. Liquidity (lower FD) versus upfront outlay (lower PF). The negotiation is across the line items, not within one.

3. Process is the negotiation.

Two banks is a comparison. Four is a discussion. Seven is a market. The math doesn't change with the number of banks. The leverage does. The moment a comparison table circulates, spreads start moving. That has nothing to do with how good a borrower you are. It has everything to do with the option set. You don't get rate-based concessions by being a good borrower. You get them by being a borrower with alternatives.

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Same bank, same risk, same security. The only thing that changed between 13.68% and 11.06% was what we knew, and what they knew we knew.

Same math runs your home loan, car loan, personal loan. Don't compare rates — compare IRRs. Don't argue one line — trade across them. And never walk in with one quote.