Aircraft Financing and Flight Training

Discussion in 'Pilot Training' started by Sierra_Hotel, Nov 27, 2019.

  1. Sierra_Hotel

    Sierra_Hotel Line Up and Wait

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    Ok, my brother and I are in the earliest stages of an aircraft purchase. Looking at 172s, hopefully will be a 172XP available when we're ready to purchase, around the $60-80k price range. I'm a CFI, my brother has his PPL and will get his IR once he turns in his Air Force paperwork to the FSDO. The initial intent is to train him up to get his commercial, and do his initial training for CFI until he's ready for the sign-off, then he'll have to go to someone else since I won't be a 2-year. I would like to be able to use the aircraft to conduct flight training on the side from my normal job in addition to personal flying with my brother and his training.

    How does aircraft financing work in this situation? Talked to one lender yesterday and he was adamant that the aircraft could only be used for private and personal business use, NOT for flight training. Once I mentioned that it would be family/friends, he said that was fine, it just couldn't be used for flight training for profit as a business, that would require a business loan, and they didn't do loans for flight schools. Received 2 other e-mails from lenders (including AOPA Finance) that both said they did not offer flight school financing at that price level.

    So how do I conduct flight training in this aircraft and remain fully legal? Since all of the lenders have "flight training leaseback" as one of the use cases when you request a quote, I don't imagine they would be too happy leasing it back to what would be my flight school LLC. But then it also raises the question, how would the lender know what my use of the aircraft entailed if I'm instructing as a part-time thing on the side and it's not being used for a full-time flight school?
     
  2. Tommar98

    Tommar98 Pre-takeoff checklist

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    There is no issue with training on your own plane. It can’t be a plane used in a for-profit enterprise. I purchased a Comanche 250 and named my brother as additional pilot since he is CFI and he trains me. I don’t pay him since he’s my bro.

    If you both buy the plane then you can train him whenever you want. You can’t use the plane to train other people as a business or lease the plane to other people to use it for training. I went thru AOPA financing and it wasn’t a good experience. Took weeks for approval and not a great rate. I went through Bantara Aviation and had my loan approved same day as I applied and a better rate. Good luck.


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  3. flyingron

    flyingron Touchdown! Greaser! PoA Supporter

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    It most certainly can be used for a "for-profit" enterprise. The issue with most financing (certain was with the old AOPA MNB/MBNA/NationsBank/BofA) is that RENTAL use (presumably the flight instruction comes with renting out the aircraft). You can certainly use it for other "for profit" uses. In fact, consent to rent is usually routinely granted. MNB financed my Navion while it was on the line with the local flying club. I just had to ask.

    This isn't a "legality" issue. It's a contractual issue between you and your lender.

    As far as legality is concerned, if you're going to conduct flight training (to others for money) in your airplane, all you need is a annual/100 hour to make the FAA happy.
     
  4. Tommar98

    Tommar98 Pre-takeoff checklist

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    I stand corrected.


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  5. Sierra_Hotel

    Sierra_Hotel Line Up and Wait

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    Ahh, that makes sense.


    I kept getting distracted while I was writing the OP, meant to clarify that before I posted :D
     
  6. Clip4

    Clip4 Final Approach

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    I would try to get the loan from a credit union first.
     
  7. Sierra_Hotel

    Sierra_Hotel Line Up and Wait

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    Shouldn't be an issue, I was more just curious about rates and terms for planning purposes.
     
  8. Clip4

    Clip4 Final Approach

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    That’s why I mentioned a CU. You are likely to get better terms and rates.
     
  9. Sierra_Hotel

    Sierra_Hotel Line Up and Wait

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    At least through Alaska Federal my brother could get the same rates I was quoted, but it is a good suggestion :cheerswine: