How Low-Doc Programs Make Ownership Easier

At AOPA Finance, we spend a good amount of time helping people understand the aircraft financing process and how to navigate through it. Over the years, we have focused on how to make aircraft financing easier, and we’ve been able to work with a few of our lenders to create programs that are less complicated than the standard aircraft financing program.

These programs are known as low document or quick app programs. Standard terms and rates typically apply with these programs such as a down payment of 15% to 20% and a loan term of 15 to 20 years. But due to the way lenders underwrite the transactions, the programs don’t require nearly as much documentation as the traditional process.

So how low doc can they go? In some cases, only a photo ID and the application are required. In others, bank statements are required as well, but certainly not two years of tax returns or a full financial disclosure document. These lenders are relying primarily on information on the application and what is included in your credit report.

Are they for everybody? No. How does one qualify? Solid income, credit scores in the mid-700s and above, and a consistently strong credit history. If there are any hiccups in recent history, delinquencies, or late payments, those can be disqualifiers.

The buyer also needs to demonstrate a strong liquidity position. That means bank accounts with cash or cash equivalents. Liquidity also includes non-retirement investment accounts. Qualification typically requires a debt-to-income ratio of 35% to 45% or better. Simply put, that means you’re not spending more than 35% to 45% of your income on minimum required debt payments.

The aircraft you’re after also matters. For a lender to consider a low-doc program, you generally need to be in the market for an aircraft from an established manufacturer, and a model that trades well in the used market.

Also, because the lender is taking more risk in these transactions, by underwriting the transaction without examining all the available financial information normally required, some lenders will increase the interest rate to cover that risk. However, AOPA Finance does have lenders that offer the same competitive interest rate on low-document loans as they would on a fully underwritten loan.

Great advice. Great rates. Helpful and responsive reps you can trust. Three good reasons to turn to AOPA 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.