In the same way a graduate school wouldn’t accept a student’s application without their college transcript, or a prospective employer wouldn’t accept a job application without a resume, a lender requires logbooks as evidence of the work done on the airplane.
In reality, it’s not uncommon for older aircraft to be missing part of a logbook, if not an entire one. Lenders understand that. However, any missing logs can become problematic for lenders. If multiple years of logs are missing, or if the missing logs are from recent years, that’s a problem. These scenarios can present unrecoverable problems for a lender and a deal may not get done.
Why? An airplane may look great in the hangar and upon cursory inspection. But it’s the complete set of logs that will prove consistent compliance with all inspections and airworthiness directives, making the aircraft the most attractive it can be. Missing logs reduce the aircraft’s value as collateral, which affects its worth, which creates uncertainty, the last thing a lender wants.
Missing logs from aircraft that have spent time overseas operated by foreign national owners are particularly problematic. When those records are missing, a lender has no way of knowing what's been done abroad, absent a full teardown inspection. Without that information, there is no way to disprove damage history, which again affects value.
This is not to say a deal can’t get done if a small portion of the logs is missing. A thorough physical inspection can fill in some of those gaps, as well as a recent overhaul or an annual. If a lender chooses to continue with the deal despite missing logs, expect to put more money down and expect a lesser advance rate and possibly a shorter amortization. These are ways lenders may choose to protect themselves, as the initial and residual values of the plane will be lower than that of similar aircraft with complete logs.
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