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
A service charge on a loan is interest by another name: it is what you pay for using the money, so it should be compared as a rate. A ₦3,600 charge on ₦30,000 for 14 days is 12% for two weeks, about 313% a year counted simply. A larger charge over a longer tenor can be far cheaper per month, so annualise before you compare.
Loan apps and some lenders describe their price as a "service charge", "facility fee", "platform fee" or "flat charge" rather than an interest rate. Sometimes the screen even says "0% interest". The label changes nothing about the money: you receive an amount and repay a larger amount. The difference is the cost of borrowing, whatever it is called.
Why a charge is still interest
- It is paid because you borrowed, and only if you borrow.
- It is usually proportional to the amount borrowed and set for a fixed tenor.
- Removing it would leave the loan free; nothing else is being bought.
- In economic terms, the cost of credit is everything you repay beyond what you received.
A lender may have reasons for the label, such as simplicity on a short loan with a single repayment. For a borrower, the useful step is to convert it into a rate so that offers with different tenors can be compared. The FCCPC's 2025 consumer lending regulations require digital lenders to disclose interest rates, repayment terms and associated fees fully before a transaction is completed, so all of these figures should be visible before you accept.
How to annualise a service charge
- Divide the charge by the amount you receive. This gives the rate for the tenor.
- Divide by the number of days in the tenor to get a daily rate.
- Multiply by 365 for a simple yearly rate.
- For a compounded figure, raise (1 + rate for the tenor) to the power of 365 ÷ days, then subtract 1.
Worked example: two offers on ₦30,000
Example figures only. Two apps offer ₦30,000. App A charges ₦3,600 for 14 days. App B charges ₦6,000 for 61 days. App B's charge is bigger; which costs more?
| App A | App B | |
|---|---|---|
| Charge | ₦3,600 | ₦6,000 |
| Tenor | 14 days | 61 days |
| Rate for the tenor | 12% | 20% |
| Cost per ₦1,000 per day | about ₦8.57 | about ₦3.28 |
| Equivalent per 30 days | about 25.7% | about 9.8% |
| Simple yearly rate | about 312.9% | about 119.7% |
App B costs less than half as much per day of borrowing, despite the larger charge. If you need the money for two months, App A would have to be repaid and re-borrowed several times, and four back-to-back 14-day loans would cost ₦14,400 for 56 days against App B's ₦6,000 for 61. If you need it for 14 days only and App B charges the full ₦6,000 even when repaid early, App A could still be cheaper in Naira, which is why tenor and early-repayment terms matter as much as the rate.
The compounded view
The simple yearly rate assumes you borrow the same amount again and again without the charges building up. If instead each charge were rolled into the next loan, the compounded figures are far higher: about 1,819% a year for App A ((1.12)^(365 ÷ 14) − 1) and about 197% for App B ((1.20)^(365 ÷ 61) − 1). Nobody should borrow that way for a year, but the gap shows how much faster short, frequent charges grow.
Why lenders quote a charge
There are practical reasons. On a single-repayment loan of a few weeks, a Naira figure is easier to grasp than an annual percentage, and it is the number the borrower will actually pay. A fixed charge also does not change with the day count, so the lender does not need to explain daily accrual. The weakness for borrowers is that a Naira figure hides the time dimension: ₦3,600 and ₦6,000 cannot be compared until you divide by the days. Some lenders also show both, a charge and a monthly rate; when they do, check that the two agree with the total repayable.
"0% interest" with a fee
An offer advertising 0% interest with a 10% service charge on a 30-day loan costs the same as a 10% interest charge for 30 days: about 121.7% a year counted simply. Ask what the total repayable is, and work from that.
Other charges that work like interest
- Processing or management fees deducted at payout; see how upfront fees raise a loan's cost.
- Insurance charged on the loan.
- Extension or rollover fees; see what an extension costs.
- Late penalties, which are charged on top.
What to check first
- Note the cash you will receive, the total repayable and the due date.
- Annualise the difference using the steps above. Our guide to APR versus a flat fee has more examples.
- Check whether the charge reduces if you repay early.
- Check the lender is on the FCCPC's approved digital lenders register; see how to check.
Where Pryme fits
For Loans on Spaces, lent by Solid Allianze Microfinance Bank, the agreement shows the amount, cost and repayment date in full before you accept, so you can annualise the cost the same way. See where every charge is shown.
Questions people ask
Is a service charge the same as interest on a loan?
In effect, yes. It is the price of borrowing, so compare it as a rate. A lender's label does not change what you repay.
How do I convert a loan app charge to an annual rate?
Divide the charge by the amount received, divide by the days in the tenor, and multiply by 365. For ₦3,600 on ₦30,000 over 14 days, that is about 313% a year.
Are 0% interest loan apps really free?
Not if there is a fee or service charge. Work out the total repayable minus what you received; that is the cost.
Which is cheaper, a 12% charge for 14 days or 20% for 61 days?
The 20% for 61 days, by a wide margin per day of borrowing. A shorter loan with a smaller charge can still cost more per month.
Sources
- FCCPC: Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations, 2025 · accessed Oct 2026
- FCCPC: Approved digital money lenders register · 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.