Farmers "should tread carefully" with euro personal loans

Wed, 08 Jun 2005

Farmers considering taking out personal loans in euro are being warned by Lloyds TSB to "tread carefully".

The bank's agricultural division said farmers might want to take advantage of lower euro interest rates by taking out personal loans at lower rates.

The euro base rates are currently at 2.75 per cent, but fluctuations in currency may mean additional risks for holders of personal loans.

Lloyds TSB's agricultural director Tim Porter warned farmers to think twice, as "arranging finance in any foreign currency can mean additional risks such as currency exchange rate fluctuations, euro base interest rate movements and the impact of any changes to the future subsidy regime".

He added: "Whilst there is a cost, farmers going down this route should consider insurance products such as 'Cap' and 'Collar' facilities to offset some of the risks."

Following confirmation that farmers will have the option to take their Single Farm Payment in euros, the bank has seen increased interest in enquiries about personal loans in euro.

Mr Porter also said that people considering taking out a personal loan should gather as much information as possible and speak to an adviser, if possible.

"Many financial commentators are talking up the advantages of euro finance without presenting a balanced view of the pros and cons," he said.

He recommended that all farmers ask for full details about both the benefits and additional risks of taking out personal loans in euro.

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