Your monthly repayment depends on the amount, the interest rate and how the interest is charged. A ₦2,000,000 loan at 28% a year over 12 months, on a reducing balance, costs about ₦193,000 a month and ₦316,000 in interest. Enter your loan below, including whether the rate is per month or per year.
How the Loan Calculator works
- Enter the loan amount.
- Enter the interest rate and say whether it is per year or per month.
- Enter the number of months.
- Choose reducing balance (bank style) or flat (common with microfinance and lenders).
Worked example
A shop owner borrows ₦2,000,000 at 28% a year for 12 months.
Reducing balance: ₦193,011.98 a month, total interest ₦316,143.73
Flat rate: ₦213,333.33 a month, total interest ₦560,000
The same headline rate costs more when charged flat.
Common mistakes to avoid
- Comparing a monthly rate with a yearly rate
- Not asking whether interest is flat or reducing
- Ignoring processing and insurance fees
Need a different calculator?
Reducing or flat: ask the lender
On a reducing balance, you pay interest only on what you still owe. On a flat rate, interest is charged on the full loan every month, so the true cost is almost double. Many loan apps and microfinance lenders quote monthly flat rates that look small but add up.
Can the business repay it?
Before borrowing, check that the monthly repayment fits comfortably inside your profit, not your sales. The break-even calculator can show how much extra you need to sell.
Frequently asked questions
How do I convert a monthly rate to yearly?
Multiply by 12 for a rough comparison. 3% a month is about 36% a year, before compounding.
Why is flat interest more expensive?
You keep paying interest on money you have already repaid.
Are fees included?
No. Ask the lender for all fees and add them to the cost.
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