If you have tried to finance anything lately, you know that it is becoming harder and harder to get a good loan. The same holds true for those who want to buy a plane and don't have the funds to purchase it outright. There are some things you can do however, to make the process of obtaining aircraft financing easier.
If you are buying your first plane, it might be a good idea to sit down with a financial advisor to get everything in order before you approach a loan officer. The kind of loan you are able to get will depend, in part, on the kind of plane you are interested in. Your advisor will be able to tell whether or not you can qualify for the financing, and if not, what you need to do to make yourself more attractive to financial institutions.
Your ability to pay the loan back is often the first consideration when lenders look at an application. They do want to feel comfortable however, that you are not overpaying for something. If, for some reason, you renege on your loan, they don't want to end up with something on their books that they can't get rid of. Older planes are riskier for loan officers and a harder sell when it comes to asking for money.
Before you go to all the trouble of applying for a loan, your accountant might advise you to consider a lease. If you don't need the tax depreciation, that might be the better option. All things being equal, you could ask for a leasing proposal and an outright purchase proposal. A lot of financial institutions stay out of the leasing business however, so that can limit your options.
You might be surprised to learn that who is actually buying the plane matters to the lender. They base their loan decisions on operating rules, tax consideration, who will be using the craft, liability, and the applicant's ability to help repay the loan. Private lenders may not be interested in making a loan for a commercial business.
It's always a good idea to get more than one proposal when you're looking for good financing. You should ask for everything you want, like no down payment with a twenty-five year amortization. You might not get everything you want, but you will find out what is possible.
Once you have gotten your proposal, you can begin negotiations. You don't want to show one lending institution what another is offering, but you can sit down with your preferred lender and try to get a compromise. If all things are equal, you should probably go with the lender with the most experience in aircraft loans.
Commercial flight continues to get more expensive, uncomfortable, and complicated. Having a private plane at your disposal eliminates that problem. Getting financing to buy one is possible if you follow some simple rules.
If you are buying your first plane, it might be a good idea to sit down with a financial advisor to get everything in order before you approach a loan officer. The kind of loan you are able to get will depend, in part, on the kind of plane you are interested in. Your advisor will be able to tell whether or not you can qualify for the financing, and if not, what you need to do to make yourself more attractive to financial institutions.
Your ability to pay the loan back is often the first consideration when lenders look at an application. They do want to feel comfortable however, that you are not overpaying for something. If, for some reason, you renege on your loan, they don't want to end up with something on their books that they can't get rid of. Older planes are riskier for loan officers and a harder sell when it comes to asking for money.
Before you go to all the trouble of applying for a loan, your accountant might advise you to consider a lease. If you don't need the tax depreciation, that might be the better option. All things being equal, you could ask for a leasing proposal and an outright purchase proposal. A lot of financial institutions stay out of the leasing business however, so that can limit your options.
You might be surprised to learn that who is actually buying the plane matters to the lender. They base their loan decisions on operating rules, tax consideration, who will be using the craft, liability, and the applicant's ability to help repay the loan. Private lenders may not be interested in making a loan for a commercial business.
It's always a good idea to get more than one proposal when you're looking for good financing. You should ask for everything you want, like no down payment with a twenty-five year amortization. You might not get everything you want, but you will find out what is possible.
Once you have gotten your proposal, you can begin negotiations. You don't want to show one lending institution what another is offering, but you can sit down with your preferred lender and try to get a compromise. If all things are equal, you should probably go with the lender with the most experience in aircraft loans.
Commercial flight continues to get more expensive, uncomfortable, and complicated. Having a private plane at your disposal eliminates that problem. Getting financing to buy one is possible if you follow some simple rules.
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