Options For Financing A Private Airplane

The Aircraft Lenders specializes in bespoke financing solutions, catering to discerning clients across the United States seeking to acquire or lease private jets.

Whether you’re exploring options for financing a private plane, considering private jet loan options, or private jet leasing, we offer comprehensive aircraft financing solutions.

Request a Loan Quote

Options For Financing A Private Airplane

The Aircraft Lenders specializes in bespoke financing solutions, catering to discerning clients across the United States seeking to acquire or lease private jets.

Whether you’re exploring options for financing a private plane, considering private jet loan options, or private jet leasing, we offer comprehensive aircraft financing solutions.

Request a Loan Quote

All About Options for Financing a Private Airplane

Private airplane financing refers to various financial solutions available for individuals or businesses looking to purchase or lease a private jet. The Aircraft Lenders offer a range of options tailored to your aviation needs. These include:

  1. Loan Options: Term loans for private jet acquisitions normally involve 20% down and a 5-year term with a 15-20 year amortization. With some lenders, up to a 20-year fixed term many be possible.
  2. Leasing: There are many kinds of aviation lease products. Operating leases allow you to enter into a long-term contract to lease the aircraft for a fixed period of time, making monthly payments, without taking ownership. Lease-to-purchase leases usually offer 100% financing, and involve monthly payments with a residual payment at the end, allowing you to take ownership of the aircraft at the end of the lease. One other lease product is sale-leaseback, in which the lender buys the aircraft and then leases it back to you. Since there in generally no down payment, a lease can help conserve cash. An alternative to outright ownership, leasing a private jet can provide flexibility and potential tax benefits.
  3. Aircraft Financing: This broad term encompasses loans, leases, and other financial instruments to facilitate aircraft purchases.
  4. Ownership: Flying private is a luxury, but financing solutions can make that luxury lifestyle attainable for you. Travelling in your own aircraft provides the gift of time, the most important asset. Private aircraft ownership provides faster and easier access to regions without a major airport hub, and lets you fly on your own schedule.
  5. Depreciation: Many buyers choose to enter into private jet ownership to take advantage of depreciation opportunities, mitigating their tax liability. Section 179 depreciation and bonus depreciation can be useful benefits of aircraft ownership, but it’s very important that the ownership structure, any dry leases and management agreements be set up properly for full compliance with FAA regulations and to ensure the greatest tax benefit. Our expert industry partners can help.
  6. Acquisition and Management: A great acquisition agent will cover the cost of their fee several times over due to their industry knowledge and connections within the aviation industry. It’s also important to partner with a great management company, especially if you are chartering your aircraft. Financing doesn’t cover acquisition and management costs, but they do look closely at the aircraft and it’s value and condition, as well as who will be managing it.
  7. Fractional Ownership: Sharing the cost of a jet with other owners, reducing the financial burden and still providing access to luxury travel. Financing for fractional use is not something most lenders offer because they can’t re-possess a portion of an aircraft if the loan is in default.
  8. Asset-Based Lending: Asset-based loans are based primarily on the value of the aircraft itself. These loans are low-docs loans, but they are usually only available for certain makes and models of aircraft that are still in production and are less than 15 years old.

The Aircraft Lenders can assist businesses and individuals in navigating these all of these options and parameters, finding suitable private and commercial aviation financing solutions to ultimately get your private aircraft funded. We aim to align the financing solution with the client’s financial strategy, ensuring the path to owning or leasing a jet is seamless.

  • Term Loan: This is the norm, and usually offers the lowest payments due to low interest rates and 15–20-year amortizations. The collateral is the jet itself, but in most cases a personal and business (if applicable) guarantee is required. These loans usually offer the lowest interest rates.

  • Operating Lease: Offers flexibility to lease a jet for a fixed period. There is no ownership but lower upfront costs and maintenance responsibilities.

  • Finance Lease: 100% financing, and usually only available to commercial borrowers. Similar to an operating lease, but with an option to purchase at the lease’s end. Term is usually 5 years, and amortization is not much longer, so payments are higher. Ideal for those seeking 100% financing and eventual ownership, who don’t mind accelerated payments.

  • Personal Loans: For jets under $5mm that are not being heavily chartered, a personal loan may offer the best rates and terms, with terms up to 15 or 20 years available. This loan product is usually more suitable for smaller, less expensive jets. The financing process can be more straightforward, but there may be more restrictions with aircraft mission

  • Secured Loan: Pro – Lower interest rates, longer amortizations; Con – full financial package is required. Jet will be repossessed in the event of default.

  • Operating Lease: Pro – Lower upfront costs; Con – No equity buildup, no depreciation benefits.

  • Finance Lease: Pro – Path to ownership, 100% financing; Con – Higher overall cost, committed to making all remaining lease payments if you want to terminate early.

  • Personal Loan: Pro – Easier process; Con – Not ideal for expensive jets.

  • Credit Score: A minimum credit score of 700 is often required, especially for term loans.

  • Income Verification: Proof of sufficient and stable income, as reported on 3 years of tax returns, to ensure repayment capability.

  • Down Payment: Varies by lender and loan type, typically20% of the jet’s value.

  • Insurance: Comprehensive insurance coverage is mandatory.

  • Appraisal: An expert valuation of the jet will be required by an appraiser of the bank’s choosing.

  • Engine Maintenance Program: Most lenders require enrollment in a comprehensive engine maintenance program for jets

  • Liquidity: Lenders look for a good liquidity buffer after the down payment

  • Assess Financial Health: Consider your cash flow, debt-to-income ratio, and personal and business credit scores. The Aircraft Lenders will pre-underwrite to get a handle on these important metrics.
  • Understand Total Costs: Consider maintenance, insurance, and operational costs beyond the monthly payments, as well as closing costs, and potential pre-payment penalties.
  • Compare Lenders: The Aircraft Lenders works with 50+ aviation lenders so will do the comparison for you. We already know who has the best rates and terms for your aircraft and mission.
  • Seek Expert Advice: Consult with an aviation tax planner to ensure your ownership structure gives you the best tax benefits. 
  • Consider Future Needs: If you may pay off your loan early, lender pre-payment penalties should be considered.
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  • Long-Term Impact: Understand how this decision affects your long-term financial plans. Will the lender impose any covenants on your business as part of the financing?
  • Market Fluctuations: Consider whether it’s a buyer’s market of a seller’s market. Take a look at the value of your chosen make and model over time. What’s the current trend compared to other options?
  • Exit Strategy: Have a plan for selling or upgrading the jet and consider how depreciation will need to be dealt with on future tax returns.
  • Regulatory Compliance: Ensure compliance with aviation laws and regulations.
  • Maintenance and Operational Costs: Educate yourself on the ongoing costs of owning a jet.