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Aircraft financing - buying your own private jet

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Buying your own private jet is much like buying a home. First you have to carefully consider all of your purchase options. You look at many different jets and weigh the advantages and disadvantages of each before coming to a well thought out decision. Now that you know what jet is going to serve you and your company best, you have to figure out a way to pay for it. This is where the financing comes in.

First you have to find a lender. Not all lending agencies do aircraft loans. Also consider that there are some lenders that only finance certain type of aircrafts. Make sure that you shop around to find the right lender (and interest rate plus conditions you can live with) for you.
Below are a few basic steps and items to expect to find on your aircraft loan application:

Tax Returns - As with any loan application two years of past tax returns will be required with your application. This is to show the lender that you have the income necessary to make your payment on the loan for your jet. The bank has the right to deny your loan if they do not think that your income is high enough to be able to pay for a jet on top of all other living expenses.

Insurance Coverage - Aircraft or aviation insurance is very similar to auto insurance. The insurance policy is listed under the pilot, not necessarily the owner. The policy must have a certain value of the plane covered as well and insurance for employees and passengers. Aircraft insurance is just as vital to the pilot as auto insurance is to a driver; not having proper coverage can lead to heavy fines or worse in the case of an accident.

Inspection - The plane/jet that is the subject for the loan must pass an inspection. The lender does not want to pay to an aircraft of shoddy workmanship. The lender is making an investment if he decides to finance you. In the case that you are unable to make your payments for the aircraft, the lender wants to make sure that he can re-sell it to another buyer and recuperate his costs.

Good Credit History - Credit history is important in any loan application process because it provides insight into the responsibility of the individual filling out the application. A credit report can answer important questions for the lender such as, "does this individual typically make payments on time?" "does this individual have a lot of un-paid debts?" and "can this applicant be responsible enough with his money to be able to pay me back in full at the end of the term of the loan?" A lender will use credit history to determine how confident they will be that you are going to pay them pack the money they have "lent" you for your plane.

Licenses - Pilots and drivers (ground crew) must have proper licenses before a loan will be approved. After all, why would a lender approve a loan on a plane that has no one who is trained to fly it? Having licensed pilots and other personnel ensures that the plane can actually operate and hopefully generate (or save) income. If the buyer cannot make or save money by using this purchase, there is no reason to invest money. The lender likes to have the plane in its best working order, this includes a well trained and qualified staff.

Many companies offer quick quotes and online aircraft financing applications. Remember to keep interest rates in mind and whether or not those rates are fixed or variable.

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Posted by DF
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