Financing Options??

When I went down the bank loan route a few years ago, I learned that most of them treat an aircraft loan as unsecured debt, because banks don't have the same valuation schedules or appraisal processes for aircraft as they have for cars, homes, etc. At the end of the day, you're basically taking out an unsecured personal loan, and that always means you'll pay credit card rates. Never mind that an aircraft's value is fairly stable over time.

Unfortunately, there's a gap in the system, as it's comparatively easy to get a long-term, secured loan on a $50K+ aircraft. Financing on a $25K aircraft seems to be much more difficult. Personally, I gave up on the bank option, because I couldn't swallow the crazy interest rate.

Tony, maybe you should be shopping for a Bonanza!

M
 
foka4 said:
When I went down the bank loan route a few years ago, I learned that most of them treat an aircraft loan as unsecured debt, because banks don't have the same valuation schedules or appraisal processes for aircraft as they have for cars, homes, etc. At the end of the day, you're basically taking out an unsecured personal loan, and that always means you'll pay credit card rates. Never mind that an aircraft's value is fairly stable over time.

Unfortunately, there's a gap in the system, as it's comparatively easy to get a long-term, secured loan on a $50K+ aircraft. Financing on a $25K aircraft seems to be much more difficult. Personally, I gave up on the bank option, because I couldn't swallow the crazy interest rate.

Tony, maybe you should be shopping for a Bonanza!

M
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nah I want a taildragger, would have to be a 195 or a Globe Swift or something.
 
Easy solution: When the bank asks what you're financing, say a Cherokee, or a Citation, or a Skyhawk, or ...

They'll have book values on those. :smilewinkgrin:
 
B2Soar said:
Or a Pitts? Go for it!:yikes:

Rick
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a pitts would be fun, but not the kind of fun im looking for right now. im looking more for the build some tailwheel time, teach leah to fly, and go visit the family in iowa and minnesota kind of fun.
 
Go see them. Catch up on old times, let them know about your progress, your accomplishments, your credit history, your job, the plane etc. You'll get the loan.

tonycondon said:
I called my hometown bank two weeks ago. They have financed my dads business through two new buildings as well as him building a new house, buying some various rental properties and always having at least one car payment. I went to school with the President and Vice President's sons. Last I heard the President had my request and the loan officer was waiting to hear back from him.
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tonycondon said:
gotcha, im pretty sure that for the flying i want to do, it makes sense to get my own airplane. ill do the flying either way, but if i rent from the club ill pay a bunch more in rental and daily fees, which will make saving for my own airplane a challenge. plus after a few years of my own airplane, ill have an airplane. after a few years of renting, i wont. and theres a personal value to that that is hard to quantify.
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Tony, chances are that you'll come out ahead financially by renting unless you're flying at least a couple hundred hours per year and even then it can be a crap shoot. There are reasons to own an airplane (I should know since I own a couple) but saving money isn't in the cards for most owners. Personally, I do subscribe to the theory that one should pay cash for luxuries and save the borrowing for the necessities but for someone as involved in flying as yourself, an airplane could well be considered mandatory so go ahead and see if you can finance it but don't expect to save money by doing so.
 
jesse said:
Tony--let me know if you figure out a way--I'm basically in the same boat as you..At this point thinking about a 150 at about the same price. Our incomes are probably comparable.

I wish my credit score were better--but it seems as though to get a good credit score--you must master putting yourself in debt just short of bankruptcy without actually going bankrupt. Makes a lot of sense.
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IMO you can achieve a good score simply by being anal about paying bills and credit cards and using your credit card for every purchase you can. Take out one or two small loans that you don't really need (but don't use them to buy something you don't need) and pay them off right away (make sure the loans don't include much in the way of origination fees and don't have any prepay penalties). As far as I can tell, the size and duration of any loans doesn't factor into your score other than the potential to lower your score if you have too many at one time. It doesn't take more than one or two examples of late payments or worse yet defaults of any kind to severely impact your score so you should avoid that at all costs including getting on the phone with anyone you are behind with before they come looking for you.
 
gismo said:
Tony, chances are that you'll come out ahead financially by renting unless you're flying at least a couple hundred hours per year and even then it can be a crap shoot. There are reasons to own an airplane (I should know since I own a couple) but saving money isn't in the cards for most owners.
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Oh, I bet Tony would save money. Going from Wichita to Iowa for the weekend, he'd probably have to spend $$ just to have a rental/club airplane overnight without flying it enough, availability would be an issue (you ever try getting a rental for an entire weekend on a whim?), and I bet Tony will fly the heck out of it.
 
flyingcheesehead said:
Oh, I bet Tony would save money. Going from Wichita to Iowa for the weekend, he'd probably have to spend $$ just to have a rental/club airplane overnight without flying it enough, availability would be an issue (you ever try getting a rental for an entire weekend on a whim?), and I bet Tony will fly the heck out of it.
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taking a club 172 home for the weekend would be at least 500 bucks. 182RG would be more in the 750 range. It could be arranged in the club, but probably not on a whim. A week or two advance planning would be needed.

Plus I dont want to buy an airplane to save money, I want to buy an airplane because I want an airplane :)
 
gismo said:
There are reasons to own an airplane (I should know since I own a couple) but saving money isn't in the cards for most owners.
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Where's the moderator :D Posts like this should not be allowed before the weekend SIR! How inconsiderate.
AND, I just want to let you know, I will save money flying my own plane this weekend because I plan to purchase fuel for almost $2.00 less (per gallon) at another field than I would play at my home field.

Sooooo, the more I fly, the more money I save (snark--nose snort).

So, there!

Best,

Dave
 
Dave Siciliano said:
Where's the moderator :D Posts like this should not be allowed before the weekend SIR! How inconsiderate.
AND, I just want to let you know, I will save money flying my own plane this weekend because I plan to purchase fuel for almost $2.00 less (per gallon) at another field than I would play at my home field.

Sooooo, the more I fly, the more money I save (snark--nose snort).

So, there!

Best,

Dave
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well shoot dave, you should come up to Stillwater for the flight breakfast tomorrow morning then.
 
When and where? Weather may be a bit of bother in the morning here.

What movie was it where Chevy Chase (or someone) pulled out his wallet and all those credit cards flipped out in a long accordion file? Now, that's how one develops a credit rating!!

Best,

Dave
 
Dave Siciliano said:
When and where? Weather may be a bit of bother in the morning here.

What movie was it where Chevy Chase (or someone) pulled out his wallet and all those credit cards flipped out in a long accordion file? Now, that's how one develops a credit rating!!

Best,

Dave
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Tomorrow morning at Stillwater. Tristan is cooking pancakes. I hear you about the weather, its looking IFR here. But as long as I feel I can safely return to Wichita, and the forecast for Stillwater looks do-able, I'll launch.
 
Jesse may be wearing more gauze than the invisible man in-between disappearances if he keeps this up.

Best,

Dave
 
Only by happenstance I discovered that my 5 year note with 15 year amortization is due for rollover 8/7. The bank didn't have my new address. I was within a month of disaster.

The bank is saying they might, maybe, if I qualify do me the favor of writing me for the last 5 years, but I have to get in by the due date and they really only fiance customers now. By definition, I guess, paying two consecutive loans on time for 10 years does not qualify me as being a customer.

Without knowing what the current value is I still think I can say confidently I own more than 2/3 of the plane now.

I want to shop around for a fallback lender.

Anybody have any recent information on aircraft financing today?
 
Call Tony. He can't tell you where you can get a loan, but can save you some time by telling you all the places you can't.:smilewinkgrin:

mikea said:
Only by happenstance I discovered that my 5 year note with 15 year amortization is due for rollover 8/7. The bank didn't have my new address. I was within a month of disaster.

The bank is saying they might, maybe, if I qualify do me the favor of writing me for the last 5 years, but I have to get in by the due date and they really only fiance customers now. By definition, I guess, paying two consecutive loans on time for 10 years does not qualify me as being a customer.

Without knowing what the current value is I still think I can say confidently I own more than 2/3 of the plane now.

I want to shop around for a fallback lender.

Anybody have any recent information on aircraft financing today?
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zook and dorr both have minimum amounts that may be too high for you now mike.

find the Red River State Bank (I think that's the name) up in Minnesota somewhere. I talked with them on the phone and they were very receptive. Loan officer I talked with flew a J3 Cub. They just wouldn't loan to me because I didn't have a car or home loan...
 
So Tony, by receptive do you mean they would be willing to loan less than $50k, like closer to $25k-$30k?
 
yes, they were. they just didn't like my credit history because apparently before you buy small dollar stuff you have to buy big dollar stuff. i don't get it either.
 
I don't get how they think, either. I had a truck that I refinanced once. After the refinance, I applied for a mortgage and was told my credit score was better after the new car loan than before. Crazy. A viscious cycle I guess. Gotta have credit to get credit, but cant get credit without having it. Good luck.
 
AWACSEng said:
I don't get how they think, either. I had a truck that I refinanced once. After the refinance, I applied for a mortgage and was told my credit score was better after the new car loan than before. Crazy. A viscious cycle I guess. Gotta have credit to get credit, but cant get credit without having it. Good luck.
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Indeed. That problem has kicked my ass. It has been extremely difficult over the years for me to build any sort of credit with no one willing to loan anything to someone that doesn't have credit. A cosigner was never an option.

I'm finally starting to get on the better side of things. A few years of credit card usage helped a little (not a lot) and a loan I got off of Prosper at a ridiculous interest rate (like 25% APR) finally puts me in a sort of better position. I am still classified as high-risk but not extremely-stupid-to-loan-a-penny-to-high-risk.

Home loans seems pretty easy to get though. I was rather surprised when the bank approved me nearly instantly and told me that they weren't setting a limit and I could buy anything I wanted (gee I wonder how people get into trouble).
 
Jesse, if you do pull the trigger on the house, you should have no issues getting a smallish loan for an airplane if you so desire. A home loan is almost as easy to get as a car loan providing you have the personal history to make the loan officer happy. I am baffled how I can walk into a dealership, secure on the spot finacing for a $40k+ BMW, but when I asked for just over half that amount for an airplane the loan officer nearly laughed me out of his office mumbling something to the effect of "not in this economy".

Edit: No, I did not ask for the airplane loan right after the car. I never got the car, but thought it was amusing how easy it would have been to do so.
 
Mike: I've never had an aviation loan; however, I've heard good words about Boston Aviation. I remembered that it had a "space" in my Palm Pilot, so I looked it up.

[FLASH]
VIEW Boston Aviation's aircraft acquisition consultants provide ...
File Format: Shockwave Flash
Fast loan approval and processing, quick and easy closings along with an attention to detail are the hallmarks of Boston Aviation Finance. ...
www.bostonaviation.com/flash/top.swf

HR
 
Have you considered in house financing? Avoid the lenders and go to the aircraft owner or broker to explore if they are willing and capable. At least one aircraft broker I know does loan up to 100% depending on M&M and does report to the big three credit agencies.
 
AWACSEng said:
Jesse, if you do pull the trigger on the house, you should have no issues getting a smallish loan for an airplane if you so desire. A home loan is almost as easy to get as a car loan providing you have the personal history to make the loan officer happy. I am baffled how I can walk into a dealership, secure on the spot finacing for a $40k+ BMW, but when I asked for just over half that amount for an airplane the loan officer nearly laughed me out of his office mumbling something to the effect of "not in this economy".

Edit: No, I did not ask for the airplane loan right after the car. I never got the car, but thought it was amusing how easy it would have been to do so.
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You just gave me an idea... creative financing. Imagine this ad in Trade-A-Plane:

FOR TRADE: BRAND NEW 2010 BMW 528i xDrive Sedan, only 150 original miles, perfect condition. Trade for <insert your desired plane(s) here>.
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