Do You Arrange "Cash Out" Financing?

Adam answers in October's edition. 
AOPA Finance
Question: I'm a relatively new private pilot and have a 2018 Cirrus SR20 G6 acquired 11/2020 for $520k through a single-member LLC on leaseback with a flight school (and Cirrus Training Center). The aircraft is starting to generate approximately $10k/month net of costs (~$4-5k). It should continue to generate this revenue as its located in California's climate good for year-round training. Hobbs is at 1440 right now & adding 55-60 hours p/month. I'm considering (re)financing the plane as it was purchased for cash. 

Is this something I could get a quote on as an AOPA member? Do you arrange "cash-out" financing?

Answer: There are two challenges for this particular scenario: 1. The time since cash purchase and 2. The usage.

In general, lenders are able to consider cash-out financing requests if the purchase was completed in the last 30 days. Some are willing to go up to 90 days max. Beyond that, cash-out financing throws up a red flag to lenders. They will question why cash is needed all of a sudden so long after the original purchase. Lenders want to steer clear of scenarios where borrowers are needing additional cash to support a struggling business. Because of this, lenders set limits on how long after a cash purchase they will consider cash-out financing.

The second challenge is due to the flight school usage. Many lenders do not offer financing on aircraft that are used in a flight training environment. Those that do prefer to see lower time aircraft with engines mid-time or less. This is due to the excess wear and faster depreciation on aircraft used in flight schools compared to aircraft flown for pleasure or business.

Unfortunately, AOPA Aviation Finance would not have any lending options for this scenario at this time, but we would be happy to discuss in further detail if you would like to give us a call at 800.627.5263.

Have questions for Adam? He is happy to answer them. Submit your questions hereGreat 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, the longtime president of AOPA Aviation Finance Co., died after a long battle with cancer in December 2023. He is remembered for his passion for helping fellow pilots, leading a team devoted to putting flight training and aircraft ownership within everyone’s reach.
Topics: AOPA Aviation Finance Co, Ownership, Financing

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