How is a personal loan repayment calculated in Nigeria?

Bank loans usually use the reducing-balance amortising formula M = P·r(1+r)ⁿ / ((1+r)ⁿ−1), where P is the amount borrowed, r is the monthly rate (annual rate ÷ 12) and n is the number of months. Each payment covers interest on the outstanding balance first, then reduces principal.

What interest rates do Nigerian personal loans charge?

Bank personal loans in Nigeria typically charge 20-35% per annum on a reducing balance, while many fintech and microfinance lenders quote flat monthly rates that translate to higher effective rates. Always check whether a rate is flat or reducing-balance before comparing.

What is the difference between flat and reducing-balance interest?

Flat-rate interest is charged on the original amount for the whole term, so the effective cost is much higher. Reducing-balance interest is charged only on the outstanding balance, which falls each month. This calculator uses reducing-balance, the fairer measure.

Can I reduce the total interest I pay?

Yes. A shorter term raises the monthly repayment but cuts total interest sharply. Making extra repayments where the lender allows it also lowers the balance faster, so less interest accrues over the life of the loan.

Does this calculator store my data?

No. All figures are computed locally in your browser and nothing is uploaded, so your details stay private.

Nigeria Personal Loan Calculator

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This Nigeria personal loan calculator turns a loan amount, annual interest rate and term into a clear monthly repayment, the total interest you will pay, and a full amortisation schedule — the way a Nigerian bank works out a reducing-balance personal loan.

How it works

The repayment uses the standard amortising-loan formula:

M = P · r(1+r)ⁿ ⁄ ((1+r)ⁿ − 1)

where P is the amount borrowed, r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of months. Each repayment splits into an interest portion (current balance × r) and a principal portion (the rest). As the balance falls, more of each payment reduces principal — so the schedule front-loads interest.

Example

A ₦500,000 loan at 28% p.a. over 12 months gives a monthly repayment of about ₦48,500. Over the year you repay roughly ₦582,000, so total interest is around ₦82,000.

Tips

Confirm whether the quoted rate is flat or reducing-balance — flat rates cost far more than they appear.
A shorter term raises the monthly payment but cuts total interest.
Ask whether extra repayments are allowed without penalty — they shrink the balance and the interest faster.