N2124v
Line Up and Wait
Anyone one have a recommendation for aircraft financing that deal with non typical situations? I'm a 1099 employee, plus have my own business. My usual banker just does not like airplanes.
I recently made a casual inquiry at my local "regional" bank that I use for both my personal and buisness activity about if they would do an aircraft loan. Turned out the guy in charge of loans for all of the branches was there and I got a chance to talk to the main decision maker.
A quick summation was that he was interested but a bit out of touch of of the deals like AOPA/BoA and other major aircraft finance sources would do. But when I shared what I knew (higher valued aircraft are eligible for longer periods and that I would only do financing with a bigger down payment) he responded that he would entertain making a competitive offer.
So the smaller local banks might have some interest in the deal (pun intended), but be ready to educate and shop a bit. Also seek out the bank and loan officer that will employ actual manual underwriting methods (aka actual review our situation and make the real judgement on if you are a good risk) versus just plugging in numbers to a computer program and interpreting a "score".
As always with debt, do your due diligence of soul searching to determine if you should really be doing debt and you really have the eventual where with all and stability to dispose of the debt in short order. Like automobiles, paid off airplanes can never be repoed and fly better when your banker isn't sitting in the back seat.
And plan on enough of a liquid cash reserve so that if life hands you a bunch of bad lemons, the note and fixed costs of ownership don't pull you over the edge of the cliff. Remember the lessons of 2006-2008 and the sub-prime where many got into more house than they needed or could afford with no reserves when things went bad and one of the wage earners lost their big income. Don't be doomed to repeat it.
A question to those who act as buyer representatives (like Wayne). Can providing assistance in finding in what were discussions be part of the services you offer? Or could that create a potential conflict of interest situation?
Maybe someone more knowledgable can comment, but my concern would be a major repair like an engine coming up while I was still paying the note. In the past those kinds of things could be financed and added to the loan, now I don't know?
I also am not a believer in financing an aircraft for pleasure use, but to each their own.
Guys, I'm looking for a recommendation on a bank to do some financing with, not a philosophical debate on debt.
Guys, I'm looking for a recommendation on a bank to do some financing with, not a philosophical debate on debt.
Guys, I'm looking for a recommendation on a bank to do some financing with, not a philosophical debate on debt.
Henning, I was going to ask how many different types of jobs you have had, but maybe it would be easier to ask you to list things you haven't done. I continue to be impressed.I used to repo for them and they had stupid high notes out there on C-150s.
Henning, I was going to ask how many different types of jobs you have had, but maybe it would be easier to ask you to list things you haven't done. I continue to be impressed.
5years is what the guy I spoke with said too. But I sorta learned that his view was more akin to a higher valued luxury car than a more durable asset. He wasn't aware that all the depreciation was already done and there wasn't that much risk of a major value loss over a longer time.
I sota remember an AOPA webinar about ownership that occurred earlier this year and them having one of their BoA contacts speaking for a few minutes. It might even be available for watching the recorded version. What she said is that there are loan programs that could have terms of up to 10 years if not longer.
As with anything, get a good education about how this aspect works before you pull any triggers, then shop the lending institutions to find the right deal for you.
A question to those who act as buyer representatives (like Wayne). Can providing assistance in finding in what were discussions be part of the services you offer? Or could that create a potential conflict of interest situation?
Henning, that is very true, you can have huge repair bills unexpectedly, but to say you need $25,000 cash reserve is ridiculous. You should know that's a possibility and anticipate it, but not fear it.
True, you should have a plan if that does come up. I've been around aviation for 20 years and have always heard stories of the $20k repair, I've just never seen it happen. Yes, engines being replaced early, but they were always high time engines so in the end it was a good thing.
Ouch.... What was the issue?
Damn, did he do any type of pre buy inspection on it?
Wow......