Buying an aircraft is a daunting task itself. However, what’s more difficult is to find out a way for aircraft financing. With that in mind, we have listed some of the necessary questions you should be asking before finding the option to support your aviation dream.
Can I Ask Around For The Best Rate?
Yes. Not only you can, but we recommend you should. The financing of each plane varies with different factors including the interest rate and the terms of the deal. However, these aren’t the only factors affecting the financing plan. Other reasons are,
- Source of financing
- Age of the plane
- Credit score
- The total amount of loan, and
- Credit history
Therefore, keep in mind that with every financing option, you have room for negotiation. But, make sure to keep it realistic.
What Is The Current Loan Rate?
Remember, the aircraft loan rates vary with each lender. The source who is financing you, will decide the loan rates on various factors including, the length of your contract, the credit score, and the down payment you submit. To give you an estimate, the experts suggest you expect the rate from somewhere between five to eight percent if you are taking a loan from a financing company.
In conclusion, the interest rates you find online or get from the loan calculators are not final. Only the lender can tell you the exact number based on the various factors mentioned above.
Are Traditional Banks My Only Option To Finance?
Most probably yes. There are financing companies, but there are not enough you will find. This is why many businesses have to settle to get a loan from traditional banks. Usually, the bigger banks do not offer you an aviation loan. But, what they can do is offer a mortgage or HELOC. If this happens, you will end up with a line of credit on your house. Therefore, if you decide to reach out to a bank, go to a smaller and local one. This is because these banks are looking for opportunities to diversify their financial services.
However, this isn’t your only option. You can reach out to financing companies like Air Fleet Capital as well. Unlike banks, these companies know about aviation loans and will provide suitable plans. Additionally, they can also offer you refinancing on your current plane, finance for engine overhauls and new avionics.
What Kind Of Monthly Payments Should I Expect?
Your monthly payment will be decided on the interest rate and principal amount. There might be some extra fees as well like a minimal closing fee. It depends on the lender you get financing help from. Also, don’t forget to consider the taxes. Although the taxes are not part of the business aircraft financing plans, you should be prepared for this cost, so it doesn’t create issues for your budget. It is a rational practice to add these costs into your budget until they are completely paid off.
We hope you find this information useful. Aircraft financing is a stressful task as you have to consider a lot of things. The information listed in this article will help you to take the initial step towards your business aviation dream.