Debt Payoff Calculator

Find out how many months to pay off your debt and how much extra payments save you in interest charges.

Debt Details

Outstanding Balance

₦

Annual Interest Rate

Monthly Payment

₦

Payoff Timeline

27 months (2.3 years)

Outstanding Balance

₦500,000

Monthly Payment

₦25,000

Total Interest Paid

₦153,541

Total Amount Paid

₦653,541

Min. Payment to Cover Interest

₦10,417

How to Use This Calculator

Single Debt Tab

Enter your outstanding balance, the annual interest rate, and your monthly payment. The calculator shows how many months until the debt is cleared and the total interest you will pay over that period.

Extra Payment Tab

Add an extra monthly payment on top of your regular payment and immediately see how many months you save and how much less interest you pay. Even a small extra amount can make a dramatic difference.

The Formula

Months to pay off (n): n = −ln(1 − r×B/P) ÷ ln(1 + r) Where: B = Outstanding balance (₦) P = Monthly payment (₦) r = Monthly interest rate = Annual rate ÷ 12 ÷ 100 Total Interest = (P × n) − B Minimum payment to avoid growing debt = B × r

If your monthly payment is less than or equal to the monthly interest charge (B × r), the debt never decreases — it grows. Always ensure your payment exceeds the interest-only amount.

Example

Scenario: Personal Loan

Chukwudi has a ₦500,000 personal loan at 25% per annum. He pays ₦25,000 per month. How long to clear it, and how much does he save by adding ₦10,000 extra?

Outstanding balance₦500,000

Annual rate25%

Monthly payment₦25,000

Standard payoff time≈ 27 months

Standard total interest≈ ₦175,000

With +₦10K extra (₦35K/month)≈ 18 months

Interest with extra payments≈ ₦110,000

Interest saved≈ ₦65,000

Adding just ₦10,000 extra per month saves Chukwudi 9 months and approximately ₦65,000 in interest — money that stays in his pocket.

Debt Payoff Strategies

Avalanche method: Pay minimums on all debts, put extra money toward the highest-interest debt first. Saves the most interest overall.
Snowball method: Pay minimums on all, focus extra on the smallest balance first. Builds momentum and motivation as debts are cleared quickly.
Lump sum payments: Any bonus, tax refund, or windfall applied directly to principal dramatically reduces interest. Nigerian banks typically allow early repayment — confirm there is no prepayment penalty.
Debt consolidation: Replace multiple high-interest loans with one lower-rate loan. Nigerian salary loans and bank personal loans range 20–30%. Microfinance loans can exceed 50% — always compare.

FAQ

Commercial bank personal loans typically range from 20–30% per annum. Microfinance bank loans can range from 2–5% per month (24–60% per annum). Salary advance products and fintech loans vary widely. Always ask for the Annual Percentage Rate (APR) to compare fairly.

Most Nigerian banks allow early repayment but may charge a prepayment penalty — typically 1–3% of the outstanding balance. Always confirm with your bank before making large lump-sum payments. Some banks and fintech lenders have no prepayment penalties, which is ideal if you plan to pay off early.

Missing payments results in late fees, additional interest on the overdue amount, and a negative mark on your credit bureau record (CRC or FirstCentral). This can affect your ability to get future loans. Some lenders also report to the CBN, affecting your creditworthiness across the banking system.

Compare your debt interest rate to potential investment returns. If your loan costs 25% but your savings account earns 12%, paying off the debt is mathematically better — you are effectively getting a 25% guaranteed "return" by eliminating that interest cost. However, if T-bills yield 22.5% and your loan is at 15%, investing may make sense. Always compare after-tax rates.