Aircraft Loan - The best way for AOPA professionals to determine the right loan package for their members is to ask them the right questions, starting with "What's important to you?"
Most have the same answer: "The lowest possible salary." From the information, we know that they really mean "the lowest possible rate for their specific situation." Three questions will help us determine their specific situation:
Aircraft Loan
The members' response will determine whether a floating fixed income structure or a hybrid structure is appropriate. Their financial difficulties compel us to introduce a more economical approach.
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A loan with a full discount and fixed with a long term can be good for those who want to own an airplane for ten years or more. The problem is that the fixed interest rate at the beginning of the term is higher than the rates that will continue until the end. But the peace of mind, knowing that a record is recorded every month, is compatible with a long-term investment plan, which makes the extra cost. For example, for non-commercial use, there are lenders who will implement the loan at a fixed rate of 15 or 20 years for turboprops that are still in operation.
When it comes to ownership, many of our customers answer "about ten years." The data collected by AOPA shows that the average time of ownership is not higher. This is why a floating or adjustable rate loan (ARM) is possible.
Floating rate loans do not have a fixed interest rate, while an adjustable rate mortgage (ARM) starts out fixed and then changes (to a new fixed or floating rate). After the first period, the ARM rate fluctuates based on benchmark rates such as the Federal Home Loan Bank (FHLB). The first period is 3 to 5 years. Another word for ARM is hybrid. In the current interest rate environment and the expected future, these funds can offer better protection compared to similar discount rates.
Balloons are another option; However, the amortization period is longer than the actual loan period. An example might be leasing a turboprop over five years with "balloons" and depreciation over 15 to 20 years. That package is best for members who a) are looking for the lowest rate and b) know that they will have the flight (and / or maintain the loan) for a little time than usual .
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Balloons allow borrowers to defer the down payment until the end, thus lowering monthly payments. At the end of this period, the unpaid balance will be due. That small monthly note goes towards a big final payment.
Sometimes members come to us comfortable with the complexity of a floating rate or ARM, but their own complexity prevents them from using those options. For example, a businessman owns 30 different assets. Each asset has a different type of asset. They have partners in some of these assets and they are the majority or the owners of the majority or a variable percentage in the entire portfolio. Despite the good cash flow, there are lenders who do not make a deal without submitting guarantees to all companies that they have shares and personal guarantees from themselves. Although they are not contractually bound to do so, the cost of money and time is not worth it. The financial complexity associated with their business makes it possible to arrange loans based on simple properties.
Of course, economies can be made easier if consumers can increase their wages. The more you put in front of the donor, the more options you have. A loan on an old aircraft or one with a high-end engine is possible if the borrower can pay a high interest rate. While new aircraft can be accepted with 15% discount over 20 years old, the same can happen for old turboprop from "no deal" to "deal" with 30% or 40% down. Likewise, a current turboprop produced in large quantities can often see a 15-year lifespan. Without a down payment, old or small turboprops can cause the borrower to shorten the amortization period or refuse to lend.
In-flight financing has its own special requirements that require a higher discount rate. It is due to the frequency of engine improvements and aircraft improvements, as well as new products that make these aircraft faster than other types. That's why by asking the right questions of our members AOPA can give them the best picture when it comes to securing the best financing package for their independent status.
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Big pay. Great condition. Helpful and responsive agents. There are three good reasons to turn to AOPA Aviation when you buy an airplane. If you need a reliable source of income with people on your side, just call 800.62.PLANE (75263) or click here to request a quote.
Adam Meredith, President of AOPA, is an aviation expert with over 15 years of credit, small business management and customer service experience. Adam is a professional pilot with multiple engines and analytical equipment. Budget airlines, business airlines are changing like any other international business. It is more reserved, more conservative and more secular. His biggest challenge is the expense that many aircraft buyers have without a good place for investment. Banks that find themselves in a similar situation tend to give more to people who don't need them, and in today's commercial airline market there are more people than ever before. . However, if you are looking for money, here are some strategies for finding the best job.
1. Find the right flight at the right price. Most airline finance companies, even companies that claim to be "real estate" are actually "credit shops". Their focus is on the ability of their customers to pay the maximum amount of money. But that doesn't mean they don't care about the plane. Banks want to trust that you won't overpay for it and that the value of their collateral won't collapse like the Titanic. Be sure to get expert advice on the cost of the flight you choose and remember that the older it is, the more expensive it is. Also, make sure it's right for your needs, so you won't be penalized for early repayment of the loan or out of rent because you bought too many or too few flights for the trip. .
2. Listen to the moment. Sometimes the airline money is arranged almost overnight. no more. If you need money, start as soon as possible. You can get a good idea of financing rates and terms by simply talking to the lender in general about the airplane model year, model and estimated price at before signing the airline ticket.
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3. Decide who will buy the plane. It sounds simple, but it can be a complicated subject. If you are a first-time buyer, I recommend hiring an airline consultant to help with this early in the process. Factors that turn the customer off the plane include concerns about the FAA's liability and labor laws, often unreasonable taxes, such as "emergency rules", public company reporting requirements and the ability of business partners or others to use and help pay for flights. . Customer experience has a direct impact on choosing a financial institution. Commercial companies do not receive loans from private banks, but executives can.
4. Decide on a loan or lease. For most aircraft buyers, the availability of tax benefits limits this option. If you can use a tax credit, a loan may be the best option. If not, consider renting where you can benefit from tax deductions through lower interest rates. If you're not sure, ask for a quote for both. Note, however, that while all financial institutions offer airline financing, not many offer leasing.
5. Choose a loan based on credit or equity. If you want your lender to put weight on the value of the aircraft against your creditworthiness, then you have unlimited options, and if you want unsecured financing, you have a choice. The problem is that if you want the flexibility of financial planning, then you are better off with a bank that does not fully comply with federal and state banking laws and regulations. .
6. Think about social media. The interest of aviation finance is different when doing what are called trade-related loans - one financing with someone who may not do business with the bank. On the other hand, if the bank is focusing or monopolizing the airline finance for customers, you should look elsewhere unless you are one of those customers. Your personal bank, for example, can offer the best financing terms for airline purchases, allowing you to use affiliate links. However, keep in mind that the plane is mortgaged at your personal bank.
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