How to Secure Aircraft Financing

There are many lenders available in the market today to finance conventional aircraft. The search is slightly more difficult for an experimental aircraft, but still possible.

Documents Needed Prior to the Search

Before you approach a financier, get some documents ready. Collect proof of your own credit record, such as, a credit report and the latest tax returns. Once you have selected the aircraft you wish to purchase, get its insurance papers up to date. If you want to take advantage of tax and liability benefits by registering the aircraft with a separate Limited Liability Company (LLC), start the paperwork, otherwise your loan would be delayed. You will also need to do a title search. This identifies the aircraft’s past owners, accidents or damages to the aircraft and whether it has a clear title or not. Title companies will do this for a fee or your aircraft financing company will do it for you, again for an additional fee.

Identifying Your Lender

Once you are ready, shop around for an aircraft financing company. Approach a lender who specializes in aircraft finance. They will do the necessary paperwork accurately, in time and without much hassles. Make enquiries about several lenders rather than the first aircraft financing company you come across. There is much variation in the expertise and experience available in this sector. So go in for three to five quotes. Note that a top class aircraft financing company takes one to seven days to close the deal.

Make the following enquiries with each of your potential lenders. Find out if they are open to refinancing or upgrading the aircraft at a later stage, and if the loan will be serviced immediately after closing. Next, ask them if they will be hiring agents to do the third-party appraisal, title search, for filing papers with the FAA and so on. This is important, because, you are going to foot the bill. Here there is scope for negotiation, so use your credit-worthiness and your personal charm.

Read the fine print regarding the loan. Find out what the duration of the repayment is, and whether you will be penalized for prepayment or not. If someone else is standing guarantee for your loan, find out if the terms and conditions are acceptable to your guarantor. Although loan terms are standardized, there is always room for negotiations.

At the end of this exercise you will be able to compare rates amongst the potential aircraft financing companies and will have no problem selecting the one that suits your pocket.