Now the average hold time for piston airplanes is about three years instead of four. Why is that? The chance to move up.
A few years ago, the cost to borrow money was pretty good. Lately, it’s been great. In fact, the low cost of financing is too attractive to ignore. But how long will that last? The future is uncertain except for one thing: A next-level-up aircraft is only going to cost you more. So, it’s better to take advantage of the historically low cost of money right now rather than waiting until borrowing rates are higher.
What’s also driving these decisions are the high prices commanded for used aircraft today, at every level. COVID surges are fueling a resurgence in private air travel. That resurgence is spiking interest in aircraft ownership in an extremely tight market.
An owner who thinks an aircraft is worth $150K, for example, might be pleasantly surprised to discover the value is 33% higher. That gets people thinking about options. The difference between what an owner thought the airplane was worth and its value on the market might now cover the down payment on a high-performance single. Plus, with the great rates, your new monthly costs could be the same as your current payments—all while getting a new airplane.
An additional driving factor is inflation. Let’s say inflation is somewhere between 5% and 10%. If the cost of borrowing is 3.5%, the math suggests that you should finance as much of the cost of your new airplane as you can, as long as you can afford the cash flow for the monthly payment. And if you can afford to pay for the whole thing, just park that money in an investment vehicle, or set it aside, and pay off the loan over time.
Great advice. Great rates. From helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying or refinancing an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263), or click here to request a quote.
