In this downloadable spreadsheet from the experts at FLYING Finance, we’ve taken the guesswork out of determining what’s possible for your next aircraft purchase or avionics upgrade.

Key data you’ll calculate:

• Your monthly loan payment
• Fuel costs based on flight hours
• Maintenance expenses
• And more

Complete the form below to download your free Annual Planning Tool today.

The post Purchasing Aircraft is Made Easier by FLYING Finance’s Annual Planning Tool appeared first on FLYING Magazine.

Why Are Rates  Down?

The change in federal interest rates comes after the Federal Open Market Committee (FOMC) met with the Board of Governors of the Federal Reserve System in September to address inflation.

The committee’s long-term goals are to achieve higher employment numbers and bring inflation down to 2 percent.

The Bureau of Labor Statistics’ Consumer Price Index report shows annual inflation for all items in the U.S. is averaged at 2.4 percent as of September. September, August, and July each saw 0.2 percent inflation increases for all items each month.

In the FOMC meeting, the committee decided to lower the federal funds rate by 0.5 percent to 4.75-5 percent

“The Committee will continue reducing its holdings of Treasury securities and agency debt and

agency mortgage‑backed securities,” FOMC’s news release on the rate drop stated. “The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

The next set of FOMC meetings are scheduled for November 7-8.

What Does This Mean for Aircraft Buyers?

Lower interest rates typically means better payment plans on big purchases, aircrafts included.

The 0.5 percent drop can mean hundreds of dollars saved in monthly payments, depending on the amount of an individual’s down payment and the term of their loan.

FLYING Finance’s Aircraft Finance Calculator can be used to determine an affordable payment plan for prospective buyers. This tool allows users to configure their ideal purchase price, loan term, down payment, and adjust for the lowered interest rates to calculate what their monthly payment would be.

For example, a 20-year term for an aircraft purchased for $1 million with a $200,000 (20 percent) down payment at a 6.75 percent interest rate would cost $6,083 per month. These same values at a 7.25 percent interest rate would cost $6,323 instead—$240 more per month.

Additional resources on aircraft purchasing are available at FLYING Finance.

The post Aircraft Affordability Takes Off as Federal Interest Rates Drop appeared first on FLYING Magazine.

If you’ve read our last article on when to upgrade your aircraft and decided that it’s the right time for you to finance a new airplane, you might be wondering what to do next. 

For first-time owners, planning for a sale and making your next move can be just as daunting as getting into your first aircraft. 

Thankfully, we have you covered with a five-step guide for what to do once you need to trade in your first aircraft for a new model.

Prepping Your Aircraft

Before you attempt a sale, you’ll want to maximize the value you can extract from your used plane. Obviously, that includes basic tasks, such as making sure the exterior and interior are both spotless and compiling records of the plane’s hours, inspections, and logs. 

Depending on what maintenance items are due or will be soon, you may want to preemptively take care of a few notable repairs or routine part replacements so that buyers will be confident in the aircraft’s condition. 

Likewise, refurbishment will often raise the value of a private jet by up to 20 percent. Of course, the returns you’ll see from a fresh coat of paint or an interior refresh will vary greatly depending on how worn or outdated your airplane appears as-is, and how much you can expect for a pristine and updated version of your model.

That leads us into our next point.

Setting a Price

To determine a fair market price, you can start with a professional appraisal or check out similar models at AvBuyer to get an idea of the current market value on private sales. Aviation classifieds are a great way to figure out what people are actually paying for and what is in high demand. 

Be sure to make note of any specifics that make your aircraft a better-than-average example. Besides detailed maintenance history and logs, any warranty you have left can be a major value to prospective buyers, as with any pre-owned vehicle. Leaving at least a few months of warranty gives the next owner peace of mind in case unexpected issues crop up. 

Listing Your Plane 

Once your plane is in prime condition, take high-resolution photos of both the interior and exterior, including avionics, panels, running gear, and anything else buyers or brokers will want to see. 

AvBuyer is the premier marketplace for buying and selling pre-owned aircraft, with a wide selection and an even wider reach. If you’re looking to sell your jet, turboprop, light aircraft, helicopter, or even vintage aircraft privately, listing here is quick and easy. 

If you want to work with a broker to help finalize a sale or structure a trade, FLYING Finance can connect you with one of our trusted contacts. An aviation broker will facilitate your sale and navigate the process on your behalf, helping both you and the buyer avoid legal and marketplace pitfalls. 

Breaking Down Financial Incentives

If you’re dealing with a business aircraft, it’s vital to understand the benefits and drawbacks of your depreciation schedule and tax incentives or penalties. 

Some federal and state legislation might provide incentives for purchasing a new aircraft, which can be particularly helpful in avoiding excessive sales tax when you sell your current aircraft. 

Depending on where you are on your aircraft’s depreciation schedule, you may have exhausted the financial benefit from your current model. Speak to an aviation tax professional about what incentives apply to your situation so you can optimize your financing and minimize your tax expenditures. 

Financing Your New Aircraft

Even if you have the means to purchase an aircraft in cash, it’s worth considering your financing options.

There are many benefits to financing all or part of the value of your aircraft. By taking advantage of long-term and low-rate financing, you can have the right aircraft for your mission now while keeping liquid capital to deploy more effectively in your business or other investments. 

In most cases, your return on investment will make it worth holding onto your capital and will outpace interest rates. 

For the best rates, reach out to FLYING Finance today, and our team of experts will help you structure your purchase and get you into the perfect aircraft. 

The post 5 Easy Steps to Sell Your Airplane appeared first on FLYING Magazine.

If you or your company are in the market for a business aircraft, having decided that it’s a worthy investment for your travel needs, you may have one lingering concern: What’s the perception of flying in a private jet or small passenger aircraft? 

Optics, like any other facet of business, require thoughtful consideration, especially with some celebrities recently dealing with controversies over their use of private jets.

Depending on your industry and even the state of the economy, you might face questions from staff, clients, or public relations about why your executives need a business aircraft as opposed to flying commercial. 

We’ve put together a list of some common questions and some ways you can answer them:

Why do you need a private/corporate aircraft? Wouldn’t flying commercial cut costs?

The ownership and operation of aircraft has been calculated like any other business expense. Travel costs are evaluated and weighed against time constraints, agenda, and available commercial or charter options.

As with any company assets, accountants will review expenses, tax benefits, and depreciation to determine the costs and benefits. In the case of private aircraft, bonus depreciation legislation means that businesses are able to depreciate the asset swiftly, potentially resulting in additional free cash flow due to tax savings.

Is business aviation a perk for high-level executives?

Due to tight schedules and demanding responsibilities, many top-level executives spend much more time on company business than the standard 40 hours per work week.

On average, using a private or a corporate-owned aircraft saves roughly three hours door to door compared to traveling by commercial airliner. In this case, the costs of private aircraft are outweighed by time savings.

While access to a company aircraft can make the workload easier, it’s also a necessity for some corporate roles—and not necessarily limited to C-suite executives.

Do corporate aircraft aid in productivity?

Studies show that travel time is significantly more productive in corporate or private aircraft, including not only flight time, but entire time spent en route.

Executives are productive for roughly 80 percent of travel time while using business aviation versus 30 percent of time while flying a commercial airliner, which results in a net gain for shareholders. 

Typically, the higher up an executive is in an organization, the wider the geographic breadth of their responsibilities. That means, on average, CEOs and other C-suite professionals spend more than half of their time each week traveling on company business. These productivity figures become increasingly relevant in organizations that span national or international boundaries. 

Not to mention, there are several intangible productivity benefits of business aviation, including schedule flexibility, access to 10 times as many airports, and the confidentiality of private travel. All of these factors are taken into account when evaluating the need for operating a corporate aircraft.

Will a corporate aircraft be sold to cut costs in the case of layoffs?

The costs associated with business aviation are justified by the utility of the asset.

Business aircraft are not a luxury but a tool like any other part of operation. Just as selling laptops and telephones would not likely be a viable way to cut costs and prevent any potential layoffs, neither would selling an aircraft or related asset. 

That said, to the extent a physical location might be shut down and equipment sold off due to lack of utilization or other factors, an aircraft could be liquidated if the needs of the business change.

Are the security benefits of private aircraft necessary? 

Due to the sensitive nature of many high-level topics and business deals, executives often need privacy to discuss vital matters out of public earshot.

In cases of both strategic planning among team members and relationships with clients or partners, traveling together via business aviation can be an incredibly effective tool and double the productivity of scheduled travel time. 

Unfortunately, commercial airliners, public airports, and accompanying ground transportation can also be sources of security risk for high-profile individuals, particularly executives and potential clients. Flying from a controlled environment such as a privately owned or leased hangar facility greatly simplifies the logistics of travel security.  

If you haven’t yet determined if buying or financing a private plane is right for you, check out the investment benefits of financing your aircraft and reach out to FLYING Finance. Our team of experts can walk you through the entire process of budgeting and accounting for the expenses of operating any type of aircraft.

The post Managing the Optics of Flying in a Corporate Aircraft appeared first on FLYING Magazine.

Recently, we highlighted the value of turboprops as the perfect niche aircraft between the passenger jet and the piston-driven propeller plane segments. But what if the use cases for turboprops don’t fit your needs? 

For new pilots and aviation enthusiasts, piston planes are the perfect class of aircraft. With fewer regulatory hurdles and less expensive operating costs, here’s a list of what to love about a simple, lightweight aircraft.

Purchase Costs 

In general, piston-driven aircraft are much less expensive than turboprops—and especially jets. 

As a general rule, general aviation models can be found for anywhere from $100,000 to $1 million, while turboprops typically start above the million-dollar mark. Depending on your budget, a piston-driven airplane can be many times more affordable and still meet your needs. 

Training 

For most turboprops, pilots are required to have additional training and certification (sometimes including multiengine and high-performance ratings).

Whatever certificate you hold, whether private, commercial, or ATP, you may need to obtain a multiengine rating or complete type-specific training in a flight simulator or qualifying aircraft.

The operational characteristics of even the lower-end turboprops are more complex than piston engines. As a new pilot or a hobby enthusiast, investing in that kind of certification may not be in reach or necessary, especially if you simply want to fly short distances in a single-engine piston plane.

Fuel Availability 

Even though turboprops and small passenger jets are able to land at relatively remote airports, some FBOs only carry 100LL, a high-octane fuel meant for spark-ignited piston engines.

Turboprops and other jets require specific jet fuels, which can limit your options for resupply.

Fuel Cost

For short flights, piston engines have lower fuel consumption rates than turboprops or jets.

Coupled with the lower cost of the fuel itself, this makes operating a piston-powered aircraft more economical for most personal and hobby use, or even potentially business use for someone who has the necessary licensing or only flies within a few hundred miles. 

Maintenance 

Turboprops and jets are inherently costlier to maintain or modify than piston engines and require your aviation maintenance technician (AMT) to have specialized skills and certification.

There are four primary types of aircraft maintenance: preventative maintenance, maintenance, alterations, and repairs. 

If you are already a Part 91 private, sport, or higher certificate pilot, the FAA allows you to do your own preventative maintenance as long as it does not involve “complex assembly operations.” 

For a list of what type of projects meet the FAA’s criteria, head to the 14 CFR Appendix A to Part 43.

Some of the more basic items approved by the FAA include the following:

• Servicing landing gear wheel bearings (for example, cleaning and greasing)
• Servicing landing gear shock struts (for example adding oil, air, or both)
• Lubricating items not requiring disassembly other than removal of nonstructural items (for example, cover plates, cowling, and fairings)
• Replenishing hydraulic fluid in the hydraulic reservoir
• Replacing safety belts
• Replacing bulbs, reflectors, and lenses of position and landing lights
• Replacing or cleaning spark plugs and setting spark plug gap clearance
• Replacing any hose connection, except hydraulic connections
• Replacing prefabricated fuel lines
• Cleaning or replacing fuel and oil strainers or filter elements
• Replacing and servicing batteries

Simple Design

Piston engines are typically designed with four to six fixed cylinders arranged in a horizontally opposed configuration, not unlike the internal combustion engines found in many other types of vehicles. Likewise, piston engines are often naturally aspirated, meaning there are no complex induction systems. 

These are time-tested designs that have been in common use for over a century. They operate with the same principles and basic mechanics as automotive engines, meaning if you have mechanical experience, much of it will transfer to maintaining your piston-driven airplane.

This doesn’t apply to everyone, of course, but it’s worth mentioning that the tools and training required to work on a piston engine are much less extensive than jet engines. 

Piston planes have a thriving community of aviation enthusiasts from around the world. Given their price point and lower bar for entry, piston engines will be in the skies for decades to come. The new and used markets for these single-engine aircraft are rich with options for whatever your budget or needs.

Check out FLYING Magazine’s thriving piston community and AvBuyer’s aircraft ownership guides for a plethora of resources. 

If you’re not sure about how much to finance and how much to put down, reach out to the FLYING Finance team today. You might be surprised to learn that your capital is better invested by financing an aircraft instead of paying cash, thanks to FLYING Finance’s interest rates, so there’s no reason not to get started and apply today.

The post Why Choose a Piston Plane? appeared first on FLYING Magazine.

In the same vein, even private buyers often purchase outright because they assume that interest rates are higher than they are.

In this white paper, we’ll highlight how there are better ways to deploy your cash.

Key topics:

• The opportunity cost of paying cash
• Does financing an aircraft put you at risk in a financial crisis?
• Borrow at the right time of the year
• Keeping liquidity lines open
• How financing an aircraft can lower your tax burden

Complete the form below to download the research today.

The post Why Financing Your Next Aircraft Makes Sense appeared first on FLYING Magazine.

The aircraft market is continuing to expand, and that means better options for the consumer. 

One of the largest growing segments in aviation is the turboprop—reliable, practical planes that fill the niche between high speed, high altitude jets and lower flying piston airplanes. 

Turboprop-powered aircraft are becoming more popular, and industry experts project that yearly turboprop sales are expected to grow by 2,450 aircraft before 2040. 

While every class of aircraft has its functions, you might be surprised how versatile and useful turboprops can be. If your business needs mean you take regular short flights to and from small airports, financing a turboprop could be a major time and money saver for you.

Turboprops Excel at Short Flights

In Europe and North America, roughly half of all private flights are less than 500 miles long. Critically, this is about the distance it takes for a turboprop to outperform a jet. 

At low to medium altitudes, turboprop engines are more efficient than jets, and cost savings of up to 40 percent are possible. Because every flight involves low altitudes at takeoff and landing, a high altitude cruise needs to be long enough for the turbofan engine to offset the disadvantage during start and landing. 

Not to mention, many people don’t realize that the speed advantage is marginal for faster jets due to the time spent ascending and descending. In a 500-mile flight, turboprops lose only a few minutes versus jets. 

If your business has you flying regularly between, say, Atlanta and Roanoke, Virginia, or Miami and Tampa, Florida, or even all the above, you’ll realistically make out better with all costs by owning a turboprop than a jet. 

Flexibility With Shorter Runways

Especially compared to jets, turboprops have exceptional short takeoff and landing (STOL) capabilities. Due to their stability at lower speeds and the drag created by propellers, these aircraft can easily decelerate to safe landing speeds for small airports and short runways, and that means that your options for travel open up—dramatically. 

Not every business is based near a large commercial airport. If you work in agriculture, manufacturing, tourism, ministry, or a plethora of other fields, chances are, you’ll need to visit smaller towns. 

With over 80 STOL ports in the U.S. alone, as well as thousands of other small airports around the country that can safely accommodate even the most advanced turboprops, there are plenty of use cases for planes that are capable of lower speeds. 

While owning a jet may not provide enough value for your company to justify the costs, especially without easy hangar or runway access, turboprops’ versatility makes them a much easier sell. 

Low Altitude = Less Turbulence

Like we’ve mentioned above, turboprops are designed for slower speeds and lower altitudes than jets. Why does this matter for your experience?

From 23,000 to 39,000 feet, at the edge of the tropopause, airspace is generally more affected by weather conditions and can often be much more turbulent. Because turboprops typically fly below 30,000 feet while jets generally stay above, most of your flights in a turboprop will be less bumpy than the equivalent ride in a jet. 

Comfortable air might not seem like a major factor, but it is if you spend enough time in your aircraft.

Safety and Reliability

We’ve talked about the benefits of turboprops compared to higher-end jets, but how about smaller, lighter airplanes? 

While some obvious benefits apply to turboprops, such as higher cruising speed and better efficiency, it’s also important to note that turboprops are much safer and more reliable than piston-driven propeller planes. 

Due to the fact that turboprop engines involve rotating mass rather than reciprocating mass, they’re mechanically safer in the case of any failure (and also less prone to catastrophic failure in the first place). 

Equally as vital, the redundancy of twin-engine turboprop models provides an extra sense of security over single-engine planes, including most piston-driven planes. 

Lower Carbon

It’s no secret that fuel prices are increasing. The cost of running a jet will only continue as legislation, such as the European Union’s Taxonomy Regulation, disincentivizes and restricts carbon emissions and consumption in the coming decades. 

In the not-so-distant future, the aviation industry will gravitate more and more toward low-carbon emitting aircraft. 

So we arrive again at the conclusion that turboprops are a practical, forward-thinker’s aircraft. 

Check Out a Wide Selection

Due to the popularity among business charters, there are plenty of options for turboprop buyers. The market has never been better for a range of tastes and needs—everything from luxury to sport to hobby use.

Many major manufacturers are producing turboprop aircraft:

• Cessna
• Beechcraft
• Piaggio
• Piper
• Pilatus
• Daher

If you don’t know where to start, look through AvBuyer’s turboprop guides. And if you’re not sure about how much to finance and how much to put down, reach out to the FLYING Finance team today and get the process started to beat the holiday crunch. 

The post Turboprops: Perfect for a Small Business Owner appeared first on FLYING Magazine.

If financing an aircraft is on your horizon, now is the time to secure your loan. The end of the year is fast approaching, and that means many individuals and businesses will be looking to finalize large purchases for tax offset purposes.

Getting preapproved in August or September is the smart move if you want to miss the hassle of buying during the holidays. As with any financial decision, timing is key.

Why Is There a Time Crunch?

According to Keller Laseter, Chief Commercial Officer at FLYING Finance, the answer is simple: holidays.

“The holidays are the biggest factor to our time crunch,” Laseter said. 

There are multiple bank holidays in the fourth quarter, and that significantly bottlenecks the process.

“When the banks are closed, we lose a lot of valuable time and your loan does not move forward,” Laseter said. 

While some salespeople and lenders may still be eager to close with you no matter the season, it’s an unavoidable fact that many banking and financial professionals will be planning vacations and focusing on family from October to early January—which means they won’t prioritize getting your loan closed. 

“The best way to avoid the busy season is to beat the crowd that’s late to the game,” said Laseter. “Being responsive, communicative, and having your ducks in a row will put you very high on the list.”

Why Start Shopping in August and September?

Waiting until Q4 can lead to delayed closings, aircraft being sold to cash buyers, and worse options and terms.

Typically, clients buying an aircraft for business reasons have complex financial documentation, meaning it takes time for lenders to underwrite them. The savvier and more prepared a client is, the more questions banks and lenders need to clarify. 

With many buyers going through this process at the same time, it can take longer for loans to be completed and can push some finalizations into the next year, which may not be ideal. 

Likewise, inventory is much more limited at the end of the year, with fewer options available for late buyers. The earlier you decide to take to the skies in a new plane, the more variety you’ll find and the more sellers and brokers will be willing to negotiate on terms in order to make those sales.

Can Both Corporate and Personal Aircraft Owners Benefit?

 Absolutely! Actually, securing your aircraft loan early is the surest way to reap the benefits of depreciation and minimize your tax burden. 

“There’s always a rush of clients who approach the finance team in mid-December looking to complete a loan on a large purchase before the end of the year,” Laseter said. “That’s our busiest time, so while we do our best to satisfy this request, it can be difficult.” 

Both corporate and personal buyers can get ahead by submitting the necessary documents as early as possible. Once approved, it’s simple to get reapproved if any time lapses.

Why Have Financing Preapproved in the Fall?

Two of the biggest factors that prolong the financing process are submitting all financial documents in a timely and accurate manner and finding the right deal on the aircraft that suits your needs. Completing the financing side of the equation means you can focus on shopping with confidence in your financial situation. 

The bigger and more complex the airplane, the more in depth the process has to be. Pre-buy inspections, appraisals, logbook review, and other factors mean you’ll want to line up your loan as early as possible so you can be satisfied with a thoroughly vetted aircraft. 

Without preapproval, the time, energy, and money spent on choosing and inspecting the right aircraft can be wasted.

“Just like with buying a house, someone who has an approval in hand when making an offer on an aircraft will be taken more seriously than someone without,” said Laseter. “If you have an approval and the aircraft of your dreams pops up for sale, you can move quickly on the sale and have less risk of the seller going with a cash buyer.”

How to Get Started 

Depending on how your finances are arranged, it’s a good idea to reach out to any investment brokers, accountants, or wealth management firms you work with to get a complete picture of your assets and liquidity. Likewise, make sure you know the details on any existing loans or liabilities so you can go into the pre-approval process with realistic goals. 

If you aren’t sure what documents you’ll need, the FLYING Finance team is here to help you with any questions. Getting started today will get you into your dream aircraft sooner. 

Instead of spending the holidays struggling to finalize details, you can be flying and enjoying the skies.

The post Beat the Holiday Time Crunch: Get Preapproved for an Aircraft Loan Now appeared first on FLYING Magazine.

Helping clients navigate the intricacies of airplane financing, FLYING Finance acts as an intermediary between buyers and lenders. The group creates competition in the loan market, explains key concepts like TBO (Time Between Overhauls), and guides clients through the entire buying process.

• READ MORE: AVweb, Firecrown Debut New Aviation Storytelling Show

The episode also addresses the question of whether it’s ever financially sensible to own an airplane compared to flying commercially. While acknowledging the convenience and time-saving benefits of private aviation, Holland uses the example of limited commercial air service from Chattanooga, Tennessee (KCHA), to various destinations to illustrate the potential advantages of owning an airplane for frequent regional travel.

Holland also explores various aspects of financing an aircraft while debunking different myths and stereotypes about private aviation. 

Market trends: The show discusses a shift in the market due to rising interest rates and the potential impact of the proposed reinstatement of 100 percent bonus depreciation on airplane purchases.

Client demographics: While some clients are first-time buyers, a significant portion are upgrading from previous aircraft models, says Holland. Business owners and high-income individuals are often the primary clientele.

Credit application process: FLYING Finance offers a streamlined online application process, requesting information like debt, income, and liquidity. Depending on the purchase price, a more thorough financial evaluation might be required.

Factors lenders consider: Beyond financial standing, lenders assess factors such as pilot ratings, insurance rates, aircraft location, and international travel frequency.

Tune in to the entire episode to see Holland break down popular TikTok videos, including why empty legs are like Bigfoot and flying private for free. 

Also in Episode 2, Cortes and Ewing discuss a handful of other topics in the aviation community. Friday marked 10 years since Malaysia Airlines Flight 370 was lost after departing from Kuala Lumpur. The two also talk about a Delta Air Lines pilot who chartered an entire Airbus A330 for his retirement flight. 

Do you have questions or suggestions for Inside Aviation? Drop us a line at insideaviation@firecrown.com. 

Inside Aviation can be found on AvWeb’s YouTube channel and Facebook page in a video format. The show is also available on all podcast platforms, including Spotify and Apple. 

The post ‘Inside Aviation’: Why Empty Legs Are Like Bigfoot; Flying Private Isn’t Always a G650 appeared first on FLYING Magazine.

As FLYING Media Group expands its portfolio of services to pilots, it recently acquired Sky Allies Capital, a nimble player in the aviation finance market, to help our readers find the path to aircraft ownership. Now, as FLYING Finance, the team we’re bringing on board will assist pilots in transitioning to owners, whether the deal is for a light sport airplane or a super-midsize jet.

We sat down with Josh Colton, founder of Sky Allies, to break through a few barriers pilots may perceive in getting started. Colton comes from a background in marketing and finance, including time at Cessna Aircraft Co.—now Textron Aviation—in a variety of roles in marketing strategy and channel development. Colton holds a Master of Business Administration degree and an airline transport pilot certificate with type ratings in the HondaJet and Citation 525 series.

“First, it’s important to understand that the aircraft you pursue drives to a large extent the kind of financing that will be available,” says Colton. “Whether it’s a light piston single or a warbird or a jet, they all involve different types of financing. For experimental aircraft, you are typically looking at a home equity loan or line of credit, or cash, whereas with a jet, a bank loan is most often the vehicle.”

That’s why having an adviser specializing in aircraft financing can help you to navigate the most likely path to securing the funds for the transaction.

“If you go to your own credit union or bank, most banks don’t understand aviation,” says Colton. “Plus, you may need to hire an attorney to do documentation on the deal and/or ownership structure, hire an appraiser, and help with insurance and closing. If you’re working with a finance broker, they’re going to do a soft pull of your credit, tax returns, etc., and provide you with a path. It’s easier than going it alone, as they can advise the best match.”

And what’s the cost of going through a financial broker? “If we do our job right, it won’t cost any more than going direct to a bank—sometimes it does. Sometimes it costs less,” says Colton.

Financing Options

Aside from cash buyers, there are typically two paths that private owners take and another option for those pursuing assets for commercial operations. Bank loan terms are generally 10 to 20 years, depending on the age of the aircraft and total time on the engine and airframe. Or a buyer could draw cash from a home equity loan. For these loans, Colton says, you’ll need to put 15 to 20 percent down on the personal loan—usually 20 percent—with interest rates floating around 7 to 8 percent at press time.

Another path would be aircraft leasing—and it’s not for private operators, normally, according to Colton—but if you’re looking at conducting Part 135 operations or running a flight school under Part 141, you might pursue this direction. For example, Colton has had another business that leases a Cessna 172 to a school.

“It has to be for a business’ essential purpose,” he says, “so if you’re flying Cessna Caravan for cargo ops, that makes sense, but if you buy one to get to your lake house and you want to lease it, that probably won’t work.”

The advantage to a leasing arrangement is that you may be able to get 100 percent financing for the deal, putting no money down as part of the transaction. The downside? There’s often a 10, 12, or 14 percent rate on that, according to Colton.

Taking Care of the Customer

Colton credits one of his mentors at Cessna, retired senior vice president of sales and marketing Roger Whyte, as inspiration for how he approaches financial brokerage.

“Whyte’s credo was always to treat your customers well, so they would come back,” he says.

In order to ensure that, the idea is to keep the timeframe no longer through a broker than the process would be through a bank.

“It’s like hiring a real estate agent—if they are a pro, they save you time and money,” Colton says.

Brokers can also offer creative ways to access capital, including using cars, rental homes, or other assets to get to the desired line of credit. If someone has been declined by their bank, “we can go do creative deals as well,” mitigating the effects of having a B- or C-grade credit—as opposed to the A or A-1 credit most financial institutions look for in conventional loans. Pilots are typically a good risk.

“There are very few losses in aircraft finance, if the banks do their market research,” says Colton.

Finally, just like on the flight deck, having a procedure mapped out ensures preparation and that no steps are missed.

“We have a checklist to follow with those seeking financing for an aircraft,” he says. “We consider the prebuy [inspection], damage history, getting an airplane with a mid-time or less engine if it’s going to be financed, or structure the loan that way. If it’s a jet, finding an airplane that’s on an engine program of some kind…it dramatically cuts into the universe of lenders available if the jet is not on a program, so be prepared for the process to take longer and cost more.”

All of the information Sky Allies has collected over the years “flows back into the type of loans that we do,” says Colton. “An asset—the airplane—on the other side could be 60 years old or brand new, an SR22, or a warbird. We have that all in our database to match people with the right lender and loan structure. As a result, we usually work with our top 10 lenders out of a large pool, and that’s what we bring to the table along with industry specialization.”

This story first appeared in the September 2023/Issue 941 of FLYING’s print edition.

The post What Are Your Options When Financing an Airplane? appeared first on FLYING Magazine.