Two carriers can quote the same policy loan rate and hand you different amounts of money. The difference is when the interest gets charged.
Interest in arrears is what most people assume. You borrow $50,000, and at the policy anniversary the carrier charges the year's interest on what was outstanding. Borrow at 5%, owe $2,500 at the end of the year, either paid out of pocket or added to the loan balance.
Interest in advance means the carrier takes the year's interest at the moment you borrow. Request $50,000 at 5% in advance and you receive $47,500, with a $50,000 loan balance on the books. The stated rate is 5%. The effective rate on the money you actually got is closer to 5.26%, because you're paying $2,500 for the use of $47,500.
Neither approach is a trick. It's disclosed in the contract, and carriers using advance interest often price the stated rate a little lower to account for it. The problem is comparing two illustrations side by side without checking which convention each one uses, since the stated rates look identical on the page.
There's a related detail on the crediting side. When a loan is outstanding, some carriers credit the collateralized portion of cash value at a different rate than the rest, and the spread between the loan rate and that credited rate is the real cost of carrying the loan. Under direct recognition it moves with the loan. Under non-direct recognition it doesn't.
It matters most on large loans and on loans you plan to hold for years. On a $300,000 loan, the gap between advance and arrears is $15,000 of proceeds in year one, and every year the loan renews, that same charge comes off the top again.
Ask the carrier directly, in these words: is loan interest charged in advance or in arrears, and what's the effective annual rate on funds received. A service rep can answer both, and the answer belongs in your notes right next to the loan rate.