Written by the Kopesha team · Last reviewed 23 September 2026 · No lender pays for these guides · How we write them
Why the third month
The first installment is paid out of the loan itself, or out of the good month that made borrowing feel possible. The second is paid out of effort. The third arrives in an ordinary month, alongside school fees, a funeral contribution and a repair, and that is where most defaults begin.
So the test is not "can I pay this next month?" It is "can I pay this in a month when something goes wrong?" — because over six months, something will.
Write down what actually arrives
Not the good week. Take the last three months and use the worst one. If you keep no records, start today and keep them for three weeks before you borrow — the number that comes out is almost always lower than the number in your head, and it is the number the loan has to live inside.
Separate the business from the household while you do it. Money that pays for stock is not money that pays for food, and a loan repaid out of stock money quietly shrinks the business that was supposed to grow.
Then the fixed costs, including the ones that are not monthly
Rent, food, transport, electricity, water, airtime, medicine. Then the ones that arrive in lumps and are always forgotten: school fees, uniforms, a licence renewal, insurance, contributions to funerals and weddings. Divide the yearly ones by twelve and put them in the monthly list, because that is how they actually land.
What is left after all of that is what a loan installment can come out of. Not what is left after rent and food alone.
The one-third line
A working rule used by lenders themselves: all your loan payments together should sit under about a third of what reliably arrives. On an income of 400,000 a month, that is 120,000 of total installments — from every lender, not just the new one.
It is a rule of thumb, not a law, and it bends: a trader whose loan buys stock that sells within the month can carry more, and a household with school fees due can carry less. But if you are over it, you are relying on nothing going wrong.
Keep a month in reserve, even a small one
One installment, kept aside and not touched, is the difference between a bad month and a default. Build it before the loan if you can and out of the first good month if you cannot, and keep it somewhere that takes a few minutes to reach rather than a few seconds.
If you are in a VICOBA or a SACCOS, that is often the easiest place for it to sit, because getting it out requires a small amount of friction — which is exactly the point.
Check it every month, not once
A budget made before the loan and never looked at again is a wish. Five minutes at the end of each month — what came in, what went out, what is left against the next installment — catches trouble while it is still a conversation with your lender rather than a demand letter.
And if the numbers say the next installment will not be there, that is the week to call — not the week after it was due.
This article is general information about borrowing in Tanzania. It is not advice about any particular lender, and the worked examples are examples only — not a quote or an offer from anybody.
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