Getting out of debt you already have

Start with one page that shows every debt

The installment (rejesho) on your business loan is due on Friday, the phone loan wants paying again, and the wholesaler has asked twice about the stock you took on credit. Before you decide who gets paid, put every debt (deni) on one sheet of paper, one line each:

• who you owe, and a phone number for them
• what is still owed today, which is not the amount you first borrowed
• the installment, and the date it falls due
• what it costs you to keep the debt one more month: interest, a rollover fee, a penalty
• what is at stake if you miss a payment: goods or land pledged as collateral (dhamana), a guarantor (mdhamini), your next stock delivery, a relationship

Include the informal debts too: the shopkeeper, your VICOBA group, the money from your brother. They are paid from the same income as the business loan.

Most rules below come from GN 679, the 2019 regulations for Tier 2 lenders, which regulation 3 defines as non-deposit-taking microfinance providers, among them digital microfinance lenders, credit companies and individual money lenders. The Microfinance Act 2018, under which they are made, applies only on the Mainland, not in Zanzibar (section 2). Banks are outside GN 679, SACCOS have their own regulations (GN 675), and a private loan from a relative is covered by none of them.

Don't guess the balances of formal loans. GN 884, the Bank of Tanzania's consumer protection regulations, says in regulation 28(1) that a lender the Bank licenses or supervises must tell you your balance whenever you ask. It must also send you a free written statement, and a 2025 amendment made that at least once a month. A Tier 2 lender may not charge anything for a loan statement (guideline 17(2)(d) of the Bank's 2024 fee guidelines). To check each line against your agreement, use the guide to reading your repayment schedule.

Which debt should you pay first?

Imagine Neema, who runs a duka in Arusha. Her sheet looks like this:

The order that costs least: pay at least the minimum on every debt, and put every spare shilling on the one with the highest monthly rate, meaning the most it charges for each shilling you owe. For Neema that is the phone loan: 10% a month against 3.5%. Clearing its TZS 150,000 ends a TZS 15,000 monthly fee. The same TZS 150,000 paid onto the business loan would cut next month's interest by only TZS 5,250.

Some people prefer to clear the smallest balance first, because a whole line disappears from the sheet sooner and that keeps them going. That is a fair choice when the rates are close. Neema's are not: the phone loan's monthly rate is nearly three times the business loan's, so cost decides. Here the two orders agree anyway, because the phone loan is also her smallest debt.

If your income will not cover every minimum, rank the debts by what a missed payment would cost you. Keep these paid before the rest: debts backed by your goods or land, debts with a guarantor, and debts your business depends on, like the wholesaler. Collateral: what you can lose explains what a lender may do with pledged goods, and the restructuring section below covers asking a lender for more time.

Stop rolling the phone loan over

A rollover means paying only the fee so the loan moves to next month. Neema's TZS 15,000 buys thirty days and leaves the TZS 150,000 untouched. Six rollovers would cost her TZS 90,000 in fees, and she would still owe TZS 150,000.

At 10% for each month, that loan's effective annual rate works out at about 214%. To convert an app's fee into a true rate, see what mobile money loans cost; the effective annual rate itself is explained in what a loan really costs.

While you work through this plan, take no new loan to pay an old installment, and delete any lending app you have no open loan with. A new loan belongs in the plan only if it pays off old debts in full at a lower cost; the tests are in the section on one new loan to clear the others.

Ask for a restructure before you miss a payment

Regulation 43 of GN 679 is written for the borrower in your position, one "facing cash flow problems or financial distress". It lets a Tier 2 lender restructure the loan, and it names two things that can change: the amount of each installment and the payment period.

Two phrases in that regulation limit it. The lender "may" restructure, so it can say no. And it acts "subject to its lending policy", its own written rules. Regulation 37(2)(n) requires every Tier 2 lender's lending policy to set out "the criteria and procedure for restructuring of loans", so ask the loan officer what those criteria are.

Go before the due date you expect to miss. Under regulation 44(2), a loan repaid in installments is past due in its entirety once any installment is unpaid for one day or more. For the stages that follow a missed date, read what happens if you miss a payment.

Here is what stretching Neema's business loan would do. The rate stays at 3.5% a month on the reducing balance:

Twelve months frees TZS 69,631 a month and costs TZS 95,780 more in interest. That trade makes sense if the freed money clears something dearer, such as the 10% phone loan, and not if it drifts into daily spending. You can try other periods on Kopesha's loan calculator.

Those figures leave out one charge. Fee guideline 13(5) allows a Tier 2 lender a "one-off loan restructuring fee" on the outstanding amount, at "a reasonable and affordable charge". Ask what it will be before you agree, and add it to the cost. Fees a lender cannot charge lists what else may and may not appear.

Put the request in writing and keep a copy. Include:

1. your name, the number you can be reached on, and the loan number from your agreement
2. what changed, such as sales falling after a road closure or a hospital stay, with any papers that show it
3. your list of debts, so the officer sees what else you are paying
4. a specific proposal: the installment you can pay and for how many months
5. a request for the new repayment schedule in writing, split into principal, interest and fees, before you sign anything

A SACCOS loan works differently. Regulation 42(1) of the SACCOS regulations (GN 675) also leaves restructuring to the society's lending policy, but a given loan may be restructured no more than once. A bank is outside both sets of regulations, so ask it for its own restructuring terms in writing.

Paying early, in full or in part

Sometimes a lump sum arrives: a VICOBA share-out, the money from a harvest, the price of a second phone you sold. For a Tier 2 loan, regulation 42(3) of GN 679 lets you repay before the end date, "either in whole or in part". You need not warn the lender, it may not penalise you, and the payment reduces the principal, interest and fees you owe. Regulation 42(4) adds that when you repay in full early, you do not pay interest for the rest of the term.

For Neema, paying TZS 827,130 today instead of six more installments totalling TZS 931,356 saves TZS 104,226. That is the interest for the months she would no longer be borrowing.

A part payment helps too, but GN 679 does not say whether the lender must lower your installment or shorten the loan. Here is TZS 300,000 paid after the sixth installment, both ways:

The lower installment saves TZS 37,803 in interest and eases each month by TZS 56,301. Keeping the installment saves TZS 59,827 and ends the loan two months early. Tell the lender in writing which one you want, and ask for the new schedule.

On a flat-interest loan, the interest inside each future installment is printed on your schedule, because regulation 39(2)(e) requires every installment to show its principal, interest and fees separately. When you ask for a payoff figure, ask for it without the interest on installments you have not reached, and quote regulation 42(4).

One complication: guideline 15 of the 2024 fee guidelines permits a Tier 2 lender's fee for early settlement or cancellation where it was "clearly stipulated" in your agreement. Regulation 14(3) of GN 884 says the same of prepayment penalties for the providers it covers, banks included. If your agreement has such a fee, ask the lender in writing to explain it against regulation 42(3). A fee that is not in the agreement cannot be collected at all (GN 679, regulation 56(3)).

SACCOS members have a matching right: under regulation 37 of GN 675 you may repay early, in whole or in part, on any business day without penalty, and a full early repayment ends the interest. Whoever your lender is, get the payoff figure in writing for a named date before you hand over the money.

When one new loan to clear the others makes sense

Borrowing once to pay off several debts can leave you with one date and one installment. It helps only when all of these hold:

• It pays off each old debt in full on the day, so the new installment replaces the old ones instead of sitting on top of them. Ask the new lender to pay the old lenders directly, and collect each settlement letter.
• Its effective annual rate, fees included, is lower than what you pay now. A smaller installment over more months can still cost more in total, as the restructuring table shows.
• Its installment fits what you earn in a bad month. A budget that survives the repayment works this through.
• The paid-off apps and credit lines stay closed afterwards, so the phone loans do not quietly come back.

If your current Tier 2 lender offers more money on top of the loan you have, it may charge interest on the extra but no fee for the top-up itself: guideline 17(2)(f) prohibits fees for "loan enhancement/refinancing/loan top up". A new loan from a different Tier 2 lender can carry that lender's one-off management fee (guideline 13(3)), plus third-party costs at actual cost. Ask for every fee in writing before you sign, and if one is deducted at payout, you receive that much less cash.

If the Bank licenses or supervises your old lender, it may not stand in the way of a move. Regulation 41(2) of GN 884 bars a provider from placing restrictions that prohibit ending a contract or changing to another provider, and requires it to give the new provider the information it needs.

Selling pledged goods yourself, with the lender's agreement

Sometimes the sheet shows that the pledged item has to go. Regulation 41(5) of GN 679 lets a Tier 2 lender sell collateral "by way of public auction or private treaty". A private treaty is a sale agreed directly with a buyer instead of at auction, so a negotiated sale is already within the rules. Propose one before the lender starts recovery.

If the lender sells instead, regulation 41(3) to (7) sets its notice periods, the independent valuation and a minimum price (details in collateral: what you can lose). One detail bears on your choice. The valuer records two figures, a market value and a forced-sale value (41(6)), and the price floor at the lender's first two auctions is the forced-sale value, not the market value (41(7)). A buyer you find can be asked for the market price.

Whoever sells, regulation 41(8) fixes where the money goes: first to what is owed on the loan, then to the proper costs of the sale, and any balance to you.

1. Write to the lender asking to sell the item privately. Name it, your asking price and the buyer, if you have one.
2. Agree in writing that the buyer pays the lender, or pays into your loan account, and get a receipt (risiti).
3. Settle in writing what happens if the price is below your balance. Unless the lender accepts the price as full settlement, the shortfall stays on your loan.
4. Get a written release of the item before the buyer takes it away.

A mortgaged house or plot also falls under the Land Act. A mortgage of a matrimonial home is valid only with the assent of the spouse living there (section 118(1)), and you can clear the whole mortgage debt right up until the lender agrees a sale with a buyer (section 148(1)). The collateral guide covers both.

If a lender will not listen

A lender that refuses to restructure has broken no rule. A complaint fits when it breaks a written one: a fee missing from your agreement (regulation 56(3)), a banned fee (fee guideline 17(2)), collection that starts without fourteen days' written notice or involves harassment (56(2)), or a payment not credited on the day you made it (42(1)).

Start with the lender itself. Regulation 54 obliges it to keep a complaints desk or a named officer for complaints. If it rejects the complaint or lets its time run out, the Bank's 2025 complaint guidelines (clause 25) let you escalate through Sema na BoT. The deadlines at each step are in your rights as a borrower. For an app that contacts your family or friends, go to harassed by a loan app.

A complaint, a dispute or a pending restructure does not pause any installment. Pay what you can on each due date and keep every receipt, so the lender's record shows payments and not arrears.

When a loan is paid off

On the day you clear a loan, ask the lender for two things. The first is a signed, dated declaration of full settlement, which regulation 29 of GN 884 entitles you to; questions before you sign lists what it must say. The second is anything you pledged: regulation 29(3) gives the lender thirty days from full settlement to have it discharged and handed back.

Tier 2 lenders report every loan to the credit bureaus monthly (GN 679, regulation 35(2)), so a month or two after the payoff, check that your record shows the loan closed. Regulation 28(1)(c) of the Credit Reference Bureau Regulations 2012 gives you a free copy of your report once every twelve months; your free credit report covers how to get it and how to dispute an error.

Sources

• Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019, GN 679 (regulations 3, 35, 37, 39, 41, 42, 43, 44, 54, 56): Bank of Tanzania
• Microfinance Act, 2018 (section 2): Bank of Tanzania
• Guidelines on Fees and Charges for Microfinance Service Providers, 2024 (guidelines 13, 15, 17): Bank of Tanzania
• Bank of Tanzania (Financial Consumer Protection) Regulations, 2019, GN 884 (regulations 14, 28, 29, 41)
• Bank of Tanzania (Financial Consumer Protection) (Amendment) Regulations, 2025, GN 298 (new regulation 2, amended regulations 28 and 29)
• Microfinance (Savings and Credit Cooperative Societies) Regulations, 2019, GN 675 (regulations 37 and 42): Bank of Tanzania
• Land Act, Cap 113 (sections 118 and 148), as at 1 July 2024: TanzLII
• Bank of Tanzania (Credit Reference Bureau) Regulations, 2012, GN 416 (regulation 28)
• Guidelines for Handling Financial Consumer Complaints, 2025 (clause 25): Bank of Tanzania
• Sema na BoT: the Bank of Tanzania's complaints portal

What changed

• 29 September 2026: Rewritten, with worked figures in TZS. Corrections: removed the unsourced claim that selling a pledged asset yourself "almost always raises more than an auction", and set out what regulation 41 of GN 679 actually says (sale by public auction or private treaty, independent valuation, the forced-sale floor in the first two auctions, and the order in which sale money is applied). Removed the unsourced statement that lenders "restructure regularly": regulation 43 says a Tier 2 lender "may" restructure, subject to its lending policy, by changing the installment amount or the payment period; a one-off restructuring fee is allowed (fee guideline 13(5)), and a SACCOS loan can be restructured only once (GN 675, regulation 42). Removed the unsourced claims that a consolidation loan usually carries a lower rate than phone loans, that most people pay a little to everybody, and that households returning to this page are almost always those who kept no reserve. Added the right to repay a Tier 2 loan early, in whole or in part, without penalty and with no interest for the unused months (regulation 42(3)–(4)), alongside fee guideline 15, which allows an early-settlement fee written into the agreement. Added that a Tier 2 lender may not charge a top-up or refinancing fee (fee guideline 17(2)(f)), and what the settlement declaration must contain (GN 884, regulation 29, as amended in 2025). Replaced the Bank's consumer protection web page, which the old text never cited, with the documents it now relies on; the 2025 complaint guidelines, already listed, are now cited in the text (clause 25). Moved to the "trouble" category.
• 24 September 2026: Added references to the Bank of Tanzania's regulations and a list of sources.
• 23 September 2026: First published.

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