What is the average loan interest rate in Nigeria?

The average commercial bank lending rate in Nigeria is around 18% per annum as of 2026, according to CBN data. However, digital lenders (FairMoney, Carbon, Branch) typically charge 15–30% monthly or equivalent, making their effective annual rates much higher. Always compare APR, not just the advertised monthly rate.

How is a loan monthly payment calculated?

Monthly payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of months. This formula gives equal monthly payments over the loan term.

What is a safe debt-to-income ratio in Nigeria?

Nigerian financial advisors generally recommend keeping total monthly debt repayments below 36% of gross monthly income. Banks typically use 33% as the maximum DTI for loan approvals. Keeping below 30% gives you more financial flexibility for emergencies.

Are loan apps like FairMoney and Carbon safe?

FairMoney, Carbon, Branch and similar apps are CBN-licensed fintech lenders. They are generally safe from a regulatory standpoint but their effective interest rates are significantly higher than commercial banks — often 30–100% APR once fees are included. Use them only for short-term emergencies, not large or long-term borrowing.

Loan Calculator

Calculate monthly repayments, total interest, and how much you can afford to borrow based on your income.

Loan Details

Loan Amount

₦

Annual Interest Rate

Tenure

Monthly Payment

₦76,381

Total Repayment

₦2,749,713

Total Interest

₦749,713

Interest as % of Loan

37.5%

Loan Tenure

36 months

Extended

Loan Analysis

Extra payments, what-if scenarios, and balance chart

Loan Amount

₦

Annual Interest Rate

Loan Term (months)

Extra Monthly Payment

₦

Without Extra

Monthly Payment

₦76,381

Total Interest

₦749,713

Payoff Months

36 months

Total Cost

₦2,749,713

With Extra Payments

Monthly Payment

₦106,381

Total Interest

₦474,900

Payoff Months

24 months

Total Cost

₦2,553,142

Interest Saved

₦274,812

Months Saved

12 months

Cost Difference

₦196,571

Professional

Professional Loan Simulator

Full amortization, lump sums, and rate changes

Loan Amount

₦

Annual Interest Rate

Loan Term (months)

Extra Monthly Payment

₦

Lump Sum Payment

₦

Lump Sum at Month

Rate Change at Month (0 = none)

New Rate After Change

Month	Payment	Principal	Interest	Extra	Balance
1	₦138,095	₦46,428	₦91,667	—	₦4,953,572
2	₦138,095	₦47,279	₦90,815	—	₦4,906,293
3	₦138,095	₦48,146	₦89,949	—	₦4,858,147
4	₦138,095	₦49,029	₦89,066	—	₦4,809,119
5	₦138,095	₦49,927	₦88,167	—	₦4,759,191
6	₦138,095	₦50,843	₦87,252	—	₦4,708,349
7	₦138,095	₦51,775	₦86,320	—	₦4,656,574
8	₦138,095	₦52,724	₦85,371	—	₦4,603,850
9	₦138,095	₦53,691	₦84,404	—	₦4,550,159
10	₦138,095	₦54,675	₦83,420	—	₦4,495,484
11	₦138,095	₦55,677	₦82,417	—	₦4,439,807
12	₦138,095	₦56,698	₦81,396	—	₦4,383,109
13	₦138,095	₦57,738	₦80,357	—	₦4,325,371
14	₦138,095	₦58,796	₦79,298	—	₦4,266,575
15	₦138,095	₦59,874	₦78,221	—	₦4,206,701
16	₦138,095	₦60,972	₦77,123	—	₦4,145,729
17	₦138,095	₦62,090	₦76,005	—	₦4,083,640
18	₦138,095	₦63,228	₦74,867	—	₦4,020,412
19	₦138,095	₦64,387	₦73,708	—	₦3,956,025
20	₦138,095	₦65,567	₦72,527	—	₦3,890,457
21	₦138,095	₦66,770	₦71,325	—	₦3,823,688
22	₦138,095	₦67,994	₦70,101	—	₦3,755,694
23	₦138,095	₦69,240	₦68,854	—	₦3,686,454
24	₦138,095	₦70,510	₦67,585	—	₦3,615,945

Cumulative Payments

Cumulative Principal

Cumulative Interest

Actual Payoff

60 months

Total Payments

₦8.3M

Total Interest (65.7% of principal)

₦3.3M

Interest Saved vs No Extra

₦0

How to Use This Calculator

Personal Loan Tab

Enter the loan amount, annual interest rate, and select a tenure. Monthly payment, total repayment, and total interest update instantly. Click "Show amortisation schedule" to see a month-by-month breakdown of principal vs interest payments.

Compare Loans Tab

Enter the same loan amount and compare two different rate/tenure combinations. The better deal (lower total cost) is highlighted automatically. Useful when negotiating with multiple banks or comparing a commercial bank offer vs a microfinance offer.

Affordability Tab

Enter your gross monthly income, any existing monthly debt repayments, and your target debt-to-income (DTI) ratio. The calculator tells you the maximum loan amount you can responsibly take on. Most Nigerian banks use a 33–36% DTI ceiling for loan approvals.

The Formula

Monthly Payment (M) = P × [r × (1+r)^n] / [(1+r)^n − 1] Where: P = Loan principal (amount borrowed) r = Monthly interest rate = Annual rate ÷ 12 ÷ 100 n = Total number of monthly payments (tenure in months) Total Repayment = M × n Total Interest = Total Repayment − P Max Affordable Loan = Monthly Budget × [(1+r)^n − 1] / [r × (1+r)^n] Monthly Budget = Gross Income × DTI% − Existing Debt Payments

This is the standard reducing-balance (amortisation) formula used by Nigerian banks. Each payment covers interest on the outstanding balance first, with the remainder reducing the principal — so early payments are mostly interest.

Example

Personal Loan: ₦2,000,000 at 22% for 36 months

Loan Amount₦2,000,000

Annual Rate22%

Monthly Rate1.833%

Tenure36 months

Monthly Payment≈ ₦76,940

Total Repayment≈ ₦2,769,840

Total Interest≈ ₦769,840

Interest as % of Loan38.5%

Reducing the tenure to 24 months drops total interest to about ₦493,000 but raises monthly payments to ₦104,700 — a classic trade-off between monthly cashflow and total cost.

Nigerian Lending Rates Guide

Interest rates vary significantly across lender types in Nigeria:

Commercial banks (GTB, UBA, Zenith, Access): 18–28% p.a. — Lower rates but stricter documentation requirements. Best for salaried employees with payslips.
Microfinance banks: 24–48% p.a. — More accessible, serve informal sector. Rates higher due to higher risk profile of borrowers.
FairMoney / Carbon / Branch: 30–180% effective APR — Instant approval but the true cost is very high. These apps often quote monthly rates (e.g. 5%/month = 60%+ APR). Use only for short-term emergencies.
BOI / NIRSAL MFB / GEEP: 5–9% p.a. — Government-backed development finance. Very low rates but very competitive, often targeted at SMEs and agriculture.
Mortgage loans (FMB / commercial banks): 18–24% p.a. — See our mortgage calculator for detailed computations.

Tip: Always ask for the Annual Percentage Rate (APR) — not the monthly rate — so you can compare offers fairly. A lender quoting "5% per month" is effectively charging over 79% APR due to compounding.

FAQ

Typically: valid ID (NIN, driver's licence or international passport), 3–6 months bank statement, 3 months payslips (for salaried staff), BVN, and sometimes a letter of introduction from your employer. Microfinance banks and fintech lenders usually require less documentation but charge higher rates.

Yes, most Nigerian banks allow early repayment but some charge a prepayment penalty of 1–3% of the outstanding balance. Always check your loan agreement. Early repayment significantly reduces total interest cost and is generally advisable if you have spare funds.

DTI is the percentage of your gross monthly income that goes towards debt repayments. Nigerian banks typically cap this at 33–36%. For example, on a ₦350,000 salary, your total monthly loan repayments should not exceed about ₦116,000–₦126,000. Exceeding this makes it harder to get approved and leaves little room for living expenses.

Yes. A loan app charging "5% per month" on a 30-day loan has an effective APR of about 60–80% depending on compounding. On ₦100,000 borrowed for 3 months at 5%/month, you repay about ₦115,000–₦120,000 depending on the exact terms. These products are designed for convenience, not cost efficiency.

Defaulting can lead to: credit bureau reporting (damaging your BVN credit score), legal action, salary garnishment (for formal sector workers), and repossession of collateral if secured. Since 2020, CBN-licensed lenders report to credit bureaus (CRC, FirstCentral, TransUnion). A bad credit record affects future loan applications across all Nigerian lenders.

Loan Calculator

Loan Analysis

Professional Loan Simulator

How to Use This Calculator

Personal Loan Tab

Compare Loans Tab

Affordability Tab

The Formula

Example

Personal Loan: ₦2,000,000 at 22% for 36 months

Nigerian Lending Rates Guide

FAQ

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