AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Using an example rate of 39% a year on a reducing balance, a ₦100,000 loan over 12 months has a monthly instalment of about ₦10,196.72 and total interest of about ₦22,360.63. Add any management and insurance fees, ₦3,000 in this labelled example, for a total cost of about ₦25,361; your bank's offer letter gives the real figures.
Bank loans are usually quoted as an annual rate on a reducing balance, with fees shown as separate percentages. That makes the true cost harder to see than with a loan app's single repayment figure. This guide builds the full picture for ₦100,000 over 12 months, using rates published by one Nigerian bank as an illustration, so you can rebuild it for any offer.
The example figures and where they come from
Sterling Bank's loans page (checked October 2026) lists its payroll personal loan at 39% per annum, a 1% management fee and a 2% insurance fee. We use those numbers only to make the example realistic. Your bank's rate, fees and eligibility will differ, and banks can change pricing; the offer letter is the figure that counts.
- Amount
- ₦100,000
- Tenor
- 12 months
- Rate
- 39% a year, 3.25% a month on the reducing balance (example)
- Fees
- 1% management (₦1,000) and 2% insurance (₦2,000) (example)
The monthly instalment
An equal-instalment loan uses the formula instalment = P × r ÷ (1 − (1 + r)−n), where P is the amount, r the monthly rate and n the number of months. With P = ₦100,000, r = 0.0325 and n = 12, the instalment is ₦10,196.72. Over 12 months you repay ₦122,360.63, of which ₦22,360.63 is interest. In a spreadsheet, =PMT(3.25%,12,-100000) gives the same answer.
Month by month
| Month | Interest | Principal | Balance after |
|---|---|---|---|
| 1 | ₦3,250.00 | ₦6,946.72 | ₦93,053.28 |
| 2 | ₦3,024.23 | ₦7,172.49 | ₦85,880.79 |
| 3 | ₦2,791.13 | ₦7,405.59 | ₦78,475.20 |
| 4 | ₦2,550.44 | ₦7,646.27 | ₦70,828.93 |
| 5 | ₦2,301.94 | ₦7,894.78 | ₦62,934.15 |
| 6 | ₦2,045.36 | ₦8,151.36 | ₦54,782.79 |
| 7 | ₦1,780.44 | ₦8,416.28 | ₦46,366.51 |
| 8 | ₦1,506.91 | ₦8,689.81 | ₦37,676.70 |
| 9 | ₦1,224.49 | ₦8,972.23 | ₦28,704.48 |
| 10 | ₦932.90 | ₦9,263.82 | ₦19,440.65 |
| 11 | ₦631.82 | ₦9,564.90 | ₦9,875.76 |
| 12 | ₦320.96 | ₦9,875.76 | ₦0.00 |
Each instalment is the same, but the split changes: interest is highest in month one and falls every month, because it is worked only on what you still owe. That is why paying off early saves most when done early in the loan. Over the year, interest makes up about 18% of everything you pay; in month one it is almost a third of the instalment, and by month twelve it is about 3%. Figures are rounded to the kobo, so a row may differ by a kobo from a bank's own schedule.
Adding the fees
In the example the fees total ₦3,000. If they are paid separately, the total cost is ₦22,360.63 + ₦3,000 = ₦25,360.63. If the bank deducts them from the loan, you receive ₦97,000 but still repay ₦122,360.63. Measured on what you actually receive, the loan then costs about 3.77% a month, roughly 45% a year nominal, against the 39% headline. Fees deducted upfront always push the real rate above the quoted one, and the shorter the loan, the bigger the effect.
Flat rate for contrast
If the same 39% were charged flat on the original ₦100,000 for the whole year, interest would be ₦39,000 and the instalment ₦11,583.33. That is ₦16,639.37 more than the reducing-balance loan. Always ask which method the bank uses; see APR vs flat fee: what a loan really costs.
If you repay early
On a reducing-balance loan, clearing the balance stops future interest. In the labelled example, after six instalments you have paid ₦15,963.10 of interest and owe ₦54,782.79. Settling then, if the bank charges no early-settlement fee, saves the ₦6,397.53 of interest scheduled for months seven to twelve. Some banks charge a prepayment fee, so check the offer letter; Sterling's page, for instance, states no prepayment penalty for its home finance product but does not say the same for every loan. See does early repayment reduce interest?
Can you afford the instalment?
Banks test affordability against your income. Sterling's page sets its payroll loan repayment cap at 33.3% of net monthly salary. On that rule, a ₦10,196.72 instalment needs net pay of about ₦30,621 a month, before counting any other loans you already repay. If you have other debts, add their monthly payments first; the cap usually applies to the total.
Steps to check your own offer
- Find the annual rate, and confirm it is on a reducing balance.
- Divide by 12 for the monthly rate.
- Work out the instalment with the formula or a spreadsheet's PMT function.
- Multiply by the number of months and subtract the amount borrowed: that is interest.
- Add every fee, and note whether fees are deducted from what you receive.
- Compare the total with the offer letter. If they differ, ask the bank to explain.
For a longer example with a full schedule, see ₦500,000 over 24 months. For insurance charges specifically, see insurance fees on loans.
Where Pryme fits
Pryme does not offer bank personal loans. If what you need to pay for is with a merchant in Spaces, a Loans on Spaces limit may be offered, lent by Solid Allianze MFB, with the cost and repayment date shown before you accept.
Questions people ask
How much is the monthly payment on a ₦100,000 loan for 12 months?
At an example 39% a year on a reducing balance, about ₦10,196.72 a month. Your bank's rate and fees will change the figure.
How much interest will I pay on ₦100,000 for one year?
About ₦22,361 at an example 39% a year on a reducing balance, or ₦39,000 if the same rate were charged flat. Fees are extra.
Do bank loan fees affect the interest rate?
They do not change the quoted rate, but fees deducted upfront mean you receive less and repay the same, so the real cost is higher.
Can I calculate my loan instalment in Excel?
Yes. Use =PMT(monthly rate, number of months, -loan amount). For 3.25% over 12 months on ₦100,000 it returns ₦10,196.72.
Sources
- Sterling Bank: Loans (payroll, vehicle, home and SME loan terms) · accessed Oct 2026
- FCCPC: Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025 (made 21 July 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.