Missed Your Loan Payment? Take These 5 Steps Immediately to Minimize the Damage
Credit Nigeria
November 8, 2025
From Salary to Loan Amount: A Nigerian Borrower’s Guide to Getting More
- Posted by Credit Nigeria
Here’s a story every Nigerian borrower knows. You have a good, steady job, earning a decent salary of, say, ₦250,000 a month. You need a significant loan—maybe ₦1 million to buy a good Tokunbo car or pay your rent for the year. You feel confident your salary can handle it, so you apply.
The lender gets back to you, but the offer is for only ₦400,000. Why?
It’s not a random number, and it’s not because the lender doesn’t like you. Financial institutions in Nigeria use a specific, non-negotiable formula to decide the maximum amount you can borrow, and it’s tied directly to your salary. This guide will break down that formula and show you how to responsibly maximize the loan amount you can get.
At the heart of every loan decision is a concept called the Debt Service Ratio (DSR), sometimes called the Debt-to-Income Ratio (DTI).
Simply put, DSR is the percentage of your monthly income that is used to pay back all your existing debts. Lenders use it to gauge your capacity to handle a new loan without getting into financial trouble.
For most personal loans in Nigeria, lenders follow a golden rule: your total monthly loan payments should not exceed one-third (33.3%) of your monthly income.
The Lender’s Golden Rule:
Your total monthly loan payments (including any new loan) should never exceed 33.3% of your gross monthly income. This is the most important number in their calculation.
Let’s say you earn ₦150,000 per month. According to the 33.3% rule, the maximum amount you can use to service all your loans each month is ₦50,000. If you have an existing cooperative loan that costs you ₦20,000 per month, a lender will calculate that you only have ₦30,000 of “free” income left to pay back a new loan.
To better understand this, you can read our detailed guide on 10 ways to get out of debt faster in Nigeria.
| Your Monthly Salary | Max Monthly Loan Repayment (at 33.3%) |
| ₦100,000 | ₦33,300 |
| ₦150,000 | ₦50,000 |
| ₦200,000 | ₦66,600 |
| ₦250,000 | ₦83,250 |
| ₦300,000 | ₦100,000 |
You can’t just state your salary; you have to prove it.
Lenders will ask for your 3-6 month bank statement to see the actual credit alerts. This is the undisputed truth of your income. It’s why it is so important to understand how lenders read your bank statement.
They look for consistency in the amount credited and the date it arrives. A regular salary payment on the 25th of every month tells a story of stable employment, which is a major green light for any lender.
Now that you know the formula, you can take steps to improve your numbers and qualify for a larger loan.
The fastest way to increase your borrowing capacity is to pay down your current loans. Every debt you clear frees up more of your income, signalling to lenders that you can handle a bigger repayment. For those with multiple small debts, learning about Strategies For Effective Debt Management can be a game-changer.
If you have a side hustle, make sure the income is paid into your bank account. Cash payments are invisible to lenders. A documented, consistent side hustle income can be added to your primary salary, significantly increasing your total monthly earnings and, therefore, your borrowing power.
If you have multiple jobs or income sources, have all the money paid into one single bank account. Presenting one, consolidated statement makes your total income clear and undeniable to a lender.
Lenders value stability. Staying in a job for a year or more before applying for a major loan shows that your income is secure. Frequent job-hopping can be seen as a risk factor.
Your salary is the engine of your borrowing capacity, but your Debt Service Ratio is the speedometer. It’s not magic; it’s simple math. By understanding this formula and taking proactive steps to manage your existing debts and properly document your income, you are no longer a passive applicant hoping for the best. You are in control.
Ultimately, a strong borrowing profile is about more than just your salary; it’s about your overall financial health. The best long-term strategy is to focus on how to how to build your credit score and demonstrate responsible financial habits.
Most lenders in Nigeria, especially for personal loans, focus on your net salary or take-home pay, as this is the actual cash available to you to make repayments.
You can’t. Cash income is invisible to formal lenders. The best practice is to discipline yourself to deposit all cash earnings into your bank account consistently. Over 3-6 months, this will create a verifiable record of that income stream.
It is best to wait until you have received the new, higher salary for at least three consecutive months. This provides the bank with a clear and consistent record of your increased earning capacity.
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