Pick the right aircraft. With all the aircraft choices available to you, be mindful that lenders prefer certain aircraft models over others. This doesn’t mean that the airplane models that lenders find less desirable are unsafe or inefficient, it means that they are looking for qualities such as an aircraft’s utility and resale value. For example, the Pilatus PC-12 and Cessna CJ3 are aircraft that lenders like. There is so much utilitarian value in these aircraft that lenders are eager to finance them. The secondary market for these aircraft is robust so lenders feel confident in financing them. When you’re shopping for your aircraft, you can refer to pricing digests like Vref or Aircraft Bluebook for resale values and determine which airplane’s rank highest.
Lenders also like to finance aircraft that are more expensive. All things considered, a lender prefers a higher dollar deal. With a more expensive airplane, you’ll get slightly better terms because more lenders have interest given the dollar amount of the loan.
Be flexible in structuring your terms. If you are able to provide a larger-than-usual down payment or pay a larger monthly payment, you are more likely to get advantageous terms and spend less in interest. The single most important force that drives interest rates is how long you want to fix your interest rate. The cheapest option is a floating or adjustable rate. If you are willing to bear the risk of an interest rate increase, a floating rate may be your best option. If you are risk adverse, however, take a hard, realistic look at how long you are going to keep the airplane and give yourself an extra 12 months; try to fix a rate for that term.
Employ the services of an aircraft finance broker. The market is changing all the time, and a broker will keep up with trends, rates, and new approaches to financing. Aircraft buyers who have a pre-existing relationship might be tempted to go to their regular banker and there is some benefit to do so; however, financing this purchase may be different with different challenges and new options that may now be available.
An aircraft finance broker can supply multiple solutions for your loan. If you go direct to the lender, you might get a good deal, but it’s like an ice cream store that sells only vanilla or chocolate. If you use a broker, you get all 31 flavors—you’ll know what many lenders are offering.
Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (75263) or click here to request a quote.
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