Owning an aircraft may seem like an unattainable dream, but with aircraft financing, it can become a reality. The process of financing an aircraft can be complex and demanding, so it can be very helpful to work with an aircraft financing broker that has expert knowledge of the niche and offers multiple financing options to secure the best rates and terms for you, as well as helping to guide you through the process. What sets a great aircraft financing broker apart from the rest? The best brokers:
- have a good basic knowledge of aircraft makes, models, and values
- have multiple financing sources for different types of aircraft, missions, and financial profiles
- know how to pre-underwrite financials so they target the right bank for approval
- are excellent communicators, as time is of the essence
- have the knowledge and experience to guide you through the entire process, from the required documents needed for financing through to pre-buy, insurance needs, title issues, and closing
Acquiring an aircraft is a time-sensitive endeavor. You will be competing with other buyers to get the deal, so moving through the process to get approved and closed as quickly as possible is important to achieving your dream of aircraft ownership. When you work with a great aircraft financing broker, they work for YOU and represent your interests. Aircraft financing brokers should be well versed in all the financing options provided by aircraft financing companies and banks, they should provide you with your best options for aircraft loan financing, they should communicate with you promptly so you can close your deal as quickly as possible. The Aircraft Lenders can deliver all of this, and is standing by to offer you stellar service.
An Overview of Aircraft Financing
Understanding how to finance an aircraft is the first step in making your aircraft ownership dream a reality. Financing an aircraft doesn’t differ too much from financing other large investments like homes boats. It involves submitting tax returns, business financials (if applicable), and bank statements to verify your cash position. This is the information lending institutions to decide whether to extend a loan. Aircraft loans are really like mortgages on an airplane. The borrower promises to repay the amount with interest over a specified period. Aircraft loans are typically the most common way to finance an aircraft. These term loans usually require 15% – 20% down, have terms of 5-20 years, and usually have amortizations of 15-20 years. Rates vary, but are generally 200-250 basis points or more above the SOFR index. Financing products are different depending on the mission:
- Part 91 Personal Business use loans usually have longer terms, perhaps up to 20 years
- Part 135 Charter loans usually offer a 5-year term with a longer amortization
- Flight school leaseback loans requires a higher down payment.
Airplane financing can have many different rates, terms, and conditions, depending on your plans for the aircraft as well as it’s age, and the price point. The airplane finance industry offers many options. Aircraft financing brokers such as The Aircraft Lenders can help you navigating this complex landscape.
Options for Aircraft Loan Financing
When considering how to finance an aircraft, you will find a variety of options. These are mostly provided by aircraft financing banks or equipment financing lenders, and they depend largely on the type of aircraft you intend to purchase, the purchase price, whether you are seeking a personal or commercial loan, the mission for your aircraft, and your financial capability. The prime options are:
- Aircraft Loans: These term loan products are similar to mortgages. These are the most common type of aircraft financing. For individuals who can afford to make a down payment and service regular repayments, aircraft loans are the go-to option. They also offer flexibility with the loan terms and conditions.
- Aircraft Leasing — Finance leases: This works best for those who don’t necessarily want outright ownership of the airplane. Finance leases are usually a commercial product, available only to established businesses with a solid financial history and cash flow. Leases usually offer 100% financing, but typical term and amortization is 5 years, so payments tend to be higher.
- Aircraft Leasing — Operating leases. These are another option, and they are available to consumers as well as businesses. These are basically like a long-term rental agreement for the aircraft.
Aircraft Financing Companies
There are numerous aircraft financing banks and brokers providing airplane financing options globally. One of the top aviation financing brokers is “The Aircraft Lenders”, known for it’s strong industry knowledge, lender network, and customer service. The Aircraft Lenders offers an impressive portfolio of aircraft loans and leasing options, and has a high number of repeat clients.
Decoding the Airplane Finance Industry
The airplane finance industry is a vast and dynamic marketplace. Factors influencing this market include airplane financing rates, which is directly influenced by the cost of capital for banks, strength of the economy overall, and supply and demand. While some aircraft lenders have recently exited the aviation financing market, new lenders have come on the scene as well. The industry is experiencing significant transformations with more financing options becoming available and competition intensifying among financing companies.
Conclusion
The journey to acquire your aircraft can be much smoother with a solid understanding of the airplane finance industry and the viable aircraft funding options. A trusted partner such as a reputable aircraft financing broker can really help make the process more transparent and your financing efforts more successful. Aircraft financing companies are increasingly innovating to provide feasible airplane financing options to prospective aircraft owners- making the dream to fly an achievable reality for many.
