In order to stay within that time frame, we’ll need to start with a complete application package. A complete application typically includes personal and business financial documents for the last two years, in addition to current bank and investment statements, and a current photo ID. Missing any of these will cause a delay.
AOPA Finance provides a full list of the documents you’ll need so you can prepare them in advance. In fact, AOPA Finance has regional account executives who manage each account, and along the way, there are different staff members who specialize in a particular part of the process. One is the loan processor. They’ll work with you so you won’t miss anything.
Aside from missing paperwork, closing delays can result from changing ownership structure. On occasion, we’ll receive an application from an individual who at some point in the process, often on the advice of their CPA, will decide it’s best to put the airplane in an LLC or finance it through some other entity. That change could create a delay because the name on the FAA registration must match the loan documentation. Therefore, this type of change late in the process requires amending both the loan and registration applications.
Likewise, changing ownership partners can cause a delay. For example, two partners decide midway through the approval process that an infusion of extra capital might sweeten the deal. So they add a third, silent partner. No big deal, right? Wrong. Now that person, too, is a potential owner, which means they also must undergo financial scrutiny.
Changing which aircraft to buy mid-stream causes a delay. That’s because aircraft financing is actually a two-step approval process. Lenders will review both the borrower and the aircraft for an approval. There are times when a person’s financial condition qualifies for an approval, but the selected aircraft does not meet the lender’s requirements. Getting a pre-approval in place is a great first step; however, that approval is not valid for every possible aircraft.
Let’s say a buyer gets pre-approved for $150,000, and subsequently finds a nice Cessna 172 to purchase. While the lender is reviewing the 172, a clean Mooney M20K 231 comes on the market for the same amount. A deal to die for, so the buyer quickly makes an offer, thinking she already has the financing in hand. While the pre-approval is still valid, the lender will still need to confirm that the Mooney fits within the limits of the approval and meets the lender’s aircraft requirements.
We’ve also seen situations where a buyer is approved for a specific airplane only to have that airplane fall through. The buyer then finds another of the same make and model, just five or 10 years older. Beware! Age matters. Some lenders will not finance an aircraft from 1960 or older. Others won’t go older than 1970. A few won’t touch anything earlier than 2000! The bottom line is that the lender needs to be comfortable with the entire structure of the transaction to fund the loan. Any change in any one of those things could cause a delay.
Great advice. Great rates. 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.
