Liquidity for aircraft loan

[kwc98]

Looking at the various finance companies, I see they are asking for standard stuff and they are looking for some amount of liquidity after the purchase. Does anyone have a ballpark on that amount? 10% of the purchase price perhaps? (just made that up)

Anyone's experience in this area greatly appreciated!
Thanks,
Ken

 

[poadeleted21]

Most are going to want 15-25%

 

[kwc98]

Most are going to want 15-25%

As a down payment on the loan, or after the down payment? So:

100K Plane
20K downpayment
80K loan
then
20K reserve in cash?

 

[rbridges]

I went aopa and they wanted a 20% down

 

[SixPapaCharlie]

From AOPA

 

[kwc98]

I am understanding the down payment, I am trying to understand how much cash after the down payment do I need. Another 20%?

thanks,
Ken

 

[Sam D]

I'd guess liquidity requirement would be less than down payment amount.

 

[SixPapaCharlie]

I am understanding the down payment, I am trying to understand how much cash after the down payment do I need. Another 20%?

thanks,
Ken

Wait what?
They want you to have spare cash after buying a plane?

I guess when I have taken unsecured loans out before, they want to know what other crap I own and how much I have in savings, etc for collateral.

 

[Unit74]

Nothing was said to me about reserves. I was given 15% or 20%. The rates changed based on amount down AND amount financed. I believe it was $70k and up where the rate break was. I got 5.1% in May.

 

[brian]]

Wait what?
They want you to have spare cash after buying a plane?

I guess when I have taken unsecured loans out before, they want to know what other crap I own and how much I have in savings, etc for collateral.

Um, conventional wisdoms here - not loan terms. You are not buying a new aircraft with a warranty... More like you are buying an old house with an unknown service history wit AS-IS terms. Be ready to replace something big soon after your a&p does the prebuy and full annual.

I thought it wouldn't happen to me, but prepared anyway. Good thing- I'm also about to write a check for a freshly overhauled propeller.. 100 hours into ownership...

$$it happens...

 

[gitmo234]

Light stream loans. 0% down and my rate was super low. 4% I think, unsecured too

 

[SixPapaCharlie]

Um, conventional wisdoms here - not loan terms. You are not buying a new aircraft with a warranty... More like you are buying an old house with an unknown service history wit AS-IS terms. Be ready to replace something big soon after your a&p does the prebuy and full annual.

I thought it wouldn't happen to me, but prepared anyway. Good thing- I'm also about to write a check for a freshly overhauled propeller.. 100 hours into ownership...

$$it happens...

Yup in our first year
New Battery
AC converter
Nav light
Landing Lights
Comm1 went kaput
Prop Re-balance
2 New Tires
As of my last flight VOR1 has no power

Its good though because all that crap going south leads you to learn who to use, and who to avoid.

 

[Jimmy cooper]

Depends on what you buy and the shape its in. If you buy it without solid back up in the bank or excellent cash flow it will turn into a night mare.

 

[OkieAviator]

I am understanding the down payment, I am trying to understand how much cash after the down payment do I need. Another 20%?

thanks,
Ken

That's going to be up to the underwriter on the finance company you're going with. I would speculate a years worth of payments with cash on hand if you have excellent (720+) credit scores.

 

[LoneAspen]

Those AOPA rates are interesting.

I thought that aircraft financing went up to 30 years, like a mortgage, but the terms are shorter than that.

Also interesting that piston twins require a higher downpayment, and have a shorter maximum term, that either piston singles or turboprops.

 

[flyingron]

I thought that aircraft financing went up to 30 years, like a mortgage, but the terms are shorter than that.

I don't know why you thought that. Never seen one more than 20 years and even that is pushing it on the terms. Airplane loans are more in line with car loans than mortgages.

Also interesting that piston twins require a higher downpayment, and have a shorter maximum term, that either piston singles or turboprops.

It's all about risk. Piston twins tend not to be as liquid when you wan to dispose of them as the others.

 

[frfly172]

Got a loan for 20 % down max twenty years. Was for a new airplane 6.75%.

 

[James331]

Yup

About 50hrs into owning my 185 had a 200rpm drop on one of my mags, you guessed it, it was a Slick and its was kauput.

Two bendex mags and harness later, alls good.

No loan on the plane but still.

Did a full prebuy and annual with a very good AP IA, plenty of experience on type. Runups were great too, up till all of a sudden.

If the plane has slicks, presume you're going to be replacing at least one.