Airplane Loan Requirement

Discussion in 'Flight Following' started by sgkramer, Oct 9, 2022.

  1. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    In theory or in practice?
     
  2. Country Flier

    Country Flier Line Up and Wait

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    Either...and BTW, in my case, it was not mentioned in the loan paperwork I signed...it was a "bank policy" that they later referred to...
     
  3. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    Unless it was in the paperwork, nothing.
     
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  4. Initial Fix

    Initial Fix Line Up and Wait

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    Loan training requirements? None

    Insurance? Checkout by qualified instructor in make and model.
     
  5. EdFred

    EdFred Taxi to Parking

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    You're probably getting some sort of flow down.

    Loan requires insurance. Insurance requires 5 hours to implement the policy. Says so to the bank. Bank says to you, you need 5 hours.
     
  6. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    Maybe. An insurance checkout requirement would have normally been made by the insurer as part of @sgkramer's insurance application. He made it sound like there was no checkout requirement from the company he chose. But, yes, it's possible the bank has its own insurance carrier independent of the borrower, an insurer the borrower never deals with.
     
  7. donjohnston

    donjohnston Pattern Altitude

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    In this case (if this really was a requirement of the loan), they could deny the loan.
     
  8. Lindberg

    Lindberg Final Approach

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    If the loan requires insurance, it most likely allows the lender to buy its own insurance at the borrower's expense if the borrower doesn't provide proof of insurance. If the lender's insurance requires five hours dual (or the lender is just anticipating the worst case) the lender may want to have proof of that on file. I've never borrowed money for an airplane, so don't know that's the case, but it has been for every other secured loan I've gotten.

    If I were the OP, especially if I hated discussion forums, I'd have a conversation with my loan officer about this and see if there were any alternatives, like providing an insurance certificate in advance.
     
  9. nrpetersen

    nrpetersen Line Up and Wait

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    Better be an extra-good loan rate - or a bank loan officer might be in trouble from screwing up a sizeable bank profit opportunity.
     
  10. Rgbeard

    Rgbeard En-Route

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    Can it be any model 182?

    I don’t know where you reside, but First Flight in San Diego (SDM) has one of the lowest-priced 182s in the country.

    edit……

    I must apologize to the OP, @sgkramer

    I also failed to answer his question, but instead tried to make a helpful suggestion. This isn’t what was requested in his original post.
     
    Last edited: Oct 10, 2022
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  11. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    Yes, "force-placed" insurance applies just about any secured loan. Sometimes its a global policy with the ability for the bank to pull things in and out as needed.
     
  12. EdFred

    EdFred Taxi to Parking

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    When I still had a mortgage, the bank tried to put their own insurance on the mortgage and charge me for it, and apply THEIR stipulations even though I already had my own coverage secured. This could be the case here.
     
  13. Zeldman

    Zeldman Touchdown! Greaser!

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    When I was flight instructing I had to do a check out for a pilot in the 182 so he could rent it. He was former AF having flown in B-52, B-1 and retired airlines. He had 20,000 some odd hours, and I had around 400 hours and he had previously owned a 182.

    I learned a lot about the 182 from him.
     
    Last edited: Oct 10, 2022
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  14. schmookeeg

    schmookeeg En-Route PoA Supporter

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    I've never heard of that with aircraft finance.

    When we bought a new 172 with financing, we were required to carry coverage for breach of contract that basically covered us in case we did an uncovered thing. Added like 10% to the premium. I assume that fills the same role that lender-placed coverage does for real estate.

    I always assumed we could then fly the plane with no inspections, ignore FARs, skip customs stops and the like and it would be covered with that rider in place, but we lacked imagination and never tested the waters. :)
     
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  15. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    A bad assumption since you probably would have found that policy endorsement only protects the lender, not you. Here's one example of part of the relevant language from a "Breach of Warranty Endorsement" (called different names by different insurers)
    upload_2022-10-10_11-53-58.png
     
  16. schmookeeg

    schmookeeg En-Route PoA Supporter

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    Good thing we never tested it then :D I typed "Breach of Warranty" and then replaced it because it didn't make any sense in my context, but you must be right, that was the clause.
     
  17. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    It's called "breach of warranty" because it's about your promises ("warranties") to the insurer, not the lender. You'll be rated and current for the operation; you won't let someone fly the airplane unless they meet certain minimums (the "open pilot warranty"); etc. The endorsement is saying that the lender's interest will not be affected by your breach of conditions to coverage.
     
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  18. Pinecone

    Pinecone Pattern Altitude

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    Sounds like new to the internet.

    But to answer the OP, I have never heard of a lender requiring this. The lender requires insurance. The insurance company sets the named pilot requirements.
     
  19. Pinecone

    Pinecone Pattern Altitude

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    The only time I have heard of this was for death coverage. Not all homeowners insurance will pay the mortgage if you die. The lender may require this covered to cover them
     
  20. MBDiagMan

    MBDiagMan En-Route

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    Good thing you’re not buying a retractable or a plane difficult to fly, they would probably have required you to get a type rating.
     
  21. MBDiagMan

    MBDiagMan En-Route

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    Yeah, he had 20,000 hours in aircraft that you flare when your head is 40’ above the ground. I would understand requirements for that guy more than the 2,000 hour GA pilot.
     
  22. Zeldman

    Zeldman Touchdown! Greaser!

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    I understand your concerns. He had previously owned a 182 for several years and taught me a lot about it. He was on airspeed +0 -0 and never landed nose wheel first. I'll have to admit his A/C knowledge and control intimidated me a little. He wanted me to help him get instrument current, but he was so within ATP standards that I should've been paying him.
     
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