Fundamentals of Aircraft Loans

Published on: February 12, 2022

Last Updated on: July 17, 2024

Aircraft Loans

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If you are only going to own an aircraft for a short time, why spend your hard-earned money out of pocket? If the interest rates on aircraft loans have been pretty reasonable lately, there is no reason not to get one.

There are ideas available on how to make things work out with cash or by making deals through our partnerships so all will be well (or at least as good).

The options for buying an aircraft are many, but we’re here to tell you that an aircraft loan is the best and most secure option.

If your goal in life is flying high and tight with this plane, it’s best not just pick any lender. They need specific criteria before approving loans, like competitive rates of interest or no-prepayment penalties and understanding how things work on a different type of plane.

This article will provide you with the necessary information about Aircraft loans. And for you to set your expectations right and not bump into any errors along the run.

Start Your Engine

Aircraft Loans

Money is an essential factor for pilots to purchase their aircraft, so their first question when looking at airplanes should be: “How am I going to pay?”

That is where finance companies come in. They can make the process as easy and painless as possible by taking care of all those pesky details like payments on time or financing with low-interest rates that are customized just for us.

Figuring out which airplane to buy can be a daunting task, but it is essential.

Before you start negotiating with the seller on price and interest rate information, though, some things will help narrow down your choices. For it to be manageable in terms of cost or difficulty. Like deciding what type of aircraft is right for you.

If you are looking to fly off in style, consider smaller private jets that can get the job done quicker and more efficiently.

However, if it is time for some family-friendly adventure, go with larger capacity models like business or cargo planes. They offer ample room while still being economical.

You may be surprised to learn that your finance company will give you everything from the quicken loan process. Right down to what type of aircraft is best suited for any particular need.

For instance: do you want a lease back option with an air charter service or strictly personal flying? It all depends on how much time and money are worth investing in one venture over another.

You will need to provide certain information before applying for an aircraft loan. One of the essential pieces is your income statement, which can include two years’ worth of tax returns and W-2s and an up-to-date view of how much money you currently make this year.

You also should be aware that lenders want proof that they are getting what they paid for if there is no specific airplane in mind.

So, you have got your heart set on a specific airplane. But how do we know if it is worth buying? Well, luckily for us, there is an easy way to figure this whole thing out. All planes come with their own “value reference” in Blue Book or Vref format, which tells us what they are worth.

In the world of aircraft financing, you’ll find that things can be more time-consuming than car loans. It is because a credit application often needs to go through several different stages before being approved or denied, which could take up all day.

Understand and Get Ready

Aircraft Loans

Financing options are the best way to go when purchasing an aircraft. Be sure not only to start looking early but also to explore all your financing avenues to find what works for you.

1. Usage

The lender wants to know if you have your heart set on just one model or are looking at different ranges of planes. They also consider how much time each year will be spent flying the aircraft and whether commercial use is planned for it as this could affect financing options.

If you’re looking for an airplane that will fly your company’s charter flights and have high utilization, then it might be worth going with one of these faster-depreciating types.

They may come at the cost of shorter loan terms, but in return, they provide more wear & tear on each flight, so less overall time is needed before getting back into service again.

As with any major purchase, it is important to check if the aircraft has been recently inspected and maintained by an engine expert. Otherwise, you may be putting yourself at risk for costly repairs down the road.

2. Age, Make, and Model

To get the best financing options, you should be aware of how old an airplane is. Age can make a big difference in what kind and when it will cost to buy one, so don’t ignore these details just because they’re not as sexy or interesting.

3. Down Payment

The down payment can be as much as 15%, but some lenders will offer 0-percent interest aircraft loans. The general rule is that if you want a longer-term, such as ten years or more, it’s worth putting up more money upfront. Those types of deals tend not to be available.

However, there are always exceptions depending on your credit score.

4. Term and Amortization

Aircraft Loans

When you buy an airplane, there are various options for how long the aircraft loan will be. For instance, if your term is ten to fifteen years, it’s likely that after four or five years into owning this aircraft (depending on age), most people who purchase new planes end up refinancing due to rising interest rates.

Prepare a Take-off With Confidence

Applying for aircraft loans is a simple process. You complete the application and provide documents, such as federal tax returns and financial statements.

All while providing information on your prospective airplane-related activities to help expedite things in getting that coveted paperless verification from our company experts. We want you to have access.

So don’t worry about any bumps of jet financing because Jetloan Capital is ready with assistance whenever you need it.

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Arnab Dey

Arnab is a passionate blogger. He shares sentient blogs on topics like current affairs, business, lifestyle, health, etc. To get more of his contributions, follow Smart Business Daily.

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