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How much will a Personal Loan cost me?

Personal loans come with multiple advantages: flexibility, relatively lower interest rates, and quick approval period.
Personal loans come with multiple advantages: flexibility, relatively lower interest rates, and quick approval period. And that's why many people turn to them whenever they need some extra cash very urgently. However, many people make the mistake of not taking their time to understand the fine print regarding a personal loan offer before going for it. This leaves them with unpleasant surprises in the long haul.

Before you take a personal loan, don't just look at how much you're expected to pay on the loan. You need to also consider the total amount of interest you're paying on the loan, since the total cost of a loan is the sum of the actual amount you borrowed and the total interest you will pay.

Example: Business Loan

We would like to show you the actual repayment process of a personal loan by giving a real life example. Assume you are a business owner and you would like to take you business to the next level by investing in marketing campaigns. In order to finance your expected costs of the marketing campaign, you are willing to take a personal loan for your business. Since you have no real assets (e.g. car or real estate) in place, you go for an unsecured loan.

The expected costs of the marketing campaign amount to ₦1,000,000 and you would like to repay the loan amount over a period of 10 months. You apply for a personal loan via TopCheck to several loan provider and the best offer you get is a 5% monthly interest rate. So what are the expected monthly repayments and interest rate costs that the business loan comes with?

Monthly Loan Repayment

Since you take the loan for duration of 10 months, you repay the borrowed amount of ₦1,000,000 in 10 equal instalments equalling ₦100,000 monthly, starting at the end of the first month after you have taken the loan. So assuming you have taken the loan on January 1st, the first repayment of ₦100,000 is due on January 31st. The second repayment of ₦100,000 would then be due at the end of February, and so on.

Monthly Interest Rate

You pay the interest rate monthly on the total loan repayment amount. Multiplying interest rate by the total loan amount equals ₦1,000,000 x 5% = ₦50,000 in monthly interest payments to the financial loan provider.

Total repayment

Your total repayment per month equals Monthly Loan Repayment + Monthly Interest Rate: ₦100,000 + ₦50,000 = ₦150,000. Since the maturity of the personal loan is 10 months, you have to repay this amount 10 times, so the overall repayment you are facing equals ₦1,500,000.

Understanding how much a loan would cost you will help you to come up with a realistic and workable repayment plan that won't affect your overall finances. And it will largely determine your ability to pay up the loan on time.

How to know the total cost of your Personal Loan

Loan providers calculate interest rates based on how much you need and how long it will take you to pay back. Basically, the more money you need, the higher interest you'll pay; and the shorter the period of repayment, the lower interest the financial institution will charge (for most providers). In many cases, interest rates also depend partly on your financial situation (e.g. do you have other loans in place?), your current employment terms (e.g. monthly salary or employment length), your demographics (e.g. age, gender or city) as well as you as a person.

With TopCheck's search engine, you can directly see which loan provider operates in your city and what the basic terms and conditions are. Loan providers differ in their credit scoring, so they provide different interest rates for different demographics.

With TopCheck you basically answer the most important questions online and you can easily submit your loan application with a few seconds. TopCheck re-directs the application to the respective loan providers, which will then get in touch with you and ask additional questions and inform you about your personal interest rate. Applying for a loan via TopCheck 100% free and non-binding, so you can always stop the process.

How to pay back your Loan

Once your loan is approved, your loan provider will tell you the specified due date of the month for repayment. This is the date by which you must have paid your due monthly repayment for that month. If you haven't paid by this date, you'll have to pay a daily default charge.

Most loan providers in Nigeria offer multiple options for receiving monthly repayments. These include:


You can pay in cash at any of your loan provider's offices.


Most loan providers will allow you to pay through a POS machine at any of their offices. This way, you can pay using your ATM card.

Online transfer

You can also pay via the Internet by transferring your monthly repayment directly to the provider's account number through your bank's online banking portal.


During your loan documentation, you'll be required to deposit some cheques with your loan provider. The number of cheques depends on the number of months you need to pay back the loan. On your due date of each month, your loan provider will present a cheque reflecting your repayment amount to your bank. So, you must have enough funds in your account by your due date.

Direct Deduction from Paycheck

Another convenient way to pay your monthly instalment is by having an automated deduction from your paycheck in place, so you are not tempted at all to spend your money on something else.

Having understood how to estimate your total loan cost and how to make your monthly repayments, you can now go ahead to request a personal loan from any Nigerian loan provider of your choice.

Be sure to compare loan deals and prices among multiple providers by visiting Topcheck.com.ng and clicking "Personal Loans" where you can compare loans and check if you qualify. This will help you make the right choice of loan provider.

Example Loan: ₦500,000 Loan amount, 1-12 months duration, 2.83% monthly interest rate, 37.61% max APR, ₦688,050 total value, ₦57,338 max monthly repayment, RenMoney MfB

Find the best Loan for you!