Monthly repayment, total interest and total cost of a personal loan.
Monthly repayment
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Total interest
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Total cost
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Worked example
Take an N2,000,000 personal loan at 28% a year over 24 months. The monthly rate is 28% divided by 12, and the amortising formula spreads the loan over 24 equal repayments of about N109,777. Over the two years you repay about N2,634,648 in total, so the interest comes to about N634,648, which is the total repaid less the original N2,000,000 you borrowed. The default rate here sits near the CBN policy rate, but personal loan rates vary widely between lenders, so always plug in the exact rate your bank quotes. At these rates the term is the lever that matters most: a longer term eases the monthly repayment but adds a lot of interest.
Item
Amount (NGN)
Loan amount
2,000,000
Monthly repayment
109,777
Total interest
634,648
Total cost
2,634,648
How it is calculated
A personal loan is repaid in equal monthly instalments that each cover a mix of interest and principal, a structure called amortisation. The monthly repayment equals the loan amount times the monthly rate, divided by one minus the quantity one plus the monthly rate raised to the negative number of months. The monthly rate is the annual rate divided by twelve. Multiplying the repayment by the number of months gives the total cost, and the interest is that total less the amount borrowed. Early instalments are mostly interest and later ones mostly principal, even though the payment itself stays level. The default rate is anchored to the CBN monetary policy rate as a sensible starting point, but the figure that actually applies to you is whatever your lender quotes, so use that for an accurate result.
Frequently asked questions
How is a personal loan repayment calculated?
Lenders spread the loan over equal monthly repayments that cover both interest and principal. The monthly amount depends on the loan size, the annual rate and the term. This calculator uses the standard amortising formula and shows the monthly repayment, the total interest over the life of the loan, and the total cost. The default rate is anchored to the CBN policy rate, but always use the rate your lender quotes.
What interest rate do Nigerian banks charge on personal loans?
Personal loan rates from Nigerian commercial banks typically run well above the Central Bank of Nigeria monetary policy rate, often landing between 20 and 35 percent per year depending on the lender, your credit profile, and the term. Microfinance institutions and digital lenders can charge higher. The default rate in this calculator is anchored near the CBN policy rate as a starting point, but replace it with the exact figure your lender quotes for an accurate result.
How does the loan term affect the total interest I pay?
Stretching the term reduces each monthly repayment because the same principal is spread over more instalments, but it increases the total interest significantly because interest accrues for longer. A shorter term means higher monthly payments but a lower total cost. For example, an NGN 2 million loan at 28 percent over 12 months carries a much higher monthly payment than the same loan over 36 months, but the 36-month borrower pays far more interest in total.
Does a personal loan in Nigeria attract any tax deduction for the borrower?
Generally not for a salaried employee taking a consumer personal loan. Interest on a personal loan is not a deductible relief against income tax for individuals under the Nigeria Tax Act. Business-purpose loans where the interest relates to income-generating activities are treated differently, but for a standard personal or consumer loan the interest is simply a cost with no tax offset.