Aviation finance/credit

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asgcpa

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CPA
Looking to finance a used 22. Anyone have experience with Dorr Aviation Credit or another referral?


Thanks!
 
Dorr did my second plane,they where great. My current loan was through aopa,they passed the loan to Bank ofAmerica.
 
I worked with Dorr on my plane and they were fantastic. Heidi and Pat were excellent to work with. Highly recommend!

Had the deal done within hours as soon as I gave them the green light.
 
I've recommend DORR to quite a few clients and they have always been happy with them. First Pryority is another good lender. It usually pays to get 2-3 quotes.
 
dans2992 said:
Better yet - cash.

I'm not sure I'd want to finance a plane (unless it was for business use).
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But....but....but....must have it now!!!!! Can't wait! Now! Now! Now! It's the American way!!!

Disclaimer, I did do a HELoC on mine, but only paid on it for 2-3 years at 2.25% so the interest was negligible. Plus it was really only like 1.8% after the tax write off.
 
HELOCs are great for buying big things, if you've got enough equity. Sometimes a reappraisal will help with that part.

I bought half of my plane with a HELOC, refinanced after several years (hated who the mortgage was sold to) with a local credit union, and they happily loaned me enough to buy the second half. All paid off now, just like two car loans.

If you round every payment off to the next higher $100, it's easier to subtract in your checkbook, it pays off faster and will save paying some interest. Of course, with a Cirrus, you may need to round up a little higher . . .
 
dans2992 said:
Better yet - cash.

I'm not sure I'd want to finance a plane (unless it was for business use).
Click to expand...

Depending on the interest rate, I might finance stuff. At a low interest rate, paying something off over time keeps more of your money for stuff you might _need_ now. Because of inflation, the money you pay later as payments has a lower value than money now.

Look up "time value of money".

I'm not advocating buying everything on credit now, just where it makes sense given your cash flow, interest, and future prospects, including inflation. The "cash flow, interest, and future prospects, including inflation" varies from person to person and the discussion of whether financing makes sense to purchase anything is really based those parameters.
 
A bit of thread drift, but for me I'm looking at cash for my next plane just because the monthly cost of a loan payment on top of hanger fees, annual reserve, and flying expenses would exceed what I want to pay in a month. That being said if you've got the cash flow to cover it all I don't see any problem with a loan.

Just curious what are typical terms for an aircraft loan with good credit?
 
Somedudeintn said:
A bit of thread drift, but for me I'm looking at cash for my next plane just because the monthly cost of a loan payment on top of hanger fees, annual reserve, and flying expenses would exceed what I want to pay in a month. That being said if you've got the cash flow to cover it all I don't see any problem with a loan.

Just curious what are typical terms for an aircraft loan with good credit?
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I'm in with a good group. My FICO is near the top. They are quoting about 4.5-4.75%, 20 year term. I'm a CPA so I'm very familiar with the time value of money. There are no prepayment penalties so the combination of lower rates and ability to pay extra makes it very affordable. I want to have extra cash around for those unexpected things that are expected to pop up. We also built in all sorts of reserves with our monthly cash budget, and are conservative with our variable per hour flight budget.
 
Why pay double the interest rates, and non-deductible at that, vs a HELoC ?
 
EdFred said:
Why pay double the interest rates, and non-deductible at that, vs a HELoC ?
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My guess would be not having the equity in the house. I bought my house 2 years ago and the LTV is at 75% now. Wouldn't I only be able to borrow 5%? I haven't looked into these too much.
 
evapilotaz said:
Financial advise on the internet is worth what?
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Well if you're financing a toy chances are you're not exactly a good decision maker in the first place.
 
EdFred said:
But....but....but....must have it now!!!!! Can't wait! Now! Now! Now! It's the American way!!!
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And the airplane has the same favorite ILS approach as the pilot so it will be able to get an instrument rating.:loco:
 
dans2992 said:
Better yet - cash.

I'm not sure I'd want to finance a plane (unless it was for business use).
Click to expand...

You finance a car or a house. What's the difference?
 
EdFred said:
Disclaimer, I did do a HELoC on mine, but only paid on it for 2-3 years at 2.25% so the interest was negligible. Plus it was really only like 1.8% after the tax write off.
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Did exactly that. Practically free money.
 
James331 said:
Well if you're financing a toy chances are you're not exactly a good decision maker in the first place.
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I don't get why people, especially those knowledgeable and active in the activity, continue to refer to non-business aircraft as "toys". :mad2:
 
asgcpa said:
Because when you're in a partnership HELOC doesn't really work.
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That doesn't sound like a well funded partnership. What will you do if you get stuck with a $50k worst case scenario new engine bill? - That just happened to me and my partner, it can happen and does.... make sure you'll know what you guys can (and can't) do.
 
paflyer said:
I don't get why people, especially those knowledgeable and active in the activity, continue to refer to non-business aircraft as "toys". :mad2:
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Because it costs money, doesn't make money, and isn't practical for 90% of peoples missions 90% of the time.

Nothing wrong with GA, nothing wrong with Harley hard tail, or a Donzi ether, just a silly thing to hurl yourself in debt over IMO.


Now if you lived somewhere like Port Townsend and worked at PAE, I could see buying a AA1 or something like that for 20k or less, but that's not most folks, nor the huge amounts people finance.
 
retailguy said:
That doesn't sound like a well funded partnership. What will you do if you get stuck with a $50k worst case scenario new engine bill? - That just happened to me and my partner, it can happen and does.... make sure you'll know what you guys can (and can't) do.
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50k!?
 
asgcpa said:
Because when you're in a partnership HELOC doesn't really work.
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Sure it does. You're a CPA, you know how to make it work. Hell, I'm a college dropout and can figure it out.
 
Overhaul on a IO520 is about 17k and 500 for removal and installation.

Not sure about a new engine factory direct.
 
Absolutely nothing wrong with financing a plane, even if it is a toy, if it fits within a well defined budget. Credit used responsibly is fine. Some people on here have a total aversion to any type of credit usage, so they may not be the best to ask about loan differences.

While the HELOC may have better rates now, they can fluctuate, and have nowhere to really go right now but up. It is true they may stay low for a while as well. A traditional fixed loan may have a higher rate, but will offer the benefit of not changing over time. So if that higher rate fits into your plan it is lower risk than a HELCO which MIGHT increase during the term of your loan to something higher than the offered fixed rate.
 
PilotRPI said:
Absolutely nothing wrong with financing a plane, even if it is a toy, if it fits within a well defined budget. Credit used responsibly is fine. Some people on here have a total aversion to any type of credit usage, so they may not be the best to ask about loan differences.

While the HELOC may have better rates now, they can fluctuate, and have nowhere to really go right now but up. It is true they may stay low for a while as well. A traditional fixed loan may have a higher rate, but will offer the benefit of not changing over time. So if that higher rate fits into your plan it is lower risk than a HELCO which MIGHT increase during the term of your loan to something higher than the offered fixed rate.
Click to expand...

Some banks do offer a fixed rate on HELoCs. Usually half to three quarters of a point higher than the variable.
 
James331 said:
Because it costs money, doesn't make money, and isn't practical for 90% of peoples missions 90% of the time.
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You can say that about most automobiles.
 
dans2992 said:
Better yet - cash.

I'm not sure I'd want to finance a plane (unless it was for business use).
Click to expand...


I'd say you should have the ability to pay it off if you needed to, but depending on interest rates, you may be better off borrowing than selling some investments. I was going to pay cash for my car, but with interest rates at 2.24%, it was a better deal to pay over three years.
 
Sure, I finance dirt, tractors, semi trucks. They make money, or at least that's what I tell my wife.

Finance a plane, car, boat? No way

In the OP's case, trying to finance a 60 year old piper that usually sells for less than a used pickup truck, you have to wonder if what the look will be on the bankers face.
 
JHW said:
Sure, I finance dirt, tractors, semi trucks. They make money, or at least that's what I tell my wife.

Finance a plane, car, boat? No way

In the OP's case, trying to finance a 60 year old piper that usually sells for less than a used pickup truck, you have to wonder if what the look will be on the bankers face.
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SR22, not a PA22
 
PilotRPI said:
Absolutely nothing wrong with financing a plane, even if it is a toy, if it fits within a well defined budget. Credit used responsibly is fine. Some people on here have a total aversion to any type of credit usage.
Click to expand...

I didn't want to say it, but I agree. It may mean getting a plane several years earlier. Knowing that a pilot can lose his ability to fly at his next medical, it is something to consider.
 
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