You are a farmer and urgently need fresh capital to make a major purchase? You need a new tractor, a larger combine harvester or a more powerful seed drill? Do you want to have a new warehouse built? Or are you simply looking for a consumer loan that is freely available to you?
Granted: Farmers and agronomists of all kinds, such as organic farmers, grape growers or livestock farmers, do not always have an easy time getting a fast, flexible and favorable loan for farmers from German banks and commercial credit institutions, as their income levels cannot be considered regular due to constantly changing weather and market conditions. But that most farmers and agriculturists have no chance at all to get a fair loan is certainly not correct!
The experienced and competent team of KREDIT 123 explains to you in this contribution, which means and ways are to you at the disposal, in order to take up as an agrarian farmer a just as flexible as favorable credit for farmers. In doing so, we also give you helpful advice on how to further improve the conditions of a farmer loan!
Distinction between credit for farmers and agricultural credit
Before we get into medias res, we would like to expressly point out at this point that, for us, a loan for farmers is not the same as an agricultural loan. A loan for farmers is simply a loan granted to a farmer. It is only tied to a specific purpose if the purpose is precisely defined in the credit agreement.
An agricultural loan, on the other hand, is by definition tied to agricultural purposes. For example, an agricultural loan approved by the lender for the purchase of a specific machine may only be used for the purchase of that specific machine. Our clear distinction between credit for farmers and agricultural credit is to be considered in the following please!
Credit for farmers from German banks and commercial credit institutions
Most farmers and agronomists who are in urgent need of a farmer's loan turn to their house bank as a first step. Ideally, the farmer seeking credit should have already dealt with the requirements that must be met in order to be able to obtain a loan for farmers from a bank or commercial credit institution in Germany before contacting his direct contact at his bank.
Requirements for applying for a farmer loan
- Official residence in Germany (can be proven by identity card or registration certificate)
- German current account
- Age of majority and unrestricted legal capacity
- Proof of income (in the form of business management evaluations, annual financial statements, balance sheets and co.)
- Creditworthiness and credit standing
Should you, as a credit-seeking agricultural farmer, be of the opinion that you can meet all these requirements for applying for a farmer's loan, it is not unimportant to also look into the criteria that are examined in detail during the credit assessment procedures of German banks and commercial credit institutions.
Thorough examination of the income situation of the applicant farmer
An extremely important criterion that is examined in detail when checking the creditworthiness of the applicant farmer is his specific income situation. If a regularly high income can be proven over the last years, the chances are certainly not bad to get a flexible and favorable loan for farmers.
However, if the applicant farmer's income is anything but regular or secure, it is obviously more difficult to get a fair farmer loan. Unfortunately, there are simply ups and downs for most farmers in terms of income situation due to weather and market conditions. And this irregularity just doesn't go down well with numerous banks!
Verification of the SCHUFA entries of the credit-seeking agriculturalist
Another important point that is not omitted by any German bank during a credit check is the verification of the SCHUFA records of the agriculturalist seeking credit.
Should the applicant have no negative SCHUFA entries and thus a high SCHUFA score, he is considered creditworthy. However, if the German credit reference agency SCHUFA has data that certify a rather moderate or even poor creditworthiness of the person in question, it will not be easy to obtain a favorable loan for farmers from a German credit institution, even if the income situation is solid.
Since the SCHUFA score plays a weighty role in the granting of agricultural loans, it is highly recommended to make a free SCHUFA self-disclosure before applying for a loan for farmers and agronomists to examine its own entries and data in detail.
If the investigation shows that there are incorrect or outdated entries in the database of SCHUFA, these can be deleted, in order to also noticeably improve the SCHUFA score via the respective deletions. The higher the SCHUFA score, the more likely it is to get a flexible and favorable loan for farmers as well! To take care of the deletion of incorrect SCHUFA data is therefore by no means a job that can be called superfluous!
Investigation of personal and material loan securities
In addition to income situation and SCHUFA score, German banks and commercial credit institutions also examine various loan collateral and collateral documents. On the one hand, a loan for agrarians can be effectively secured by personal loan collateral, on the other hand by tangible or real loan collateral. Both types are very good tools to significantly reduce the risk of default of the lending bank, which ultimately leads to more favorable interest rates and more flexible conditions.
Collateralization of the loan for farmers by personal loan collateral
To the personal loan securities belong on the one hand the addition of a second borrower, on the other hand the registration of a guarantee. Both collateralization options are closely examined by German banks and, if classified as appropriate, quite welcome.
Addition of a second borrower
With the addition of a second borrower is basically a joint loan together with a co-applicant applied for. Both main applicant and co-applicant commit to repay the total loan amount. Thus, the co-applicant is also a direct contractual partner with the lending bank.
The income situation as well as the creditworthiness of the co-applicant are also taken into account in the creditworthiness check. If the main applicant has an irregular and rather unsecured income situation and also has negative SCHUFA entries, this can be compensated very effectively by a regular income and a high credit rating of the co-applicant.
Registration of a guarantee
If a guarantee is registered, the corresponding guarantor must be responsible for the repayment of the installments if the borrower is no longer able to pay them. Unlike the addition of a second borrower, the guarantor is a third party and therefore not a co-applicant.
Registration of a conditional guarantee
A guarantee can also be registered under reserve. The addition of "subject to reservation" means that the registered guarantor only has to step into the breach if the borrower has already had to undergo all enforcement measures in order to settle the remaining debt of the loan.
The possibility of registering a conditional guarantee is often a very good argument to get a still hesitant guarantor to sign quickly after all! So, if you are desperate to get a flexible and cheap farmer loan with the help of a guarantor, you may well take this argument into the field.
Collateralization of the loan for farmers through tangible or real loan collaterals
A very effective collateralization option is tangible loan collateral, which is also called real loan collateral in technical jargon. Here, assets or property are pledged to reduce the bank's default risk to a minimum.
Mortgage and land charge
Probably the best known material loan collateral are the mortgage and the land charge. The lender is granted a lien on real estate or land, which he can use at the moment when the borrower is no longer able to repay the loan for farmers.
Pledging of assets and property
Furthermore, of course, assets and property can be pledged to secure a loan for farmers and agronomists to a high extent (partially covered loan) or even to the full extent (fully covered loan). This can include, for example, agricultural machinery, equipment, vehicles, jewelry, furniture, life insurance policies, shares or securities.
Since both personal and material loan collateral can make a major contribution to greatly reducing the risks of the lender, they usually ensure much more flexible and favorable conditions. For this reason, any agriculturalist who wants to take out the fairest farm loan possible should review their collateral options very thoroughly and in depth. And that is before it goes into the loan negotiations with the bank employee!
Farm credit without SCHUFA from Swiss banks
If a farmer wants to take out a loan for agriculturalists and farmers without SCHUFA, this can be done, for example, through Swiss or Liechtenstein credit institutions. Credit without SCHUFA means that there is no SCHUFA query during the credit check, especially since the corresponding foreign lenders are not contractual partners of the German credit agency SCHUFA. If a SCHUFA-free loan from Switzerland or Liechtenstein is approved, no SCHUFA entry is made.
Now, the following two scenarios in particular are conceivable why an agricultural farmer would definitely want to apply for a SCHUFA-free loan for farmers from Switzerland or Liechtenstein. On the one hand, it could be that he does not receive a favorable loan for farmers in Germany due to negative SCHUFA entries despite good income situation. On the other hand, behind taking out a loan without SCHUFA could be the consideration that simply no SCHUFA entry is made.
If, for example, the farmer needs both a freely available consumer loan and a mortgage loan for the construction of a warehouse, the SCHUFA entry for taking out the freely available consumer loan could result in significantly higher interest rates for the mortgage loan. Here, the credit-seeking farmer could have a great interest in the fact that some data are not to be found at the SCHUFA.
Collateral for the SCHUFA-free loan for farmers from Switzerland
Even if Swiss or Liechtenstein banks do not access the data of the SCHUFA when checking creditworthiness, this does not mean that they generally do without a detailed credit check. They merely have their own procedures, but tick very similarly to German banks.
So, of course, federal credit institutions also take a closer look at the income situation as well as the collateral options of the applicant. And if the SCHUFA-free loan for farmers can be secured to a high extent or even completely, then top interest rates and flexible advantage conditions are of course also granted by Swiss and Liechtenstein banks!
Preliminary costs when applying for a loan for farmers without SCHUFA
Who wants to take out a SCHUFA-free loan for farmers in Switzerland or. abroad should beware of dubious credit brokers and dubious offers. Because it is not uncommon for upfront fees to be charged for checking credit applications, commonly known as upfront costs. Credit mediators, who work with pre-costs, are in most cases unserious and therefore to be counted to the group of the loan sharks. Caution is therefore required here!
Credit for farmers and farmers from private
Not only domestic or foreign banks and commercial credit institutions grant loans to farmers and growers, but also private lenders. On the one hand, they can come from the family circle, on the other hand, they can be unknown persons, who can be located, for example, via special Internet sites.
Credit for farmers from family members or friends
A usually very favorable variant, to come to a credit for farmers, is the permission of a credit from private by family members or friends. Here are often not only loans with very flexible conditions and extremely low interest rates possible, but also interest-free loans.
When granting an interest-free loan, however, it is important to note that no gift taxes have to be paid here. If the loan amount is above the gift allowance and the German tax office classifies the transaction as a gift, taxes would first have to be paid. And that would not be pleasant!
Loan for agronomist from unknown private lenders
As far as loans for agriculturalists are concerned, which are arranged via relevant websites and issued by unknown private lenders, it should be said that with this type of loan it is not unimportant to examine very carefully all the conditions and details that can be found in the contract. Private lenders are not bound by the quite strict lending guidelines of German banks and commercial credit institutions and can therefore draw up and design their loan agreements very individually.
Examination of the effective annual interest rate
A loan from private is not known as the cheapest type of credit. The exact examination of the effective annual interest rate is therefore very recommendable here. Also should be examined in detail whether certain rights, which the consumer protection actually provides, are curtailed.
Unscheduled repayment? Right of termination?
Is the possibility of the special repayment given? What about the termination? Could unclearly worded clauses in the contract conceal a bad intention on the part of the private lender, for example?? These and similar questions should be thoroughly investigated before entering into a credit transaction with an unknown private lender!
To the mediating on-line portal to be paid switching costs
If you use an online portal to find unknown private lenders, you should bear in mind that if you are successful in finding a loan, you will usually have to pay a fee.
The team of KREDIT 123 means to this: The switching fees are raised from our view rightfully, because otherwise it would not give the appropriate on-line portals simply. And for some farmers and agronomists, the credit for farmers from unknown private lenders is definitely an interesting option!
Uses of loans for agriculturalists and farmers
As already described under "Distinction between credit for farmers and agricultural credit", a credit for farmers can have the most diverse purposes, since a farmer can of course also apply for a freely available consumer loan. This is also known as an installment loan because in most cases it is repaid in fixed monthly installments.
However, if a loan for agriculturalists and farmers is earmarked, it may only be used for the purpose stipulated in the contract. If not, there is a breach of contract.
Accordingly, an agricultural loan may only be used for agricultural purposes, and an agricultural machinery loan may only be used to purchase the agricultural machinery specified in the contract. Also, mortgage loans for farmers may be used only for the construction of a specific building or. be used for the purchase of a specific property.
Mini-credit or. Small loan for farmers
A special form of the consumer credit for farmers is the freely available mini credit or. Small credit for farmers. This loan has a relatively short term and a maximum loan amount of 10.000 EUR. Since the small loan for farmers and peasants is usually committed and approved very quickly or even immediately due to the relatively small loan amount, it is also known as express loan, lightning loan, fast loan or instant loan for farmers.
Car loan for farmers
A car loan is in contrast to the small loan is not freely available and thus earmarked. The contract stipulates that the loan amount is to be used exclusively for the purchase of a specific car, especially since the car to be purchased is also provided as material loan collateral.
By placing the object of purchase as tangible collateral for the loan, the risk of default is reduced, so the lender also grants better interest rates. A car loan for farmers is usually much cheaper than a consumer loan for farmers, which is why a new car should definitely be purchased through a car loan!
Agricultural loan
The agricultural loan is to be used exclusively for agricultural purposes. It is thus also an earmarked loan, even if it is not chained to the purchase of specific agricultural equipment or agricultural machinery.
Some special banks for farms focus their attention on the agricultural loan, which is why these should also be the first to be visited in this particular case. The appropriate investment desires are examined then also for promotion possibilities by federation, countries or European Union, which can be naturally very interesting for farmers and farmers!
Agricultural machinery loan
The agricultural machinery loan is very similar to the agricultural loan, except that the exact object of purchase is contractually specified, so that the same can also be provided as factual loan collateral.
So, if you are a farmer who wants to buy a certain tractor, a certain seed drill, a certain combine harvester or a certain trailer, you should think about an agricultural machinery loan, as it has much more favorable interest rates than, for example, a freely available consumer loan for agriculturalists and farmers.
Mortgage loan for farmers
The mortgage loan, also known as a mortgage loan, is also one of the earmarked loans, as it is intended to finance the construction of a specific building or the purchase of a specific piece of land. Mortgage loans play an essential role in construction financing. They imply that the building to be constructed or the land to be acquired will also be provided as material collateral for the loan.
Conclusion of KREDIT 123 to the topic credit for farmers and farmers
The income of most farmers may be unpredictable and therefore irregular due to constantly changing weather and market conditions, but farmers and agronomists still have good possibilities to get a fair, flexible and above all cheap farmer loan. In particular, the chances of approval of a favorable loan for farmers are very good if personal or material or real loan collateral can be provided that secures the loan to a high or even full extent.
In principle, agriculturalists and farmers can obtain a farmer's loan from German banks, foreign credit institutions or private lenders. If an agricultural loan or agricultural machinery loan is needed, it is highly advisable to turn to a specialist bank for agricultural businesses, as this will then also immediately check various funding options from the federal government, the states or the EU!
Certainly the most favorable loan for farmers is the one approved by a family member or friend. Far more cost-intensive in this respect is the farmer's loan, which comes from an unknown private lender. But also here there could be interesting solutions, if the other ways simply do not offer a favorable loan for farmers.
Those who absolutely need a SCHUFA-free loan for farmers have the option of applying for a "Swiss loan," for which neither a SCHUFA query nor a SCHUFA entry is made.
Professional credit contract as a basic requirement for any credit transaction
In order to avoid ambiguities and misunderstandings and to avoid dubious loan sharks, it is essential to ensure that a professional loan contract exists for every loan transaction, which regulates all conditions and contract contents in a clear, understandable manner and in mutual agreement. Even with credits, which come from acquaintances, it should be better to give a written loan agreement!
Comparison of different credit offers for farmers and agriculturists
Last but not least, the KREDIT 123 team would like to point out that a comparison of different credit offers for farmers is highly recommended. Because only over a detailed and thorough credit comparison the most flexible and most favorable credit for farmers and farmers can be found! If you do without it, you risk to take out a much too expensive loan. And that would not be very wise!