Farmer’s loan – where to look?

Profitable agricultural activity is not possible without modernization and investment. A good source of additional resources may be loans to farmers – products created to support growing farms.

The size of the farm also has an impact on the interest in this type of products: the larger it is, the more willingly farmers look for additional funds. Entrepreneurs involved in agricultural production can take advantage of the wide range of government banks. However, the possibilities do not end there: many banks have prepared a special offer for this professional group.

Farmer’s loan

Farmer

Agriculture stands out from the rest of the economy. Substantial dependence on atmospheric conditions is associated with greater risk, and seasonality affects the income irregularity. For this reason, loans to farmers should take into account the specificities of the industry and be tailored to its specific needs. We will find them in the offer of many institutions – not only small cooperative banks, but also large universal banks.

They usually take a formula similar to corporate loans. Investment loans have been provided for farmers who want to finance investments, while revolving loans have been prepared for those who intend to finance current operations in this way.

Agro loans at Cream Bank

Agro loans at Alior Bank

Cream Bank has prepared a rich offer of loans for farmers. Constant access to new funds is provided by the Agro revolving loan in the credit account, the Agro overdraft facility operating on a similar basis is also an alternative. A purchase product is a special product used to finance the purchase and storage of seasonal agricultural products.

People looking for investment funds should in turn be interested in the offer of investment loans for farmers: Cream offers its clients an Agro investment loan, enabling financing of any investment projects, and an Agro loan for the purchase of agricultural land.

Loan for a farmer at Good Finance

Loan for a farmer at BNP Paribas

An even wider cross-section of loans to farmers was prepared by the Good Finance bank. Customers looking for revolving loans will find several products tailored to their specific needs. The Agro loan is characterized by quick application processing, at the same time it can reach USD 2,000,000 with a loan term of one to five years.

Farmers seeking funds for the purchase of agricultural inputs should in turn be interested in the Advocate Loan, whose repayment can be spread over up to 84 months, and in some variants it is not necessary to provide any kind of collateral. Lite Lender is also an interesting product. An amount of up to USD 1 million can be repaid over a period of 15 years. It is also possible to establish collateral on the property belonging to a third party.

The investment loan offer for farmers at Good Finance is based on two products: Agro Progres enables the payment of high amounts and the repayment deadline of up to 30 years. In turn, Agro Progres Premium, addressed to owners of larger farms, gives the possibility of cashless settlement with equipment suppliers and settling all formalities directly at the bank branch.

Credit for a farmer at Best Lender

Credit for a farmer at Credit Agricole

Best Lender is another bank that looks at agricultural activities in a special way. The investment loan for farmers offered allows for relatively cheap financing, with a margin of 2% and a variable rate based on 3M USD. The repayment period can be up to 12 years.

This is an interesting offer, especially for farmers who have obtained EU funding. In this case, it will not be necessary to pay your own contribution, while the part of the investment that is subject to subsidy will be financed through a bridge loan. A similar mechanism can also be used when waiting for a refund of the VAT due.

Farmers who want to buy agricultural land or real estate can, in turn, take advantage of the land loan on their own. The maximum investment cost is USD 2 million, while the bank will require only 10% of its own contribution. The installment repayment schedule will be adjusted to individual dates of obtaining revenues, and the repayment itself can be spread over even 20 years, postponing the repayment of capital for two years.

Attractive loan offers for farmers

Attractive loan offers for farmers

Running a farm can become a very profitable activity. To succeed, however, it is necessary to find the right forms of financing. In addition to their own savings and funds from EU subsidies, farmers can also find attractive loan offers from banks. Particularly favorable conditions are offered by preferential loans in which the Agency for Restructuring and Modernization of Agriculture participates.

However, this is not the only offer addressed to farm owners. They can also count on standard working capital and investment loans, adapted to the characteristics of their business. Many institutions propose, among others making the repayment schedule dependent on income or enabling unpaid EU subsidies or VAT due to be covered by bridging loans.

Cheap loans only with short terms, salary receipt and top collateral.

Assess the credit applicants’ credit rating

Assess the credit applicants

This also includes scoring and the budget statement. It is conceivable that the applicant chooses a short term of only a maximum of 24 months and is a police officer or university lecturer by profession. Then there may be a chance for a loan on favorable terms. But it is also conceivable that no one is granted exactly these conditions, but that they are purely decoy offers. Experience has shown that many loan seekers also accept higher interest rates once they have made a loan request. Even if the customer asks, it is justified that it has to do with the credit rating. Many banks also offer interest depending on the term.

Borrowers have no chance at all at a low-interest loan

A longer loan term always means an increased risk for the bank and therefore the longer the chosen term, the higher the interest rate. With terms of 72 or even 84 months, the borrowers have no chance at all at a low-interest loan. The highest effective interest rates are required here. While the normal consumer still sees the reason for the increased risk with a longer term, the reason for the credit rating still remains opaque and vague. Bank employees who have been employed by their employer for more than 10 years and can prove a high income of over 2,000 USD also get a loan that is advertised with 4.9 percent, ultimately with a term of 84 months granted only with 11.99 percent.

With a loan of 25,000 USD, this means that, including residual debt insurance, which was also made a condition, a total loan of over 38,000 USD. So 13,000 USD in loan costs. This is 50 percent of the loan amount, which must be paid for the cost of the borrowed money. Loan seekers should always obtain offers from several banks and compare them with one another. It is never the case that the bank with the cheapest promises really sells the cheapest loans. For a comparison, it also makes sense to get an offer from a bank that is advertising from the start with 6.9 percent.

Is it worth paying off an advance loan? Find it out!

Many people who have financed an asset, such as a car or property, dream of paying off the advance financing. After all, nothing like getting rid of payments for good and not paying interest anymore, right?

In fact, it depends! It is not always advantageous to make this anticipation. There are a few steps – and calculations – needed before concluding whether or not it is worth doing.

Then check out the information we have gathered to know everything you need on the subject!

How does financing interest work?

How does financing interest work?

As you may know, financing is a request for credit from the bank. He offers them money for the customer to make a purchase and this amount is returned in installments with increased interest and other fees.

The number of installments, their price and the amount of interest are characteristics that can vary a lot according to each bank. In addition, the conditions agreed in the contract also influence whether the installments will be larger or smaller, for example.

The system used by the bank to grant the financing can work with fixed value installments or with constant amortization. In this second case, the value of the installments gradually decreases.

In both situations, there is an interest rate that can be calculated on a monthly or annual basis so that you can evaluate its effects on payments.

What happens when discharge is anticipated?

Whenever a monthly payment of the financing is paid, the amount referring to the portion of the money borrowed and another amount related to bank fees are included. In advance, a discount on these fees is granted.

In other words, you still have to pay the amount granted by the bank in full, but you can pay less interest when anticipating the discharge. However, calculating this discount does not consist of simply removing all fees from the final amount.

In fact, some fees continue to be charged even when the customer chooses early discharge. The discount is calculated in proportion to the interest and the time that would still be left until settlement in the agreed period.

It is also necessary to pay attention to another thing: in financing contracted until 2007, an advance payment fee may be charged. After that year, that fee was extinguished. So, those who requested at that time need to check the information in their contract.

If you want to simulate the proportional discount conditions for your financing, you can use an advance calculator. It performs the calculation automatically and facilitates its analysis.

Is it worth paying off advance financing?

Is it worth paying off advance financing?

And now? Is it worthwhile to anticipate the discharge of a loan? As you saw, this answer depends on some factors and, mainly, on the information. It is only possible to understand if the decision is advantageous by analyzing the calculations and knowing the conditions offered by the bank.

Whether it is worth it or not will depend on each case. Therefore, it is essential to reflect on the details involved in this matter. If you are considering anticipating your financing, check out some essential elements that should be noted.

All bank fees

It is not uncommon to see people who make a quick calculation considering interest rates and decide that it is worth paying off a loan. However, this account does not always close. That’s because there are other fees involved in it.

The ideal is to calculate the total effective cost of financing – the GFI. And how to get to him? Considering not only interest but also the other costs of the operation. An example is the reference rate (TR), a general indicator of the Brazilian economy.

There may also be built-in costs with insurance and administrative fees, as well as taxes. Normally, these amounts will not be discounted in the payment of the financing, and the discount will be only on interest – which may make the anticipation not worthwhile.

The difference between an investment and discharge

money

Even considering the calculations we quoted, you may think that it is advantageous to pay off the financing to use the money you have. But there are other attractive options, like investing the amount and getting interest from it.

This is an interesting alternative because it can even help you pay the financing installments. And the way to know if it is better to anticipate the discharge or invest the money is to compare the yields.

The total effective cost of financing must be compared with the net return on investments of interest. In this way, it is possible to verify which is the higher value: if it is the GFI, it may be advantageous to pay the installments.