How to get the best deal on a used plane

Scud_072

Scud_072

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Scud
Hi everyone... I am a student pilot with about 25 hours, just starting on my cross country training.... I see myself getting my PP certificate in a few months so naturally I am beginning to dream about buying a plane one day. I may join a partnership, rent, or club for a while.. but one day I plan on owning a plane. I have been on Controller.com non stop for the last several weeks. I have no idea what I will end up buying of course and plan on figuring how to fly lots of different planes before I purchase one but for the sake of the three questions I will ask below, lets say I plan on buying a 1980 Bonanza advertised for $150,000.

1. Who has purchased a plane off of Controller and how much below the asking price were you able to get the plane for?

2. I don't have $150Gs laying around, so I am thinking to get a loan. I have been doing some reading about it online.. but in real life, can you get a 20 year loan on a plane that old with what down payment and at what interest rate? I am assuming 20% down but can you put less down and still get the loan (assume my credit score is 700+)? I have been assuming a 6% interest rate? Is that low or high for a used plane of this type.

3. What is the best way to get the best deal on a great plane? Buying one on the open market where there are many many for sale of the same type? Do I figure out exactly what I want, and put out into the world (like posting on this board) what I want to buy see what shows up? If it is going to be a Bonanza, do I go to a Bonanza fly-in somewhere and they all have them for sale there?

Thank you for any advice and for having compassion on my naivety.

Scud
 
I was in your shoes in 2012. First off, a beech bonanza is a lot of airplane for a low time pilot. Secondly 120k loan for an airplane is not the best idea financially, you'll end up paying a huge amount over the course of the loan.


And lastly you need to define your mission.
-how fast you need to go
-how far you need to fly
-how many seats you need
-avionics
 
Think about it like buying a car. I just negotiated a deal where the purchase price was 60% less than the asking price. I've also been involved in deals where I took the asking price. And then there are deals where the seller is just way out in left field. So there's not really a rule of thumb.
 
1. I've purchased a plane off Controller.com. I paid about 11% under asking price, but that isn't a predictor of current or future behavior. All sales are different.

2. You can get a loan for just about anything provided you put enough money down, and pay a high enough interest rate. I would say, for the type of plane in your example, a banker is going to want maybe 25% or more down, and you are looking at nearer 10% or a bit under for int rate. They have little incentive to loan you money on a very old plane, but hey, it's all about making money, so if you sign the note, and keep insurance on the plane I guess you can find a bank to do it.

3. Keep all your options open for buying. Globalplanesearch.com, barnstormers.com, controller.com, a broker, private sales, estate sales are all avenues that you can use. Generally speaking, in an efficient market there is no 'secret' or 'undisclosed' deals out there. If you can shop for it, so can everyone else. If you find a deal that is proverbially too good to be true, it prolly is and there will be some horrible defect that causes the value to plummet(spar corrosion, engine making metal, etc).

3a. State your mission for flying. Do you fly solo? With a family? Trip distance? Weather conditions? Speed you want? Short/soft field options? Transportation or just local hole boring? No reason to get a Bo V35B if you are going to take a 60 mile trip for a pancake on Sat and then go back for a few touch and go's. Or - you need to go from Cleveland to Altoona every Thursday, rain or shine and you only have a Pietenpol air camper. Describe your mission for the next 3 months, and next 30 months.
 
Scud_072 said:
2. I don't have $150Gs laying around, so I am thinking to get a loan. I have been doing some reading about it online.. but in real life, can you get a 20 year loan on a plane that old with what down payment and at what interest rate?
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I don't know if you can get a 20 year loan but I can tell you it would be extremely foolish to do so. I would treat buying an airplane no different than buying a car. Don't finance it longer than you would a car. Remember that airplanes will require annual inspections and are typically more expensive to maintain than a car. Don't spread yourself so thin you can't afford to fly the plane. And as was pointed out before, don't buy a plane that exceeds your flying skills. No telling how many people have been killed in Cirrus' and Bonanzas because they could afford to purchase more airplane than their skils warranted.

I will also state this disclaimer. I always try to encourage people to avoid debt when possible. I feel like our country, as a whole, is in the economic mess we are in because people are way to deep in debt. So many people are so far in on credit cards that they have very little, if any money to spare after they pay their monthly bills. They have bought into houses that are beyond their means because of balloon payments and other unhealthy payment schemes. Buying a house more than two times your annual salary is asking for problems. Buying a car more than 1/3rd your annual salary is not good either. Airplanes for most people are purely luxury items. You will have to make the financial decision how this fits into your budget, but I will caution you to be careful and not get in over your head. Leave yourself plenty of financial breathing room for fuel and maintenance so you can actually afford to fly it and enjoy it.
 
Some aircraft loan places have really gotten away from loaning money on older airplanes as well as certain models of airplanes (older Cessna 310's for example). About the only way you can get loans on something over 20yrs old is by using a local bank, but expect loan terms between 5-10 yrs. The days of 20yr airplane loans are pretty much over unless it's a newer airplane.

Controller is usually a marketplace for higher end planes. I would look at trade-a-plane or barnstormers if you're looking for a deal.
 
Save up, pay cash. The best deals are made with dead presidents in hand. Besides that, you'll be able to sleep better when a jug fails in 2 months.
 
hkyplr18 said:
Some aircraft loan places have really gotten away from loaning money on older airplanes as well as certain models of airplanes (older Cessna 310's for example). About the only way you can get loans on something over 20yrs old is by using a local bank, but expect loan terms between 5-10 yrs. The days of 20yr airplane loans are pretty much over unless it's a newer airplane.

Controller is usually a marketplace for higher end planes. I would look at trade-a-plane or barnstormers if you're looking for a deal.
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When I was repoing, I was amazed at all the Cessna 150s they loaned stupid money on, I'm talking loans that had $70k outstanding on planes that at that time were worth maybe $30k.

To the OP, don't go in debt for a plane unless you have a purpose for it that will make it worthwhile like a business use that makes you considerably more productive financially or makes you money directly like instructing in it. Even at that you don't need to start with a $150k airplane when a $40k one will serve the same market.
 
Guys, he didn't ask for advice on borrowing, just instructions on how. Nothing wrong with giving opinions, that's what we're here for, but at least you could answer the questions.
 
Barnstormers is a great place for deals. Place an ad looking for a particular aircraft, then sellers are calling you.
 
Geico266 said:
Barnstormers is a great place for deals. Place an ad looking for a particular aircraft, then sellers are calling you.
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Might even find one to carry the paper as long as you keep them a named insured.
 
I'm surprised nobody has warned you about pesky little details like how much insurance will be for a new PPL with low hours for a bonanza... and hangar costs, maintenance, etc. That $150k loan you are servicing by the month will be just one of your headaches.

Seriously, rent for a while.
 
First thing in getting the best deal on a plane, is getting an airplane that needs nothing.

Then look at insurance, storage, and annual costs.

I've found that when time is on my side during negotiations, I'm more likely to get the owner to come off his price.

Remember to ask for the extras during the negotiations...oil, check lists, portable gps, wheel pants, etc.... You can't ask for them later...when you realize, they should have come with the plane, and now you're hunting on ebay for extra pilot operating manuals, keys, and miscellaneous "stuff", the prior owner will put on ebay. :rolleyes:

Again, find a nice plane first, and go from there with the price.
 
docmirror said:
Guys, he didn't ask for advice on borrowing, just instructions on how. Nothing wrong with giving opinions, that's what we're here for, but at least you could answer the questions.
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I did just that; cash on the barrel head.
 
So I read this thread and came up with some questions of my own. I am not currently looking to buy because of my available time to fly, but would like to in the future. I have been looking at 60's and 70's bonanzas and mooneys generally. I figured that older aircraft are pretty much fully depreciated at this point (aside from engine/airframe time), so their value would not decline nearly as fast as a car. Because of this, I figured it would be wiser to finance part of the aircraft and keep cash on hand in case an engine blows up or something. If I get a trouble-free year, I could always pay off a large chunk of the loan. Am I missing something in this line of thinking? Don't get me wrong, I don't advocate borrowing for the sake of borrowing. In fact, I have no debt other than my house which is on a 15 year fixed loan, but it seems like a better idea in this case as opposed to dropping 70k in cash and finding out in 6 months that I need a 30k overhaul or something.

I also didn't realize that it was that difficult to get a reasonable loan on an older plane. So all that stuff I read about AOPA and places like Dorr aviation providing good financing only applied to newer planes? I appreciate the insight as I have not gone through the process yet.
 
kujo806 said:
I figured that older aircraft are pretty much fully depreciated at this point (aside from engine/airframe time), so their value would not decline nearly as fast as a car.

I also didn't realize that it was that difficult to get a reasonable loan on an older plane.
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Sometimes the answer to a question is already answered.

Most GA planes are old. They are fully depreciated and loaning against them is a bigger risk. Bigger risk = higher interest. A banker doesn't really care what the thing is he's loaning against as long as he can make money on it, or repo and sell it at a profit.

Put yourself in the position of a loan officer. He's sitting there trying to figure how to underwrite the loan. No way! They aren't going to underwrite the loan, it's gonna stay in house forever. I don't know cause I never asked about a loan on a 50YO plane but my guess is it would be pricey. Like I said above, maybe you put min 25% in, and ~10% rate, just a guess, but I'm betting it's pretty close.
 
I agree with the thought to pay cash if you possibly can. I am involved with a possible transaction on a 1978 Warrior II with average interior, needing paint, and 950 SMOH. The price is maybe between 22 and 30k. If you could consider something like that it sure would be easier on your pocketbook. It is not for public sale, I just am giving an example of real world numbers on budget planes.
 
docmirror said:
Sometimes the answer to a question is already answered.

Most GA planes are old. They are fully depreciated and loaning against them is a bigger risk. Bigger risk = higher interest. A banker doesn't really care what the thing is he's loaning against as long as he can make money on it, or repo and sell it at a profit.

Put yourself in the position of a loan officer. He's sitting there trying to figure how to underwrite the loan. No way! They aren't going to underwrite the loan, it's gonna stay in house forever. I don't know cause I never asked about a loan on a 50YO plane but my guess is it would be pricey. Like I said above, maybe you put min 25% in, and ~10% rate, just a guess, but I'm betting it's pretty close.
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I guess my thinking is that loaning money on a fully depreciated asset is actually less risky than something like a new car because a 60k plane is probably worth around 60k a year or two after you buy it (not factoring in additional engine time if it is flown a lot). You would be lucky to get 25k on a 30k new car the day after you bought it. Sure the market for cars is bigger than planes, so that is a factor, but I would think aircraft value is relatively stable.
 
kujo806 said:
I guess my thinking is that loaning money on a fully depreciated asset is actually less risky than something like a new car because a 60k plane is probably worth around 60k a year or two after you buy it (not factoring in additional engine time if it is flown a lot). You would be lucky to get 25k on a 30k new car the day after you bought it. Sure the market for cars is bigger than planes, so that is a factor, but I would think aircraft value is relatively stable.
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My aircraft maybe had a value of 60k in 2005. Supposedly the VREF and other valuations after some flying hours has dropped to 22 to 30k. So I guess losing 30plus thousand for 8 to 9 years of flying maybe fits your "relatively stable" comment although the great recession did hit airplane values pretty hard.
 
The big difference between buying a car and buying an airplane is that you do tune ups on your car on your schedule, not the cars. It costs a few hundred dollars to tune up a car, and can cost into the many thousands of dollars for your twelve month annual on your airplane.

Think hard before buying an airplane, but if you do, save up the money for it as noted above, you are going to have enough expenses, don't add loan payments to them.

Plan on spending an average of about five thousand dollars a year to be able t make the proud claim you own your own airplane. Some years can be a lot less, but over time, that is probably about what it will cost you, not counting payments.

I'm assuming your an average earner and will be buying some sort of certificated plane from our aging GA fleet.

-John
 
When we bought our Cherokee 180 we gave a tad too much for it, but not completely "upsidedown". and also paid with a big pile of Franklins. Which BTW gave the seller an incentive to drop the price several thousand when he got a peek at what was in the bag, and saw that when we said cash we meant cash.
 
Scud_072 said:
Hi everyone... I am a student pilot with about 25 hours, just starting on my cross country training.... I see myself getting my PP certificate in a few months so naturally I am beginning to dream about buying a plane one day. I may join a partnership, rent, or club for a while.. but one day I plan on owning a plane. I have been on Controller.com non stop for the last several weeks. I have no idea what I will end up buying of course and plan on figuring how to fly lots of different planes before I purchase one but for the sake of the three questions I will ask below, lets say I plan on buying a 1980 Bonanza advertised for $150,000.

1. Who has purchased a plane off of Controller and how much below the asking price were you able to get the plane for?

2. I don't have $150Gs laying around, so I am thinking to get a loan. I have been doing some reading about it online.. but in real life, can you get a 20 year loan on a plane that old with what down payment and at what interest rate? I am assuming 20% down but can you put less down and still get the loan (assume my credit score is 700+)? I have been assuming a 6% interest rate? Is that low or high for a used plane of this type.

3. What is the best way to get the best deal on a great plane? Buying one on the open market where there are many many for sale of the same type? Do I figure out exactly what I want, and put out into the world (like posting on this board) what I want to buy see what shows up? If it is going to be a Bonanza, do I go to a Bonanza fly-in somewhere and they all have them for sale there?

Thank you for any advice and for having compassion on my naivety.

Scud
Click to expand...

You have gotten some great advice regarding defining your mission. I would agree that jumping into a high performance, complex aircraft immediately after getting your private will be an expensive row to hoe and potentially dangerous. You will need an instructor/mentor to give you enough hours in the aircraft to be comfortable and in reality, carry you through your instrument ticket. Unless you have a business need and justification for something like a Bo, I would suggest buying an Archer, Dakota, C-182, etc. and get comfortable with the process of owning and use it to get your instrument rating. Out here in California it is very handy to have to get up and down through the marine layer with which we must often contend.
 
Hey Everyone,

Thanks for all the advice, concerns and ideas.

I agree... cash is king and best to avoid debt when possible. I should have mentioned that I am 55 years old and all three of my cars are paid for. And, the way I learn best is to explore what is possible. I own a business and can write off a lot of my expense for owning the plane because I will use it to see clients. I am a consultant with clients all over the US.

As for my mission... I live in So Cal and will fly to the SF Bay Area quite often. That is about 235NM from my home airport. I have other business that will take me to North Las Vegas Nevada (KVGT) @ 250NM and Las Vegas New Mexico @ 725NM. Then I have a client I go see once or twice a month in Iowa on the Mississippi River @1400NM. I have done the calculations for flying there in one day (8 hours flight time @ 175NMPH plus one stop for lunch, fuel and leg stretch. I am thinking this is a bit much for a new pilot but I am dreaming. The fuel cost $1200 round trip but a commercial ticket is only $500 so I am not sure if my client will pay more than $500 for the ride and if it is really worth it to fly myself that far. I can get there commercially in about the same amount of time figuring all the time required door to door with both modes of transportation. But that is why I was thinking Bonanza, for this trip. For the others, I could do with less of a plane.

Finally, thanks for telling me about Barnstormers.com. Spent a lot of time on there last night and see what you all mean about it.

Thanks again everyone!! Much appreciated.
 
It makes no difference to the seller if you pay cash from your bank account or a check from the company from which you borrowed money.

In a lot of ways, I prefer a check from a loan. Put gives the seller a buffer from potential whackos.
 
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Have you considered a partner in the aircraft that you wish to purchase?
 
It sounds to me like a Lancair 360 is a perfect plane for you, assuming you only need 2 seats and will mostly be flying solo.

Otherwise, a Bonanza with a 550 would be a good choice.
 
Kristin said:
You have gotten some great advice regarding defining your mission. I would agree that jumping into a high performance, complex aircraft immediately after getting your private will be an expensive row to hoe and potentially dangerous. You will need an instructor/mentor to give you enough hours in the aircraft to be comfortable and in reality, carry you through your instrument ticket. Unless you have a business need and justification for something like a Bo, I would suggest buying an Archer, Dakota, C-182, etc. and get comfortable with the process of owning and use it to get your instrument rating. Out here in California it is very handy to have to get up and down through the marine layer with which we must often contend.
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Great advice Kristin.. thank you!!
 
Ted DuPuis said:
Otherwise, a Bonanza with a 550 would be a good choice.
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A 2001 Cirrus SR22 will sell for about $160k, and it will have the IO-550. It would be perfect for the flight from SoCal to New Mexico. Set the autopilot and enjoy.

Iowa to CA is doable, but twice a month sounds like a tough experience without a turbine.
 
NoHeat said:
A 2001 Cirrus SR22 will sell for about $160k, and it will have the IO-550. It would be perfect for the flight from SoCal to New Mexico. Set the autopilot and enjoy.
Click to expand...

If a Cirrus is your preference, that would be another option. I'm not a Cirrus fan. :)

Iowa to CA is doable, but twice a month sounds like a tough experience without a turbine.
Click to expand...

Depends on your level of flexibility and which piston you have. Some of them give you good capability and good options to work with, especially if you're solo.
 
1. I'm of the opinion that you should get a plane that's just slightly above your skill and pay grade, so to speak. It gives you something to grow into and challenges you. I don't think a Bonanza is out of the realms for a brand new PPL by any means - whatever complexity might be there will become second nature after just a few hours anyway.

2. I do however agree that you should avoid financing aircraft if you can at all. The first years of ownership will be steeper anyway as you iron out bugs and gremlins as well as upgrade. Remember, most sellers sell for economic reason, so they last years maintenance has probably been deferred. There are plenty of older perfectly fine Bonanzas (and they all look the same anyway) that can be had for very little money. I was just looking at a pretty V-tail today for $35K online somewhere.

3. And this is related to my second point - don't be afraid of an aircraft that's a little down on its luck, might need a paint job, or where the engine is high time. Even though it always makes more financial sense to buy an aircraft where everything is done, this is only true if you have the cash. If you have to borrow to buy that tip top plane where everything is done, then upgrading as you go for earned money is a better deal. This is easily proven on a simple spreadsheet.

Case in hand - I bought my aircraft with run out engines for not very much money. Seller had tried to sell it for over a year, but buyers were terrified of the run out engines. The engines were not only run out, they were 300hrs over TBO which probably freaked them out even more. I haggled a low price even lower and got them to include my insurance approved training on type as well. They even spread the payment for me over a few months, interest free. I flew that plane for another 100hrs (essentially for free) without a single squawk (OK, one leaking O-ring, but that was it) and when I thought it was time I threw them in for overhaul.

The overhaul of two engines is costly, and yes, it would have made more financial sense to buy one with already overhauled engines. But that would have meant financing, and the ones who were willing to finance me (not being an American citizen), wanted 18% interest. Yes, 18%! Even though the value will be about 20-30.000 dollars less with overhauled engines compared to what I paid for plane + overhaul, that's less money than just one years interest at that rate.
 
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