A budget that survives the repayment

Will the installment still be there in a bad month?

The first installment (rejesho) can come out of the loan itself, or out of the good month that made borrowing feel possible. The third arrives in an ordinary month, next to a school contribution, a funeral and a phone that needs repairing. Build your budget on that month and see whether the installment still fits.

The lender is meant to ask the same question. Regulation 38 of GN 679, the 2019 rules for Tier 2 lenders, requires the loan application form to ask for your current income, your expenses and assets, and your other loans. Under regulation 39(1), the lender enters into a loan agreement once satisfied that you meet its loan conditions and have "the capacity to repay the loan".

But the lender sees your household spending only through what you write on its form, and a bigger loan earns it more interest. So answer those questions for yourself first, on paper. What else a lender weighs before approving you is in how to get a loan approved.

Tier 2 lenders are licensed by the Bank of Tanzania and take no deposits; regulation 3 names individual money lenders, credit companies and digital microfinance lenders among them. The Microfinance Act 2018, under which GN 679 was made, applies to Mainland Tanzania only (section 2), so these rules do not apply in Zanzibar. Banks and SACCOS work under separate regulations, but the arithmetic below is the same whoever lends to you.

A worked budget for one household

Take a made-up household in Tabata, Dar es Salaam, with two children in school. Salim rides a boda boda he owns, and Mwanaidi is a mama lishe who cooks lunches for workers at a nearby building site. After fuel for the boda and food stock for the lunches, the money that reached the household was TZS 910,000 in June, TZS 780,000 in July and TZS 860,000 in August. They build the budget on July, the worst of the three.

Three lines are easy to forget because the bills do not come every month: rent paid six months at a time, school costs, and wedding and funeral contributions. Divide each lump by the months it covers and put the result in the monthly list.

If you have never written your spending down, record everything for three or four weeks before you borrow, and use what you recorded rather than what you remember. Keep the business out of the household list, as Salim and Mwanaidi did: fuel and rice are paid for before the household counts its money. An installment paid out of stock money leaves less stock to sell next week.

How much of what is left can a loan take?

Kopesha's affordability calculator suggests an installment of no more than half of what is left after essentials and existing loans, and treats 70% as the limit. That is our own rule of thumb, and a cautious one. GN 679 sets no such figure: it leaves the "determination of the borrower's ability to repay the loan" to each lender's lending policy (regulation 37(2)(h)).

For Salim and Mwanaidi, half of TZS 130,000 is TZS 65,000 a month, and the limit is TZS 91,000. The TZS 65,000 they keep back pays for the month the boda needs a new chain and a tyre.

The 3.5% is chosen for the example; no official figure exists for a typical microfinance rate. If the lender charges interest on the full amount for the whole term (a flat rate), the same installment repays less: about TZS 549,296 over 12 months at 3.5% a month flat. Flat and reducing interest get a full comparison in what a loan really costs; to see a real offer month by month, enter it in the loan calculator.

You may have heard that all your loan payments together should stay under a third of your income. For this household a third of TZS 780,000 is TZS 260,000, twice what is left after essentials. A test on income alone ignores what the household must spend, which is why the calculator takes spending off first.

When money comes in by the day or by the harvest

Salim is paid in cash every day, but the lender wants TZS 65,000 once a month. Spread over the year, that is TZS 15,000 a week (65,000 × 12 ÷ 52), or TZS 2,500 on each of six working days. He can put the day's TZS 2,500 aside first, before lunch or airtime, somewhere apart from the pocket he spends from. If a lender offers weekly installments instead, compare the weekly figure with a slow week, not an average one.

A farmer's income may come once or twice a year while the installments come every month. Before signing, ask whether the lender can set installments around the harvest. Regulation 37(2)(e) of GN 679 makes the frequency of payments one of the terms each lender's own lending policy must set, so the answer depends on the lender. If it says no, hold back enough of this harvest to cover every installment due before the next one, and count that money as spent.

A good month helps as well. Under regulation 42(3), you may pay a Tier 2 lender ahead of schedule, all of it or some, with no notice and no penalty, and the payment cuts what you still owe in principal, interest and fees. On a reducing-balance loan, an extra TZS 50,000 paid after a busy month lowers the interest in every month that follows. Getting out of debt you already have shows both ways a part payment can go: a lower installment, or the same one ending sooner.

Keep one full installment in reserve and leave it alone. Build it before the loan if you can, or out of the first good month if you cannot, and keep it somewhere that takes some effort to reach. For Salim and Mwanaidi that is TZS 65,000 they do not spend.

If the installment comes off your salary

A salary loan changes one line of the budget: the installment leaves before the pay reaches you. Budget on the take-home figure on your payslip, after tax, pension, other deductions and the new installment, never on the gross.

Section 28(1) of the Employment and Labour Relations Act (Cap 366) says an employer may deduct from your pay only where a written law, collective agreement, wage determination, court order or arbitration award requires or permits it, or where you have agreed in writing to a deduction "in respect of a debt". Section 28(4) requires an employer that deducts money for another person, such as your lender, to pay it over as the agreement says. Breaking section 28 is an offence (section 28(7)).

• Keep a copy of the salary deduction form (fomu ya makato) you signed, and check the amount and the number of months against the loan agreement.
• If your payslip shows a loan deduction you never agreed to in writing and no law requires (HESLB's is one a law requires), raise it with the human resources office by letter, and keep a copy.
• If money was deducted but the lender says it never arrived, ask your employer for proof that it paid the lender; section 28(4) obliges it to pay the deducted money over.

One misreading to avoid: section 28(2)(e) limits deductions to a quarter of your pay, but only deductions that repay your employer for loss or damage you caused at work. It does not cap loan deductions. The Act covers employees in Mainland Tanzania, including public servants, but not members of the Defence Forces, the Police, the Prisons Service or the National Service (section 2(1)).

If your studies were paid for with a Higher Education Students' Loans Board (HESLB) loan, count that deduction too. HESLB's repayment FAQ says an employed beneficiary has 15% of salary deducted each month, and its 2026/2027 guidelines set the minimum at 15% of basic salary (section 10). The FAQ's example is TZS 150,000 a month on a salary of TZS 1,000,000, with repayment starting 24 months after you finish or stop studying.

Borrowing for school fees or a hospital bill

A loan for stock can repay itself from the sales. A loan for fees, a hospital bill or a burial cannot: every installment comes out of income that was already paying for something else. If you have to borrow for a child's schooling or a parent's operation, size the installment against the budget above, and try the cheaper routes below first.

Before you borrow for school

• Ask the head teacher or the bursar whether the amount can be paid in parts across the term, and what the real deadline is. Ask weeks before the deadline, not on the day.
• Ask for the written list of charges, and which are fees and which are contributions. An opinion piece in The Chanzo on 5 August 2026 notes that the fee-free policy for basic education, Elimu Bila Ada, sits alongside a growing number of public primary schools that teach in English and charge parents fees.
• Split out the lump items: uniforms and books can be bought one at a time in the months before school opens, instead of all at once with borrowed money.

For a university place, apply to HESLB before any lender. Its 2026/2027 guidelines for bachelor degree students allow up to TZS 3,100,000 a year for tuition and TZS 10,000 a day for meals and accommodation for students studying full time on campus. Applications were open from 19 June to 31 August 2026, with a non-refundable fee of TZS 30,000. Appeals against this year's results open in November 2026 and carry no fee.

The same guidelines expect parents to contribute under the cost-sharing policy, and make the guarantor (mdhamini) responsible for the unpaid loan in full if the student defaults. Each academic year has its own guidelines, so read the next ones on heslb.go.tz before the next window opens.

Before you borrow for a hospital bill

• Ask for an itemised bill and check it against the treatment actually given.
• If the patient is covered by the National Health Insurance Fund (NHIF), as a member or a registered dependant, or by health insurance through an employer, ask the hospital's insurance desk what the card pays before you settle the rest in cash.
• Ask the accounts office whether the balance can be paid in parts, and whether a payment plan adds any charge. If it adds nothing, it costs less than any loan that charges interest.

If you belong to a VICOBA group or a SACCOS, ask there next. A SACCOS member may repay a loan early, in part or in full, without penalty (regulation 37 of the SACCOS regulations, GN 675). How a group, a SACCOS and a microfinance lender compare is set out in VICOBA, SACCOS and microfinance.

Should you borrow the whole bill or only the gap?

Say the household above faces a school or hospital bill of TZS 600,000 in January and has TZS 200,000 put aside. Borrowing the whole bill and keeping the savings feels safer. It costs more, and over six months the installment is TZS 112,601, far above their TZS 65,000 line.

Borrowing only the gap over six months saves TZS 25,202 of interest compared with borrowing the whole bill over the same six months, all of it interest on money they already had. Of the options that fit, borrowing the gap over eight months costs TZS 31,198 less in interest than borrowing it over twelve. A twelve-month loan taken in January would also run until the next January, when the bill comes back.

The eight-month loan, taken in January with its first installment in February, is cleared in September. If they go on setting aside the same TZS 58,191 each month from October, they will have about TZS 232,764 by the end of January, and next year's gap shrinks from TZS 400,000 to about TZS 367,000.

Think carefully about what you pledge for a loan like this. A school fee or a hospital bill earns nothing, so a missed payment cannot be made up by working harder at the thing the loan bought. Pledging the house, or the boda the household earns from, as collateral (dhamana) is a heavier decision here than on a business loan. The rules on what a licensed lender may do with pledged goods and land are in collateral and guarantors.

Check the budget every month, and call before a payment fails

Spend five minutes at the end of each month on three numbers: what came in, what went out, and what is set aside for the next installment. Change the budget when life changes, for a new baby, a rent rise or a slow season, rather than keeping a sheet that no longer describes your month.

If the numbers say the next installment will not be there, call the lender before the due date. The rule behind that timing is regulation 44(2) of GN 679: once one installment has been due and unpaid for a day or more, the lender must count the whole loan as past due in its books, not only the missed installment. Regulation 43 lets a Tier 2 lender restructure a loan, with a smaller installment or a longer term, for a borrower with cash flow problems or in financial distress, if its lending policy allows, and it may refuse.

Take this budget sheet to that conversation. It shows the lender the installment you can actually pay, which is the figure any new schedule has to meet. The guide to missed payments follows a loan through the days and weeks after a missed date. With more than one loan, the guide to getting out of debt helps you decide which to pay first and what to write when you ask for a restructure.

Sources

• Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations 2019, GN 679: regulations 2, 3, 37, 38, 39, 42, 43 and 44 — Bank of Tanzania
• Microfinance Act 2018 (Act No. 10 of 2018), section 2 — Bank of Tanzania
• Microfinance (Savings and Credit Cooperative Societies) Regulations 2019, GN 675, regulation 37 — Bank of Tanzania
• Employment and Labour Relations Act, Cap 366 R.E. 2019, sections 2 and 28 — ILO NATLEX copy
• Guidelines and Criteria for Issuance of Loans to Bachelor Degree Students for Academic Year 2026/2027 (June 2026) — HESLB
• Loan repayment FAQs — HESLB
• "When Tanzania's 'Free' Schools Cost Money", opinion, 5 August 2026 — The Chanzo

What changed

• 29 September 2026: Rewritten, and moved from the cost category to life. This guide now also covers the former guide "Borrowing for school fees or a medical bill" (published 23 September 2026), whose address now redirects here. Corrections: removed the claim that keeping all loan payments under a third of income is "a working rule used by lenders themselves", which had no source, and fixed its example (a third of TZS 400,000 is TZS 133,333, not TZS 120,000); the guide now uses the affordability calculator's test, half of what is left after essentials, and says it is Kopesha's rule of thumb, not a law. Removed unsourced claims that most defaults begin in the third month, that an hour of asking often removes a third of a school or hospital bill, and that VICOBA or SACCOS loans for fees usually carry the lowest rate. Added a worked household budget in TZS, loan sizes and a school-fee borrowing table computed at 3.5% a month, daily and seasonal income, written consent for salary deductions under section 28 of the Employment and Labour Relations Act (and why its one-quarter cap does not apply to loans), HESLB's 2026/2027 guideline figures, the Tier 2 rules on capacity to repay (GN 679 regulations 37 to 39), early repayment (42(3)), restructuring (43) and past-due loans (44(2)), SACCOS early repayment (GN 675 regulation 37), and a list of sources.
• 22 September 2026: First published.

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