What Lenders Look at When Setting Your Aircraft Loan Rate

Most aircraft lenders tend to base their rates on three main things: the size of the loan, the type of the aircraft, and the intended use of the aircraft.

In general, larger aircraft loans will come with lower interest rates. That scale that defines a large loan changes based on the type of aircraft. Piston aircraft lenders, for example, will typically have their best rates available loans above $100,000 or $150,000. Some lenders add an age component here, but in most cases, the common piston aircraft that have flying for the last 30-40 years will fall into the same category.

This is true industry-wide. When compared to smaller loans, larger loans will still produce greater cash flow for the lender despite the lower interest rate. Lenders also know that a lower interest rate can act as an incentive for a buyer to consider a more capable aircraft through a larger loan.

Aircraft type is another determining factor for interest rates. When considering turboprops and jets, age plays a much larger role not only in the rate decision, but also in the availability of financing all together. Jets and turboprops manufactured prior to the year 2000 can be both challenging and expensive to finance.

Aircraft type includes more than just the engine. How common an aircraft is and how developed its secondary market is will affect the loan rate for that aircraft. The more common and the more widely available the aircraft is in the used market, the more likely it is that you’ll have the best available rate presented to you.

Expanding on aircraft type even further, the following types of aircraft often fall into separate rate categories from those mentioned above: Aircraft new to market from manufacturers that don’t yet have an established secondary market, rare or uncommon aircraft, experimentals, warbirds, light sport aircraft, and aircraft manufactured outside of the United States. Financing is available, but because of the perceived risk, it may come with a premium.

Intended use makes up the third major loan rate criteria The most common use is personal and business travel, and thus those looking to use their aircraft in this way typically get the best available rates. Anytime commercial use is considered, the available rate may change. “Commercial” includes, but is not limited to, flight instruction, flying clubs, aerial tours, pipeline patrol, tail wheel checkouts and upset recovery training. If you’re thinking about leasing your aircraft out for charter—a common way to offset operating expenses for turboprop and jet owners—expect a rate premium there as well.

The right aircraft financing starts with the right partner. AOPA Finance combines competitive rates, access to multiple lenders, and knowledgeable, responsive representatives who understand aircraft financing. Whether you’re buying or refinancing, we’re here to help you find the financing that fits your needs. Call 800.62.PLANE (800.627.5263) or request a quote online to get started.