How to forecast your loan repayments into your

2 min read

MonthlyAdd the repayment to each month

TroughWatch the quiet months

BufferKeep a positive balance

Loan amount (£)

Annual interest rate (%)

Term (months)

Illustrative only. Assumes a fixed rate and equal monthly repayments (annuity). Your actual offer depends on Credicorp’s assessment of your company.

Step 1: work out the repayment

For the amount, rate and term you are considering, calculate the monthly repayment — the loan repayment calculator does this. This is the fixed outflow you will add to every month of your forecast for the life of the loan.

Step 2: add it to each month

In your cash-flow forecast, insert the repayment as an outgoing in every month of the term. Do not average it against annual cash — the point is to see the effect month by month, including the months when income is lowest.

Step 3: check the closing balance

With the repayment in, check the projected closing bank balance for each month. If any month turns negative, the loan is too large for that point in your cycle. See forecasting cash flow for the underlying method.

Step 4: keep a buffer

Aim to keep a positive cushion in every month, not just a break-even. A forecast that only just survives leaves no room for a late payment. If it is tight, reduce the amount or extend the term — see headroom.

Model the repayment

Use the calculator to work out the figure to drop into your forecast.

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Frequently asked questions

How do I forecast loan repayments?

Work out the monthly repayment for your amount and term, then add it as an outgoing in every month of your cash-flow forecast for the life of the loan, and check the closing balance stays positive.

Why add the repayment to every month, not the average?

Because averages hide the tight months. A repayment that fits the annual average can still push a quiet month into the red. Adding it month by month reveals whether the loan fits at every point in your cycle.

What if a month turns negative in my forecast?

The loan is too large for that point in your cash cycle. Reduce the amount or extend the term until every month keeps a positive buffer, not just a break-even balance.