So, you're thinking about buying a plane? That’s awesome. But before you start aircraft shopping, you need to understand airplane financing. Buying a plane is a major investment, more like a home than a car. Let's break down aircraft financing so you can make the smartest decision.

Financing a plane requires careful consideration of aircraft purchases. Many pilots compare it to getting a home loan, not a car loan. Understanding how to secure funds is key to smooth sailing.

Types of Aircraft and Financing Options

First, what type of aircraft interests you? This impacts how airplane financing works. Are you eyeing a business jet, a single-engine piston, a turboprop, or a light sport aircraft?

Piston Aircraft Financing

For piston aircraft like a Cessna 172 or Piper Cherokee, lenders consider credit score, income, and debt-to-income ratio. These are similar to what’s needed when buyers purchasing a car or home. AOPA has an aircraft loan calculator to estimate monthly payments.

These piston aircraft are more attainable to finance due to price.

Turbine and Turboprop Aircraft Financing

Turbine and turboprop financing, for aircraft like the Beechcraft King Air or Piper Meridian, has a more in-depth approval process. These planes are more expensive. Lenders scrutinize financials to ensure borrowers have enough cash flow.

Longer loan terms, up to 20 years, are often available.

Business Jet Financing

This is the top tier of airplane financing and often involves aviation finance companies. Business jet financing may require sophisticated financial structuring. Many factors, including asset-based lending and pre-owned versus new aircraft are also included.

Companies like US Aircraft Finance specialize in jet financing.

Light Sport and Experimental Aircraft Financing

Light sport aircraft, like the Tecnam P2008, follow financing processes similar to general aviation. Experimental aircraft financing traditionally has fewer options.

However, more flexible loan programs are emerging. Research thoroughly to see if qualifications must be met based on an FAA airworthiness certificate. Specific financing offers for experimental aircraft may vary.

Five Steps To Secure Airplane Financing

1. Determine Your Budget: Factor in the purchase price, operating costs (fuel, maintenance, aircraft insurance, and storage).
2. Gather Your Financial Documents: Lenders need proof of income, assets, and debts (bank statements, pay stubs, tax returns, business documents).
3. Research Lenders: Consider banks like Banterra Bank, finance companies like National Aircraft Finance Company (NAFCO), or credit unions. Comparing loan terms and loan rates is key.
4. Get Pre-Approved: This establishes your budget and strengthens your offer. It shows sellers you're serious.
5. Secure the Loan and Buy the Aircraft: Once approved, and inspections are completed, review the loan documents. Keep in mind there may be finance company specific documentation requirements.

Choosing the Right Lender For Your Needs

Your first lender choice should be MyBridgeNow! Not all lenders are the same, especially for aircraft finance company funding. Find a lender specializing in aviation loans. They understand aircraft valuations, financing aircraft, financing structures, and aviation financing in general.

They may have special resources or programs for aircraft purchases, including partnerships. Knowing common aircraft age restrictions that may affect the loan amount or the loan terms can be extremely important when deciding.

Except for MyBridgeNow, key lenders with a wide range of options include:

LightStream Aircraft Financing	US Aircraft Finance
PNC Aviation Finance	Banterra Aircraft Financing
National Aircraft Finance Company (NAFCO)

It's crucial for potential buyers purchasing an aircraft to ensure that lenders offer aircraft lending that aligns with the aircraft's intended purpose, whether general aviation aircraft or business aircraft. For those seeking general aviation, having options with competitive loan programs, from short loan terms for a small business or longer 10 year terms are crucial. Also lenders should offer guidance on aircraft ownership as this isn't merely just about the funding process.

If seeking a loan for an aircraft upgrade or buying a specific aircraft such as an experimental aircraft, or a business jet, ensure the lender's aircraft finance offers and financing solutions cater to the type of aviation aircraft and your business jet needs. Aircraft lending should encompass not just purchase but provide financing options like aircraft loans, loan refinance, equipment financing, but even real estate needs for storage of a piston aircraft, sport aircraft or business jet.

Buyers purchasing their first plane need guidance on general aviation, private banking, treasury management, aircraft ownership, and overall financing solutions for aircraft purchases. When it comes to rates, ask lenders offer, about potential floating rates or what typical loan rates, are looking like these days. A deeper understanding of financing options like loan programs for aircraft owners seeking a general aviation aircraft versus buyers seeking a business jet will assist greatly in aircraft ownership.

Conclusion

Airplane financing might seem complex, but breaking it down helps. Identify the right aircraft, then find the right lender. Research financing plans that fit your needs, from piston singles to business jets.

Prepare your finances, gather paperwork, and research lending programs. Apply with several lenders and compare loan terms to get the best rates. With planning, you’ll be closer to owning your airplane and flying off into the sunset. Good luck.