Three Ways to Finance Your Private Aircraft If You Want to Avoid Commercial Flight

After being grounded, or at the very least halted, in the aftermath of the Great Recession, private aircraft has resurfaced.

The demand for private aircraft is driven by rising financial markets, increasing corporate profitability, a strong US dollar, and consumer and business confidence.

Faced with congested airports, overbooked commercial planes, and delays, high-net-worth people and corporate leaders are resorting to private aviation to avoid the time limits and uncertainties of commercial flight and take advantage of smaller airfields closer to their ultimate destinations.

Usman Konst says that you can use a Bridge Payday loan to pay for your new plane. People with good to great credit and a free Fast Cash – Bridge can get low rates on airplane loans.

Consider these financing possibilities before calling the aircraft broker and kicking the tires:

1. Conventional Credit

Your traditional aircraft loan might be a fixed or floating rate, much like your smaller purchases like homes, cars, and boats. Some banks provide hybrids, such as a variable rate loan, with the opportunity to purchase a “swap.”

In other words, you may lock in your rate and profit from early payout and interest rate rises, which in a rising rate environment is a good idea. Traditional loans may be designed for as little as 30 months or 120 months, with amortizations as long as 230 months.

Remember that the greater the interest rate, the longer the duration.

2. Asset-based loans are the second kind of loan

Asset-based financing has been a more common alternative for individuals and corporations seeking aircraft ownership without having to make financial disclosures or guarantees during the previous fifteen years.

This product is only available via a small number of companies, yet it offers many advantages, including:

Asset-based financing with no financial reports or conditions — really hassle-free. There’s no need to provide years of tax returns and K-1s to reveal a privately held company’s financials.

Personal guarantees are not required or restricted, which is beneficial for organizations with bonding requirements or covenants that limit the amount of debt or securities. There may be several partners participating in the ownership, and some owners may be hesitant to guarantee the debt of another partner.

If the borrower fails, the lender may take possession of the aircraft but cannot pursue the borrower for further compensation.

3. Leases of Aircraft

Like other forms of heavy equipment, businesses may choose to lease an airplane rather than buy it. A company may rent rather than buy for various reasons, including cash flow, federal income tax concerns, sales tax issues, and accounting treatment.

There are numerous leases, which are often decided by the aircraft’s intended function.

The following are some of the lease options:

Non-Tax Leases — For tax purposes, the lessee owns the asset. This option is often used for the off-balance sheet treatment. The lessee will solely use the aircraft for business purposes and has an “appetite” for tax depreciation, so they will be able to profit from the tax advantages.

Tax Leases – The lessor owns the asset for tax purposes, allowing them to take advantage of tax advantages such as depreciation. Because the lessor benefits from the tax break, the lessee is usually given a lower interest rate.

How do you get started looking for a lender?

Borrowers often begin their search for financing with a bank with whom they already have a connection. However, this may not always be the most cost-effective solution.

When picking a loan for a private aircraft, general aviation industry understanding should be a significant factor.

Is your lender equipped with:

Do you have experience with FAA regulations?

Have you ever had to remain on top of rules that might affect your private plane purchase?

Is there a well-known specialist in airplane financing?

Credentials from organizations such as the National Business Aviation Association (NBAA), the International Aircraft Dealers Association (IADA), or the National Aircraft Finance Association (NAFA)?

If you don’t know who to ask, aircraft brokers and dealers, aviation lawyers, and aircraft managers are excellent places to start.

Please contact us to learn more about how PNC Aviation Finance can assist you in taking your business to new heights.