Our survey results show that farmers in other European countries can get some very favourable interest rates relative to what our main banking institutions have on offer at the moment.
While a difference of 1% to 2% in interest rate over 10 years of a medium-term loan might not sound like much, it amounts to a fairly significant amount of money when the saving over the 10 years is totalled up.
While the most recent offering of medium-term loans at 2.95% is attractive, it is little use for capital development on a farming enterprise if the duration of the loan is only one to two years.
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At the very least, the six-year term would need to be activated to make it worthwhile and this fund can only be used retrospectively if the capital development has happened in the recent past. I understand that the majority of the money going out at this 2.95% interest rate is going out on terms between one and three years.
Considering options
Weighing up whether to lease, hire purchase or take out a loan for a tractor? Teagasc financial specialist James McDonnell suggests to consider what will be allowable against tax and what saving that will mean for the business. The answer to these questions may well decide what the best model of finance is.
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Our survey results show that farmers in other European countries can get some very favourable interest rates relative to what our main banking institutions have on offer at the moment.
While a difference of 1% to 2% in interest rate over 10 years of a medium-term loan might not sound like much, it amounts to a fairly significant amount of money when the saving over the 10 years is totalled up.
While the most recent offering of medium-term loans at 2.95% is attractive, it is little use for capital development on a farming enterprise if the duration of the loan is only one to two years.
At the very least, the six-year term would need to be activated to make it worthwhile and this fund can only be used retrospectively if the capital development has happened in the recent past. I understand that the majority of the money going out at this 2.95% interest rate is going out on terms between one and three years.
Considering options
Weighing up whether to lease, hire purchase or take out a loan for a tractor? Teagasc financial specialist James McDonnell suggests to consider what will be allowable against tax and what saving that will mean for the business. The answer to these questions may well decide what the best model of finance is.
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