You want a turboprop, a jet, or even a high-end piston-engine aircraft costing $600,000 to $4,000,000. You realize there are all sorts of professionals waiting to help with financing, accounting, insurance, appraisal, title and escrow, and aviation-oriented lawyers. If you use all of them, the fees alone on a turbine aircraft could total $8,000 to $10,000—even more. Is it worth it?
Often it is the new buyer, or first-time buyer of high-end single-engine aircraft, that does not appreciate or understand what professional services offer. Those with more ownership experience generally understand the value of professional guidance.
Buyers of the less expensive aircraft, especially those used only for personal travel and not business, may not need every service. Even if you are buying an entry-level jet, you may be able to get away with ignoring an appraisal and save $2,000 in the process. You also may not need an aviation-oriented lawyer if you are not planning on creating a holding company for the aircraft or establishing a leaseback arrangement to a closely held business negotiating the loan documents, saving you anywhere from $2,000 to $4,000 in legal fees. (When you do need an attorney, make sure it is one specializing in aviation.)
Everyone should appreciate the use of professionals especially for escrow, financing, and even buying the aircraft. Let’s say you skip the finance broker—who may have access to many financing sources—by going to your local bank. You can do it, but aircraft financing is such a specialized category that most banks are not going to have the experience to properly handle an aircraft loan. Maybe you have a good relationship with your local banker, and the banker is satisfied with your financial situation. But when the loan reaches the bank’s credit committee, suddenly your fate is in the hands of decision makers who may not understand aircraft loans, or have heard unfavorable rumors about them.
Satisfying the FAA when filling out aircraft loan paperwork is an art in itself—one not understood by most banks. If the bank should make a mistake, you may not find out until three or four years down the road when you want to sell your airplane.
Care to skip the aircraft broker and just read for-sale ads on your own? You will save broker fees but do you really know how to recognize a faulty airplane? Is it a good one or a bad one? The aircraft broker buys and sells aircraft every day. They also often have planes not yet listed that can be bought at a good price.
As with the aircraft broker, the benefit of using a finance broker comes from the broker’s wide range of multiple finance companies and daily experience with financing planes. A broker can pair you up with the best-suited lender. A typical lender may offer one or two ways to structure a loan, while a good broker has access to financiers offering every variety of services that are available and tailored to best fit your situation. It’s the difference between an ice cream store offering just vanilla versus the Baskin Robins store across the street with “Bobsled Brownie” among its 31 flavors.
Considering aircraft ownership? AOPA Aviation Finance will make your purchase experience as smooth as possible. For information about aircraft financing, please visit the website (www.aopafinance.com) or call 1-800-62-PLANE (75263).
