Financing Your Wings

Financing Your Wings

Maybe you can simply write a check for your new wings. If not, keep reading because there are many ways to save money on financing your sport aircraft.

First, try your favorite bank. You might be surprised to learn the bank that holds your car loan also lends on aircraft, too. Many lenders do. Being a customer in good standing can get you a preferred rate — or at least less hassle. You might need to educate your loan officer a little about the model you're buying, but most are very willing to make low-cost loans with secured collateral.

If you're buying your aircraft through a dealer, ask about house financing. The dealer might have a loan package all set up with a preferred aviation lender that can get you the lowest rates. Just as car loans often involve loan fees, so do plane loans, so be on the lookout because such fees can drive up the total cost of your financing. Ask for the effective annual percentage rate (APR), which includes all interest charges and fees. Be aware that most lenders won't lend on kit aircraft because they have no collateral to resell until you finish building it.

By reading ads in various flying magazines you'll find a plethora of lenders just waiting for an opportunity to lend you money for your first or next aircraft. Call them. Compare rates and services. Learn from every contact you make.

Of course, many aviation loans are available online. As you must do with any online financial transaction, make sure you know who you're dealing with (ask about referrals, recommendations, accreditation) and proceed with caution. However, you might find that borrowing online is just as easy and safe as borrowing from your local bank — and sometimes you can save yourself time and money. If you're a member of Aircraft Owners and Pilots Association (AOPA) or Experimental Aircraft Association (EAA), check out their websites for preferred lenders.

There's one more financial resource to try: the owner. Some aircraft owners who have free-and-clear title opt to sell their craft on an installment contract at an interest rate higher than they can get if they deposit their money in the bank. If you prove you're a worthwhile credit risk and put at least 20 percent down in cash or trade, you might find the fastest and fairest terms through the aircraft's seller.

The application you fill out for plane financing is nearly identical to one for a car loan, so get a copy and look it over to make sure you know the answers to all the questions. Going to a loan application meeting prepared can save time.