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The short answer
Salary domiciliation means your employer agrees in writing to pay your salary only into a named account at the lending bank until the loan is repaid, and not to move it elsewhere without the bank's consent. The bank then deducts each instalment as your salary lands. The commitment is released when the bank issues a letter confirming the loan is cleared and your employer receives it, so ask for that letter as soon as you finish paying.
What salary domiciliation is
When a bank lends against your salary, its main worry is that you will move your pay to another bank and stop repaying. Domiciliation answers that worry. You, your employer and the bank sign a letter (sometimes called a letter of undertaking or domiciliation of salary letter) in which your employer undertakes to pay your salary into an account you hold at that bank for the life of the loan.
It is a standard feature of salary loans, personal loans for employees and some asset finance. Jaiz Bank's Murabaha household appliance finance, for example, lists salary domiciliation among its features and repayment monthly from salary, according to its listing on nairaCompare accessed in October 2026.
What the letter commits each party to
| Party | Typical commitment |
|---|---|
| You (the employee) | Not to instruct your employer to pay your salary elsewhere while the loan is outstanding; to keep the salary account open; to let the bank deduct instalments |
| Your employer | To pay your salary, and often your terminal benefits, into the named account; not to redirect it without the bank's written consent; sometimes to tell the bank if you resign or are dismissed |
| The bank | To lend on the agreed terms, and to issue a release letter when the loan is repaid |
Read the employer's undertaking carefully. Some letters go beyond monthly salary and ask the employer to route gratuity, end-of-service pay or other benefits to the bank if you leave before the loan is cleared. That can matter a great deal if you change jobs.
What it does and does not allow
- It lets the bank collect repayments from your salary account when salary is credited. Many banks combine this with a mandate to debit the account on each due date.
- It does not, by itself, let the bank take money from your other banks. A separate arrangement such as a Global Standing Instruction would be needed; see GSI explained.
- It does not stop you receiving your salary. Whatever is left after the instalment remains yours to use.
- It does not usually give the bank a right to contact your employer about your private affairs beyond the loan. See Can a lender contact your employer?
Civil servants and IPPIS
Federal workers paid through government payroll may meet a different mechanism, an Irrevocable Standing Payment Order, which deducts at source. Our guide on ISPO for civil servants covers how that differs.
Worked example: how much is left each month
Example only. Your net salary is ₦280,000 and the bank lends you ₦600,000 repayable at ₦62,500 a month for 12 months (₦750,000 in total). When your salary lands, the bank deducts ₦62,500 and you are left with ₦280,000 − ₦62,500 = ₦217,500. If your employer pays late one month and the bank's debit date has passed, check whether the agreement charges a late fee; ask the bank to align the debit with your actual pay date if it often shifts.
Changing jobs or banks while domiciled
- Tell the bank before you resign. It may ask you to repay from terminal benefits or agree a new arrangement with your new employer.
- Do not quietly ask HR to redirect your salary. The employer has signed an undertaking to the bank and is unlikely to agree.
- If you want to move banks, the cleanest route is to settle the loan, get the release letter and then change.
Steps: getting domiciliation released
- Pay the final instalment, or ask for a written settlement figure and pay it. See early settlement.
- Ask the bank for a letter confirming the loan is fully repaid and releasing your employer from the domiciliation undertaking.
- Give a copy to your employer's HR or payroll team, and keep the original.
- Cancel any separate debit mandate on your account.
- Check your credit report a few weeks later to confirm the loan shows as closed. See how to get a loan clearance letter.
Before you sign the letter
Ask for a copy of the full domiciliation letter, not just the page you sign. Check whether it covers salary only or terminal benefits too, whether it lasts until the loan is repaid or for a fixed period, and what the bank must do to release it. Digital lenders that offer salary-backed loans through apps are also covered by the FCCPC's 2025 digital lending regulations, which require fees and repayment terms to be fully disclosed before a transaction is completed (Regulation 17(a)). If anything in the letter is unclear, ask the bank to explain in writing before you or your employer sign.
Where Pryme fits
Loans on Spaces do not require salary domiciliation. They are lent by Solid Allianze Microfinance Bank, offered based on how your Pryme account is run, and the agreement is shown in full before you accept. See Loans on Spaces.
Questions people ask
What does salary domiciliation mean?
It means your employer undertakes to pay your salary into a named account at the lending bank until your loan is repaid, so the bank can deduct instalments.
Can I change my salary account while my salary is domiciled?
Not without the bank's consent. Your employer has signed an undertaking. Settle the loan and get a release letter first.
How do I remove salary domiciliation after repaying a loan?
Ask the bank for a letter confirming the loan is repaid and releasing the undertaking, and give a copy to your employer.
Does domiciliation let the bank take my terminal benefits?
Only if the letter says so. Some undertakings include gratuity or end-of-service pay, so read it before signing.
Sources
- nairaCompare: Jaiz Bank personal loan, household appliance finance (Murabaha) · 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.