Adam Answers Year in Review: Part 2

The end of the year is nearly here and we at AOPA Aviation Finance want to continue highlighting some of our favorite "Adam Answers" of 2017. This is part 2 of our two-part series of aircraft financing reflection. 
Adam Answers
Question: Are aircraft loans amortization loans or fixed rate loans?

Answer: Based on the size of the loan, our lenders can offer a variety of different structures. Most loans have fixed rates for the entire length of the loan. There are also options for balloon or adjustable rate structures. With these types of loans, the rate would be fixed for a shorter term (typically 3-7 years) with the monthly payment based on a longer amortization. Balloon and adjustable loans also offer lower rates than standard fixed rate structures. Please give us call and we can help you determine which loan structure is right for your needs.

Question: Is there financing for SLSA and ELSA ready-to-fly aircraft?

Answer: Yes, we have lending options for most LSA’s. Since these aircraft do not typically have book values, lenders look for at least 25 registered with the FAA and three comparable listings. If the make and model does not meet this requirement, a desktop appraisal would be needed. AOPA Aviation Finance will help coordinate any appraisal with the lender. 

Question: What are your thoughts on loans for fractional ownership versus co-ownership? 

Answer: It’s not uncommon for people to mistake fractional ownership with co-ownership and not recognize the significant differences.

Fractional ownership, where there’s a fractional management provider like NetJets or Planesense and the company flies and maintains your “share” of the aircraft, have very limited financing options. The reason for this is that lenders are rarely able to fully secure their collateral interest in these loans. Also, making things challenging is they must assess both your personal financial situation as well as the financial health of the fractional operator. For the strongest fractional providers there are some options, however, financing is limited and you can expect terms of no more than five years. As an aside, if you anticipate flying more than 25 hours annually, fractional ownership can be a very cost-effective way to gain access to larger aircraft…just don’t expect to be able to fly the plane!

Co-ownership is frequently what people mean when asking about fractional ownership.  If you are looking to purchase an aircraft with multiple partners, this is more commonly regarded as a partnership loan. The good news here is that there’s a lot more financing options. Lenders are comfortable financing partnerships with up to four members using standard loan structures amortized up to 20 years. Beyond four members, lenders will typically only find comfort if the partnership is operating as a flying club. We have plenty of flying club options as well, however, those typically require a larger down payment and a shorter amortization.

Have questions for Adam? He is happy to answer them. Submit your questions here.

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.

Have a specific aviation finance question you would like to see in future articles? Submit it here, and it may be highlighted in an upcoming content piece.
Adam Meredith

Adam Meredith

President of AOPA Aviation Finance Company
Adam Meredith, President of AOPA Aviation Finance Company, is an aircraft finance professional with more than 15 years lending, small business management and customer service experience. Adam is a commercial pilot with multi-engine and instrument ratings.
Topics: AOPA Aviation Finance Co, AOPA Products and Services

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