4 Tips for Financing An Aircraft
While not as common as buying a car, buying an aircraft requires many similar processes and steps, including financing the purchase. Here are four tips for financing an aircraft.
Aircraft finance is as much about negotiation as any type of financing. You need to be a stellar negotiator to get the best deal possible on both the aircraft itself and your loan options. Make sure you shop around for different sellers and lenders who fit your general needs. Compare the sellers’ merchandise and price points, as well as the lenders’ rates. Once you zero in on the one you’re most interested in, let the seller or lender know whether the offering is competitive compared to your other options. If additions or customizations as possible, you can negotiate for those too.
2. Choose A Financing Type
There are two general categories of aircraft acquisition available: leases and loans. Most financing institutions won’t offer leasing plans and you’ll need to determine whether a loan for aircraft purchase would provide tax benefits.
There are also two methods of aircraft finance available to purchase an aircraft with a loan: asset-based and credit-based. Think about whether it would be more beneficial for your loan to be based on the worth of the aircraft or your credit, as well as how much flexibility you want in the financing structure.
3. Retain An Aviation Counsel
You should always keep aviation counsel on retainer throughout the process, particularly if you’re a first-time buyer. The aviation counsel should be well-versed in aviation law, financing agreements and FAA rules and regulations. He or she can guide you through the financing and purchasing process and help you determine who should be the one to actually purchase the aircraft, for example, the CEO or the enterprise.
4. Plan Well
Aircraft finance is all about planning. You might get lucky and find a great deal right away, but it’s better to start the process of financing your purchase started before you even narrow down the exact aircraft you want to buy. Start looking for the type of aircraft you want and research applicable loan options at the same time. Research general information and seek the estimated cost of acquisition first. Then you can create a timeline and a budget and decide on which features are must-haves.
Like many financing industries, the market for aircraft financing is constantly changing. It’s important to keep an eye on trends in the industry and keep your skills and knowledge honed.