2023 is around the corner and before we start our next chapter, we wanted to highlight what we learned with a few of our favorite “Adam Answers” from 2022.
Question: I need to discuss my options for financing a plane. What is the process and what are rates? The plane I am interested in is $255,000 and due to location, I will need to get it ferried some distance.
Answer: The process is a simple one, however, it can be somewhat time consuming depending on your financial picture. You fill out an online application and provide supporting documentation (the part that can be time consuming). After that, the loan is submitted to a lender for approval. Once approved the lender will work with you to coordinate the closing. Rates have been increasing over the last few months as a result of the Fed’s attempts to address inflation. As of this writing, however, you can still find financing for as low as 3.99% fixed for up to 10 years.Question: What are the minimum credit score requirement to get a loan on an aircraft I own? I have a 1967 Cherokee 235 that I’m rebuilding, so far I got the wings attached along with the engine, lots of work been done and I’m being drained financially so I need a loan. I still need the propeller to be hanged and the wiring of control surfaces, I have all the parts.
Answer: Most lenders are looking for a minimum of 700 credit score. However, credit score is almost always not going to be the deciding factor in obtaining loan. More frequently it’s a candidates debt to income ratio, liquidity and/or whether they have had comparable debt experience. Given the airplane you’re looking at is a project and not in airworthy condition, that poses a challenge (limits options) as most lenders will require the airplane to be fully assembled and certified for flight and within full compliance with any ADs.
Question: My Piper Cherokee had a prop strike (It wasn't me) requiring a teardown for which the insurance company will pay. However, the teardown revealed cracks in all four cylinders and corrosion in the crankshaft, none of which was caused by the prop strike and so is not covered by the insurance. The best option now is to have an engine overhaul and I would have to pay the excess over what the insurance pays. Do you give loans for such situations?
Answer: Assuming you don’t have a loan there should be plenty of value in the aircraft to pay for the overhaul with up to 100% financing. If you have a loan on the aircraft the answer is “it depends.” Specifically, on how much equity you have and how much value the overhaul will add to the current value. As a rule of thumb you should be able to finance up to 85% of the combined value (this includes the refinancing any existing loan). Feel free to give us a call so we can discuss your situation and options in more detail.
Question: Who do you recommend for title insurance on a 1980 Cessna TR182 that I'm buying 1/3 ownership? It's in an LLC. Hull value is $150k and I'm paying $50k.
Answer: AvSure is the only source to consider when obtaining title insurance for your aircraft. Some attorneys may offer a title opinion but that’s not the same as title insurance.
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.
