Can You Repay That Loan?

Can You Repay That Loan?

It’s a scene from a typical Nollywood movie: The main character has fallen on hard times (probably caused by village people) and when it seems his life couldn’t get any worse, ‘bank people’ come and seize what is left of his possessions to repay a loan he took at some point in the past. It’s a movie trope, but a real-life occurrence.


One of the biggest causes of anxiety for people when taking loans is whether or not they will be able to repay the loan taken. Will they pay it back on time? Or will they be embarrassed when loan repayment time comes along?

A simple solution would be to only take out a loan you feel you will be able to repay. However, we are only human and cannot predict the future and unexpected things happen. To combat this, it is best to sit down before you take the loan in question and determine the chances that you will be able to repay the loan. You may not be 100 percent accurate, but it is a better option than flying blind.


First of all, look at your current income stream. If you are taking out a loan that is larger than your monthly salary, it is best to take a step back. Unless what you are taking a loan for will likely yield profit, what are the chances that you will have enough money to pay it back? Make a spreadsheet detailing your probable income stream for the period leading up to repayment time. Calculate your likely expenses and determine how much you will have left at the end of the day. If the amount will be able to pay back your loan, then feel free to take the loan.


Also, take a look at your intended income stream. If you are taking out a loan for business purposes, consider what profit the business will bring in before repayment time. Don’t make assumptions, rather have a concrete figure in mind. If you are expecting to come into some money before repayment time, have a contingency plan in case it falls through.


Another important factor to consider is unexpected expenses. While expected expenses should have already been taken into consideration, life happens to us all and you should factor in the unknown. What if a medical emergency comes up, or some other situation? Your repayment budget should have accommodations for these types of things.


Loan repayment can be one of the most stressful things to happen to a person if they are not well-prepared for it. Before you even apply for a loan, draw up a repayment schedule and make sure it is viable. This will save you and the institution you are borrowing from a great deal of stress.

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