The Taxi rate is comparable to the overdraft base rate, plus margin that banks charge.
We compare Taxi to a business overdraft because similar to a business overdraft, it is a flexible funding facility required to be cleared to zero within nine months, with a fee for availability of funds to borrow.
The funds are secured against business assets (in this case, provisional tax payments), similar to the GSA (General Security Agreement) for standard business borrowing from a bank. GSA lending is generally considered more high risk than residential mortgage lending, so any business loan secured with residential property is not comparable to Taxi funding.
Rates for banks represent the minimum and maximum overdraft rate (base rate plus lender’s margin) as quoted on the interest.co.nz/borrowing/business-base-rates page at the date listed. [Individual bank rates may be lower than the maximum for some customers].
In addition to the rates referenced here, both banks and Taxi charge a monthly fee for access to their facilities. On the interest.co.nz page above this is referred to as the Management fee. Taxi’s management fee is 0.15% per month on the Taxi facility limit. This is calculated monthly, billed quarterly and is comparable to the management fee of the main four banks.