Choosing the right loan in Nigeria is a very difficult decision to make given the plethora of options increasingly available. We now have many registered moneylenders who provide loans instantly online to you bank account without having to travel to the bank.
How much, for how long?
The formula’s simple. Borrow as little as possible, repay as quickly as possible. To avoid complications, always base your borrowing on what you can comfortably afford to repay (preferably after doing a budget), as borrowing too much can cause debts to spiral out of control.
Beware – while borrowing over a longer period spreads the debts and decreases monthly repayments, it massively increases the interest you’ll repay. Borrow ₦10,000 at 7% over three years and the interest cost is ₦1,100. Borrow the same over 10 years, and it’s ₦3,900.
Beware ‘representative’ rates
All advertised loan and credit card APRs are ‘representative’. This means only 51% of successful applicants have to get those rates. So, up to 49% may end up with a more expensive loan than they applied for (if they get accepted at all).
Lenders have to tell you that their loan rates are representative. They’ll do this by having a representative example on their site of what it may cost. You’ll see something like this…
“A loan of ₦75,000 over 5 years at 3.2% APR would equate to monthly repayments of ₦1354.30, and the total cost of the loan that you pay back would be ₦81,259.70.”
In our Nigeria loan search, we compare loans that can be paid back over terms of between one and five years. Rates in the best buy tables below start at 4.8% and go as high as 32.5%, though you could be priced higher as the APR you’ll be charged depends on your personal circumstances.
It might be cheaper to borrow more
It’s worth being aware of this when borrowing close to the rate boundaries set by lenders.
If you wanted to borrow ₦490,000 over five years, the cheapest loan’s 5.2%, meaning a total repayment of ₦557,500 (₦67,500 interest). Yet borrow ₦500,000 and the rate drops to 3.3%, which means total repayments are ₦543,100 (₦43,100 interest) – that’s ₦24,400 less in interest payments.