The general objective of this study is to identify the impact of interest rate charges of loan repayment for micro-financial institutions in Tanzania. This study centers on the relationship between interest rate and loan repayments by comparing the two MFIs operations in Tanzania. The focus is the impact of interest rate, multiple loans and clients’ business capacity in loan repayments.Based on the findings, the study aims at providing recommendations which will ensure efficient loan reimbursement in MFIs in Tanzania. A literature review was conducted to get insights into what other researchers have found and conclusive in relation to the subject under study. The findings show that, when a client borrows without being assessed of the capacity of his or her business to reimburse that amount of loan, and when it comes exposed that the loan protected (secured) is larger than the capacity of the business,there is a higher possibility of repayment default. This means that the significant correlation between the interest amount charged by the MFI and loan repayments was clients regarded the higher interest amount as the factor that increases the burden to their businesses and direct cause of them to have problems in loan repayments.The study revealed that when the borrowers, submit an application for borrowing multiple loans at a time, in different micro finance or in the same micro finance has an impact of loan repayment. This means that multiple loans is not a significant reason for loan default. However, multiple loans increase the burden of interest amount to be repaid and the riskiness of the borrower as the number of individuals guaranteed increases, this leads the client to be liable when his or her group members of both MFIs default. The reason pointed out by clients was that their businesses have higher ability to cover the obligations, for example, when a new borrower submit the first loan application in more than one micro finance cannot lead to repayment problems. The clients’ business capacity has a significant relationship with impact on loan repayments.The reason laid down was that, taking higher loan level than the business capacity to repay that amount of loan leads to business difficulties on servicing the principal plus interest. Clients are serviced loans with a higher interest amount face of difficulty in repayments compared with those servicing lower amounts of interest charges. It was revealed that the interest burden retards clients’ business growth.In order to alleviate the repayment problems, the study suggest that micro finance has developed the training on business skills to their clients, before they submit the loan application, to facilitate approval of the amount of loan that fits the business of the loan applicant, and also to reduce the number of clients served per Credit Officer to facilitate the good services to their customers