Financing an aircraft is a two-part process. The first part involves lenders underwriting the buyer based on their financial capability and their credit, income, and liquidity. The second part is evaluating the aircraft. Here’s what matters when it comes to the aircraft...
While every lender is a little different, generally, aircraft approval is often contingent upon the following: the age of the aircraft, complete logbooks, limited to no damage history, and the annual and airworthiness status.
While not all lenders require a pre-purchase inspection prior to financing, AOPA Aviation Finance always recommends one. You can’t know enough about an airplane’s condition, its ownership, or its operational and maintenance history. For insurance against any inadvertent oversight during the pre-purchase inspection, an objective, third-party, certified A&P who has not been maintaining that specific airplane is best.
Why are damage history and missing logbooks limiting factors for lenders? Aircraft damage means aircraft repair, and, frankly, not all repairs are equal. Many lenders will finance an airplane with a damage history, however, they often require documentation of the repairs to help confirm the aircraft is in good operational condition. That’s one reason why a complete set of logbooks is often required. A good logbook review from an A&P will indicate if the entries are for normal maintenance or for a major repair.
Missing logbooks often complicate the transaction because critical information about repairs, overhauls, ADs, and other maintenance could be missing. All that information helps determine the actual value of the aircraft.
Aircraft age, damage history, or incomplete logbooks may require a rate premium, or the lender may finance a smaller percentage of the value. Lenders may only be willing to finance up to 70% or 75% for an older aircraft, or one with damage history or incomplete logbooks. Or they may adjust the term of the loan. A standard term might be 15 years, but the lender might decide it’s only worth it to them to keep the asset on their books for 10 or 12 years. Other options for the lender are to increase the rate or increase the required down payment.
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.
