The loan process for financing an airplane can be quite different than a car or boat. When you’ve decided it’s time to buy your first plane, it’s important to start the airplane loan process as prepared as possible. Lenders will look at more than just your credit history, they will want to assess the plane and the purpose for owning. Here are a few standard questions you might be asked during the process. Not all of these factors can be a determining factor in how much you are able to borrow.
What do you plan on using the aircraft for?Buying a small airplane for short flights is very different than buying a large plane that will be taking long-distance charter trips. Make sure you come prepared to answer questions regarding your usage and what types of trips you might be taking, what the purpose of those trips are, and who you will be transporting. When thinking about usage, make sure you have done your due diligence and have researched the exact type of plane you will need to meet your needs.
What is the airplane’s specs?Once you’ve decided to start the airplane loan process, the lender will examine the specs of the airplane and compare it to the value stated in a pricing digest. This is the aircraft equivalent to the Kelley Blue Book for cars. In most cases, lenders will lend the amount stated in the pricing digests value or the purchase price, whichever is lower.
*Tip: Make sure to look up the plane’s pricing in the digest before working with a vendor. If the plane is over the typical list price, you could be paying out of pocket to make up the difference between the loan and purchase price.
What is the aircraft’s history?Your lender will ask you to provide well-documented maintenance history for the plane you’re looking to purchase. This is information that the seller should provide prior to purchase. (If the seller does not have this information on-hand, huge red flag.) Also, many lenders will not lend on an aircraft with certain types of damage history or incomplete logs, thus limiting your financing options.
You’re probably wondering why the lender wants to know all of these details. The best way to think of it is that the lender is, in essence, a co-owner of the plane. If you were going to be a co-signer for a loan you’d want to know as many details as possible before giving your signature. Also, the more information you can provide, the better your chances of getting approved. If you’re ready to discuss financing for your small aircraft, contact Alex Martin, Aviation Program Manager, at 954-913-7871.