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Adam Answers 2019 Year in Review

While there's still much to celebrate in 2019, the end is in site and we at AOPA Aviation Finance want to continue our tradition and highlight some of our favorite "Adam Answers" of the year.

AOPA Finance

Question: What's the minimum purchase price to obtain a 10-year loan? I'm looking at aircraft in the $20K-$30K range after 1960.

Answer: Thank you for reaching out. The minimum loan amount required for a 10-year term is $20,000. This is after the minimum 15% down payment. Therefore, the minimum purchase price should be around $24,000.  Please feel free to give us a call as you get closer to purchasing. We always recommend that AOPA pilots get pre-approved as they shop.

Question: I’m planning to purchase a used airplane in the next 6-months. I’ve heard some owners talk about not needing title insurance? Wouldn’t this be required by a lender? I’m familiar with title insurance for a home purchase, but what exactly are the benefits of title insurance for an airplane purchase?

Answer: Surprisingly, no, many lenders do not currently require title insurance on every transaction.

Similar to a home, your aircraft also has a title history that should be reviewed before buying. While most AOPA members know the importance of this and perform a title search prior to buying an aircraft, many may not know there are numerous scenarios where a lien or claim can end up in the FAA registry and/or otherwise “clouding” your ownership interest. By obtaining title insurance, the title insurance company will defend you legally against any bogus claims.

Question: I own my home outright, so would it be more beneficial to get a loan against my home at a much lower rate, than to go through an aircraft finance company at a considerably higher rate?

Answer: While HELOCs can potentially offer rates slightly lower than traditional aircraft financing, going this route ties up equity in your home. Equity may be needed for inevitable home repairs. Financing through a traditional aircraft loan only uses the aircraft as collateral. This helps keep equity in your home and other assets. Most importantly, however, is that aircraft lenders understand the aircraft purchasing process. They have access to detailed valuation tools and will ensure that the appropriate documents are filed with the FAA. These steps would be entirely on the borrowers’ shoulders when using non-traditional financing. AOPA Aviation Finance’s staff help alleviates the stress of buying an aircraft. In the current rate market, these benefits typically outweigh the minor differences one may see with a mortgage rate versus aircraft rates.

Question: I am interested in a 1988 Gulfstream 1V. It is refurbished inside and out with an engine program. The price is around $3,000,000. I will like to make $1,000,000 down payment and would like to know what the longest term I can receive, and approximate interest rates.

Answer: Older jets can often be difficult to finance. AOPA Finance not only has options for older jets but also helps make the process as streamlined as possible. We can offer financing on jets manufactured from 1980 and newer. Terms can range from 3 to 20 years with amortizations from 10-20 years. Down payments will typically average 20-30% for jets older than 15 years. Age, aircraft type, and usage will be the key factors to determine which structures are available. Lenders also require that older jets be kept on the appropriate engine program and preferably a maintenance program as well. Our knowledgeable staff would be happy to assist you in navigating the financing and purchase of your turbine aircraft.

Question: I purchased a plane last year utilizing AOPA.  One thing I was not made aware of until later in the process is that required sales tax (I live in TX) could not be included in the loan so I had to give up almost $7k which I was going to use ADS-B compliance.  No one seems to talk about that. Is that normal?

Answer: The tax requirements of an aircraft purchase can vary drastically from state to state. Since lenders do not roll taxes into the financing, AOPA Aviation Finance does not typically get involved with tax questions. Often times the selling broker will account for sales tax but we always recommend consulting your CPA or a tax attorney. AOPA’s Pilot Protection Services has attorneys on staff and panel attorneys throughout the country that can assist members with such questions. Members of the PPS plan receive a free 30-minute consultation annually along with a number of other benefits.

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.

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 Company, AOPA Products and Services

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