Estimate the largest loan you can service on your income.
Maximum loan
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Affordable monthly payment
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DTI budget
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Start from what you can repay, not what you want
Most people approach a loan from the wrong end. They pick a target, a car, a plot, a renovation, and then ask whether they can squeeze the repayments in. This calculator flips that. It begins with your income and the share of it a lender will let you spend on debt, works out the monthly payment that fits, and only then converts that payment into the largest loan it can support at your rate and tenor. The number it gives you is a ceiling, not a recommendation, and borrowing right up to it leaves no room for the months when life is more expensive than usual.
The tool is built for salaried borrowers and steady-income earners in Nigeria weighing a personal loan, a car loan, or an equipment purchase. It does not touch tax, so use a take-home figure that already has PAYE and pension stripped out. If you are unsure what your net pay is after deductions, your payslip from your employer, or a quick check against your state internal revenue service guidance on PAYE, will give you the right starting income.
How the debt-to-income limit drives the answer
The engine of the calculation is your debt-to-income ratio, the slice of monthly income a lender allows to go on all debt combined. You set that ceiling, your income, your existing monthly repayments, the interest rate, and the term. The tool multiplies income by the ratio to get your total debt budget, subtracts what you already pay, and treats whatever is left as the affordable payment for a new loan. That payment is then run backwards through the standard loan formula, the present value of a level monthly annuity, to find the principal it can service.
In plain terms, a higher rate or a shorter term means each naira of payment supports a smaller loan, because more of every instalment goes on interest. Stretch the term and the same payment borrows more, but you pay interest for longer. The calculator floors the affordable payment at zero, so if your existing repayments already eat your whole budget it tells you there is nothing left to lend against rather than showing a negative figure.
Working through a NGN 600,000 income
Take the default inputs: NGN 600,000 net monthly income, NGN 50,000 of existing repayments, a 40 percent debt-to-income ceiling, a 26 percent annual rate, and a 36-month term. Forty percent of NGN 600,000 is a debt budget of NGN 240,000 a month. After the NGN 50,000 you already pay, NGN 190,000 is free for a new loan. Discounting that NGN 190,000 monthly payment over 36 months at 26 percent a year (about 2.17 percent a month) gives a maximum loan of roughly NGN 4,715,738. The rate used here is illustrative; price your own loan on the offer in front of you.
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Why your bank may lend less than this
Treat the result as your own affordability test, not a pre-approval. Nigerian lenders layer on rules this tool cannot see. Many price salary-backed loans against your employer and your account history, cap the tenor by your age or remaining years of service, and add fees, insurance, and a management charge that raise the effective cost above the headline rate. Some apply a stricter debt-to-income ceiling than the 40 percent in the example, especially if your income is irregular. The Central Bank of Nigeria sets the policy rate that pulls commercial lending rates along with it, so the rate you are quoted moves with the wider market.
A common mistake is forgetting the debt that does not show up as a formal loan: the cooperative deduction at work, the family obligation, the buy-now-pay-later balance. Add all of it to the existing-payments box, because a lender checking your bank statements will. The honest move is to size the loan against the payment you could still make in a bad month, then leave a margin below the ceiling the calculator gives you.
What debt-to-income ratio should I use?
For unsecured personal lending in Nigeria, many borrowers keep total debt payments under about a third to 40 percent of net income, which is why 40 percent is the default here. If you have dependants or an unstable income, model a lower ceiling such as 30 percent. The right figure is the one that still lets you save and absorb a surprise, not the highest a lender will tolerate.
Does a longer term let me borrow more safely?
A longer term lowers each payment, so the same budget supports a larger loan, but you pay interest over more months and the total cost climbs. It can be the right call for a productive asset you will hold for years. For consumption spending, the shorter term that you can still afford usually leaves you better off.