With a flat rate, interest is charged on the full loan every month. A ₦500,000 loan at 4% a month flat for 6 months costs ₦120,000 in interest, ₦103,333 a month. Enter your own loan below to see the payment and the total you repay.
How the Flat Rate Loan Calculator works
- Enter the loan amount.
- Enter the monthly flat rate.
- Enter the number of months.
- See the monthly payment, total interest and total repaid.
Worked example
A trader takes a ₦500,000 microfinance loan at 4% a month flat for 6 months.
Interest: ₦500,000 × 4% × 6 = ₦120,000
Monthly payment: ₦103,333.33
Total repaid: ₦620,000
On a reducing balance at the same 4%, interest would be ₦72,285.71.
Common mistakes to avoid
- Comparing a flat monthly rate with a bank's yearly reducing rate
- Taking a loan app offer without checking total repayment
- Missing payments and paying penalties on top
Need a different calculator?
The true cost
4% a month sounds small, but flat over a year it is 48% of the loan, and the effective rate is higher still because you repay as you go. Compare offers on total naira cost, not the headline percentage.
Cooperatives and ajo loans
Many cooperatives also charge flat interest. If you borrow from one, ask for a written repayment schedule and keep a receipt for each payment.
Before you sign
Ask the lender for the total amount you will repay in naira, the date of each payment, any fees taken from the loan before you receive it, and the penalty for paying late. If a lender will not put these in writing, look elsewhere.
Frequently asked questions
What is a flat interest rate?
Interest worked out on the original loan for every month, even as you repay.
Is 5% a month high?
Yes. Flat, that is 60% of the loan in a year.
Can I repay early?
Ask the lender. Some charge interest for the full term anyway.
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