Get to Know the Factors Involved in Aircraft Financing

When it comes to financing, there are a lot of factors involved in this procedure. A list of verifications needs a proper structural plan to be followed. Thus, it takes root to make an aircraft financing company ready to finance your aircraft. Whether you are getting the plane for yourself wants to establish a business, in both cases, you can go for a financing company that will help you make your dream come true.

Here are some essential factors that are highly involved in letting your lender be ready to lend so that you could live your dream in this life.

Down Payment

In order to finance an airplane, a down payment must be get done. The most popular range of down payment is between 15 and 20 percent of the purchase price. The ability to make a 10% down payment may be available to you if your credit is outstanding. In the aviation industry, there are no zero-down payments. The greater the down payment is, the longer the loan’s duration will be.

History

The more detailed the information you can provide to the lender regarding your airplane, the greater your chances are of having favourable loan conditions. For example, you must be familiar with all of the specifications of your aircraft, be able to provide pictures and be able to demonstrate its both maintenance and damage history, if any.

 The ability to provide a well-documented and timely maintenance history would be beneficial for you. If the vendor is unable or reluctant to accept the information, it should raise a red flag and cause you to rethink your decision. Furthermore, there will be some lenders who will not lend on an aircraft that have specific sorts of damage history or incomplete records, restricting your financing possibilities if you have one.

Usage

A finance firm wants to ensure that you are purchasing an appropriate aircraft for your needs and not purchasing more than you are capable of handling. In addition, the lender demands to know that how you intend to utilise your airplane (personally or commercially).

 Purchasing a single-engine airplane for infrequent short flights will result in different terms than buying a workhorse airplane for commercial reasons that will be flown fifty hours per month in all-weather situations. An aircraft intended for your personal use will be subjected to different terms and conditions than an aircraft designed for commercial use. This is because the more an airplane is used, the more it depreciates; in addition, there is more wear and tear on the aircraft, which is especially valid for student pilots. In this case, because the financial institution is a joint owner of your aircraft, their asset must keep its worth.

Age of the Aircraft Tells All About its Efficiency

Logically it’s true that the older an airplane is, the fewer financing alternatives are available to it. When purchasing a turbine airplane or a piston twin, age is a significant limiting factor. It will impact your financing conditions because turbine airplanes and piston twins depreciate faster than piston singles. These types of aircraft require a more amount of money down.

Engine performance and time have always been important factors in determining loan value by the airplane financing company. Still, the cost of avionics replacement is now considered essential in deciding lending value.