Asset-Based Lenders

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robicano22

Filing Flight Plan
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robicano22
Let me start by saying, I'm not soliciting financial advice ;)

Has anyone used/does anyone have recommendations of a lender that does asset-based financing vs credit-based?

TIA
 
robicano22 said:
Would consider if they provided lube with the disbursement of funding
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Kinda like a pawn shop ... you can get a little for giving a lot and getting it back will cost you even more.

You could always to the "reverse mortgage thingy" ... :rolleyes:
 
Daleandee said:
You could always to the "reverse mortgage thingy" ... :rolleyes:
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Funny that the banks will pre approve me on a house 10x the cost of the aircraft I want, but won’t touch the plane with a 10 ft pole.

The house is a necessity they say...
 
Thought you were a home owner from your mortgage post. In that case, what assets do you have that would be collateral? What credit score are you working from at this time?
 
WDD said:
Thought you were a home owner from your mortgage post. In that case, what assets do you have that would be collateral? What credit score are you working from at this time?
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Hesitant about divulging this publicly, I can't PM you though for some reason?

schmookeeg said:
House collateral can't flee the city/state/country at 200kts like plane collateral can.
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Not what I'm buying lol
 
Depending on a few factors (the first being if you have one) you can borrow from your 401K at a great rate and pay yourself back ...
 
Never borrow from a 401K or 403b or the equivalent, especially for a toy. Most expensive money ever when you calculate lost opportunity costs, particularly in a strong stock market like we’ve generally seen the last few years.
 
When starting a business, I was able to get a loan guaranteed by some stocks as collateral. When the loan was satisfied, I got the stocks back. It was better than selling the stocks and paying capital gains.
 
Never done what the OP’s asking. Good luck.
 
robicano22 said:
Hesitant about divulging this publicly, I can't PM you though for some reason?
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No need if you’re not comfortable. Sounds like you have no home equity, no existing assets for collateral, and credit rating not where you need it to be. Also sounds like you want to buy a plane by financing it and it is the collateral.

The only things remaining I can think of would be things I’d never recommend to a friend - as you’ve requested no financial advice I’ll just refrain from further posting on this thread.
 
Jumpmaster said:
Never borrow from a 401K or 403b or the equivalent, especially for a toy. Most expensive money ever when you calculate lost opportunity costs, particularly in a strong stock market like we’ve generally seen the last few years.
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We simply disagree ... but I do agree that a strong market is not a time to consider this.
 
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Oh man, I remember the good ol’ days when we used to debate financing or paying cash. Now we’re debating 401k withdrawal! Awesome.
 
WDD said:
No need if you’re not comfortable. Sounds like you have no home equity, no existing assets for collateral, and credit rating not where you need it to be. Also sounds like you want to buy a plane by financing it and it is the collateral.

The only things remaining I can think of would be things I’d never recommend to a friend - as you’ve requested no financial advice I’ll just refrain from further posting on this thread.
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Thanks for holding back. It's too bad you couldn't refrain from making such a well substantiated conclusion about my situation. I hope you're more thorough in your market research.
 
Daleandee said:
Depending on a few factors (the first being if you have one) you can borrow from your 401K at a great rate and pay yourself back ...
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Would prefer not to go this route but these are generally not all that risky if done right from what I read
 
robicano22 said:
Thanks for holding back. It's too bad you couldn't refrain from making such a well substantiated conclusion about my situation. I hope you're more thorough in your market research.
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Just taking a best guess from what you’ve posted. If it’s inaccurate please correct my view of your situation.
 
robicano22 said:
Would prefer not to go this route but these are generally not all that risky if done right from what I read
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As mentioned by others, this may not be your best option especially in a good market. But if you only need a small amount, can pay it back quickly, and the interest rate is low it can sometimes work to your advantage. Withdrawing money will incur a penalty but a loan is different.

Just depends on how much risk you want to take in order to buy something that you want but don't need. But the fact that there is no trailer hitch on a hearse sometimes comes into play ... i.e. we ain't taking it with us when we leave this place.
 
robicano22 said:
Would prefer not to go this route but these are generally not all that risky if done right from what I read
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I’m still not sure of your situation.

Since you asked about lenders who might loan based on assets rather than credit, it sounded like you had assets a bank could hold as collateral. That’s very different from borrowing from a 401k or whatever.

I’ll say it again: if you have assets - stocks, bonds, real estate, precious metals, you name it - a bank would probably accept those as collateral against a loan. They’ll want assets in excess of the loan amount to cover possible fluctuations in value, and may have provisions for requiring additional collateral if the value of your assets decrease to below the remaining loan balance. I used stock certificates as collateral for a business loan, and a home equity loan to partially cover the cost of my 2003 Cirrus demo.

This all falls under the general heading of “creative financing”, and it can work out well for all parties involved. Worst case is you default on your loan, and the bank liquidates your assets to cover the balance, so be sure to go in with your eyes open to that eventuality.
 
robicano22 said:
Has anyone used/does anyone have recommendations of a lender that does asset-based financing vs credit-based?
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Like @WDD, I think we might need to know more about the assets you intend to use. Otherwise we are just throwing darts and guessing at what might help you. If you don't want to divulge even the high-level asset classes you might have to get financing... welp good luck and we can all move on.

As a side note, what year Bonanza are you looking to purchase?
 
Here’s what yer gonna want to do: take out a personal loan from your 401k, walk down to your local payday lender, sign over the title on your car, pawn your TV, and put the balance on a high-interest credit card. Boom. Plane purchased!

What’s that? You wanted good advice? Oh, yeah we don’t do that here.
 
Jumpmaster said:
Never borrow from a 401K or 403b or the equivalent, especially for a toy. Most expensive money ever when you calculate lost opportunity costs, particularly in a strong stock market like we’ve generally seen the last few years.
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I wouldn't say "never." I borrowed from my 401(k) for something I knew I would be able to pay off, and because the market was flat at the time, I actually got to get more money in the account off the interest I paid myself than if the loan had been in the market. Plus I wasn't paying interest to someone else.

One major downside to this route for something like an airplane is that if you leave your job, you have to pay the loan back.
 
Rein Hart said:
From aopa website: Credit & asset-based loans, fixed rates, floating rates and hybrids
https://finance.aopa.org/aviation-f...F7qYipZG6n44W8cwibjEGDcAyzYmJoxhoCZq0QAvD_BwE
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This must be outdated because I called AOPA earlier this week (they no longer do direct financing but partner with another financier), and the rep informed me that they strictly do credit based lending now.

AA5Bman said:
What’s that? You wanted good advice? Oh, yeah we don’t do that here.
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That was evident quickly hahaha. No one has even answered my question which was "does anyone know of asset-based aircraft lenders?". The trolls are just after "WeLl WhAt KiNd Of AsSeTs Do YoU hAvE?" so they can swing their dongs from their hangar office.
 
FastEddieB said:
I’ll say it again: if you have assets - stocks, bonds, real estate, precious metals, you name it - a bank would probably accept those as collateral against a loan.
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This is good advice, maybe I just need to push harder with the lenders??? I've just been asking if they do asset/credit based lending and they all just say credit and that they can't help me out.
 
The only good advice likely to be offered in this thread is "don't finance toys -- particularly capital-intensive toys sold at the top of the market".

But I'm not offering that, you do you. Good luck finding your asset-based lender. :D
 
robicano22 said:
This is good advice, maybe I just need to push harder with the lenders??? I've just been asking if they do asset/credit based lending and they all just say credit and that they can't help me out.
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It goes like this, for example…

“I’d like to borrow $100,000 and pay it back over x years at x% interest. I have $150,000 in Chevron stock (or whatever asset you have in mind) that I’d be willing to let you hold as collateral for the term of the loan”.

Something like has worked for me in the past. “Holding” the asset involves a legal document giving them the legal right to liquidate the asset to satisfy the balance of the debt if you default on the loan.
 
I get the impression that the asset for collateral is the aircraft in question. But it’s not clear.
 
robicano22 said:
The trolls are just after "WeLl WhAt KiNd Of AsSeTs Do YoU hAvE?" so they can swing their dongs from their hangar office.
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I honestly have no idea what you’re trying to say. You asked about asset lending. Asking about the assets you’d use for the loan isnt unreasonable.
 
robicano22 said:
This is good advice, maybe I just need to push harder with the lenders??? I've just been asking if they do asset/credit based lending and they all just say credit and that they can't help me out.
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Try a local credit union where you can walk in and talk to someone.
 
Lindberg said:
I wouldn't say "never." I borrowed from my 401(k) for something I knew I would be able to pay off, and because the market was flat at the time, I actually got to get more money in the account off the interest I paid myself than if the loan had been in the market. Plus I wasn't paying interest to someone else.
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As a general rule of life: "never say never, never say always." :stirpot:
 
robicano22 said:
Sorry but that's not universally true.
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Agree, maybe not even usually true.

If say, you trade $100K cash for a $100K plane your net worth is the same. But from a business and cash flow perspective, $100K cash is far more liquid and useful than $100K equity in a plane.

Of course, if you can't afford a "toy" it's not a good place you keep your net worth anyway.
 
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