What Are The Factors That Affect The Aircraft Loan Rate Terms?

Aircraft Loan

When it is time to decide the aircraft loan rates, the lender considers more than just the credit history and the income. In this article, we have listed down the factors that will be examined by your airplane financing company, and you should be aware of them.

The list of factors include:

Usage Of The Airplane

The first thing that your financing company will be considering is the usage of the plane. They will determine how often you will use it, and also if it is something that you can handle or not. Furthermore, they will also need to know the purpose (whether commercial or personal) of the plane. Remember the terms for a single engine plane and workhorse plane will vary, as the usage time for both differs a lot. The more the plan will be used, the quicker it will depreciate. Therefore, as a co-owner, the financial company will need to make sure the airplane financing they are providing will retain its value in the future.

Age And The Model Of Aircraft

Age is a critical factor for financers, as it determines what kind of loan you’ll get. Remember, the older the plane is, the harder it will be to get a finance for it. This is because of the potential threats that it possesses. Also, if you are looking at buying an old turbine or piston twins plane, getting finances will be difficult for them as they depreciate pretty quickly. Even if you succeed to get aircraft financing for them, they will be at higher repayment plans.

Furthermore, we advise you to compare different loan plans with companies to see which one’s more suitable. You don’t want to get stuck with higher interest payments that can become a burden to pay off later. Also, consider if buying an old model at high prices is worth than buying a new one.

Plane’s History

The more details you are able to provide the lender about the airplane, the better is the chance for securing good loan terms. It includes the details of the specs, any damage, and the repair history of the model. Also, you should be able to provide the latest pictures of the plane to the aircraft financing companies. If the seller is unable to provide these details, then you should reconsider your purchase before reaching to get finances. Also, keep in mind that most of the companies do not offer loans on a certain type of damages, so be prepared.

Down Payment You Are Willing To Pay

The financing companies like Air Fleet Capital recommend you to consider your willingness for the down payment. Commonly, the range of down payment lies within 15-20% of the total amount. If you can secure an exceptional aircraft loan credit score, then you may be able to get this rate down to 10%. Furthermore, remember, in aviation, there is no zero down payment.

These are some of the major factors that will affect the aircraft loan rate terms for you. Make sure you consider them before applying for the aircraft loans.

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