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How to repay a Personal Loan?

Brief explanation about the different repayment methods on the Nigerian loan market
Before taking out a personal loan, business loan, or payday loan it is important to understand the true cost of the loan and how that loan will be repaid. Below TopCheck gives you a brief explanation about the different repayment methods on the Nigerian loan market.

When you sign the loan agreement with the loan provider you agree to a certain loan repayment schedule outlined in the agreement. Be sure to read this paragraph carefully in order to avoid potential fines in the future. In general, a loan can be repaid in different ways:


With cash repayment you need to bring the due amount to the office of the loan company or a partnering bank. It is important to hand-in the cash amount on or before the due date of the respective loan repayment date. It is important that you receive a written proof that you fulfilled your duties and handed in the cash repayment. Cash repayment is often used for small loan sizes (micro loans) in rural areas.

Bank Transfer

Probably the most popular way to pay back your loan and make interest payments is by making a bank transfer to the respective bank account of the loan provider on or before the repayment due date. It is important to keep in mind that bank transfers often take a couple of days, so make the loan repayment on time.


When entering the loan agreement the loan provider receives post-dated-cheques from the loan applicant. Those cheques already include the loan amount, interest payments any other agreed fees. The amount of cheques to be handed in depends on the loan maturity. For example, if the loan tenor is 10 months, then the loan company asks for 10 post-dated-cheques, which you can easily get from your bank.

Direct Salary Deduction

A safe way for the loan provider is to include your employer in the loan contract. A part of your salary, which equals the amount you have to repay, is then automatically deducted from your salary and transferred to the loan company. Many loan applicants favour this repayment method, because you don't need to take care of the repayment process. The downside is that you lose control over parts of your salary, which some people don't want to give up.


Similar to the direct salary deduction the POS repayment method makes automated loan repayments to the loan company based on your POS transactions. When entering the agreement you agree on a certain % that is deducted from your POS transactions until the full amount plus interest is paid back. Businesses and merchants, who use POS machines in their daily operations, can only use this repayment method.

Make sure you understand the Repayment Method fully

It is very important to note that you need to fully understand what kind of repayment method to expect before you enter the loan agreement. Every repayment method has its advantages and disadvantages, so you need to think for yourself which repayment method suits you the most. Paying your debts on time is crucial, as it will save you a lot of money in the future. In case you want to see a quantitative example of loan repayment schedule, click here.

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

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