How to Secure a Loan on an Aircraft

Establish the aircraft's purchase price. Determine the aircraft's purchase price by adding the cost of the airplane and optional components. If you're purchasing a new aircraft, for example, options can include an upgraded trim package and a larger engine. If you're buying a kit aircraft that you will complete, you may be able to select from different finish levels (e.g.boxes of parts vs a partially completed airframe).

Compile your financial information. Assemble the background data for your loan before you commit to a lender. Although finance companies vary in their required documentation, you'll need to submit proof of income and capability to make your loan payments. There may be a pre-approval process that allows you to shop for your aircraft. A more formal loan approval may be granted once your loan paperwork is complete.

Determine the loan and payment values. Once you've established the aircraft's purchase price, identify a down payment percentage that meets your needs. Your lender may require a minimum down payment for loan approval. Subtract that down payment from the principal, and the balance will be the amount financed to pay for the aircraft.

Use a loan calculator to construct payment scenarios with different interest rates and payment amounts. Because closing and miscellaneous costs will be included in the transaction, your calculations will differ from figures on your final loan statement.

Obtain manufacturer financing information. If you're purchasing a new aircraft or a kit plane, the manufacturer may have their own intra-company financing arm. Although this approach may result in an efficient settlement with less footwork for everyone, you won't necessarily receive the best interest rate. Reserve your financing decision until you've researched all available funding sources.

Contact the Aircraft Owners and Pilots Association. AOPA provides many aviation-related services to its members, many of whom are general aviation pilots. AOPA operates an aircraft financing arm that can facilitate loans for new or used aircraft purchases and upgrades.

Contact an aircraft finance company. More than 100 aircraft finance companies compete for aviation enthusiasts' loan business. Some of these companies are financing arms of aircraft sales companies, while others are conventional banks that also finance aircraft loans. Finally, some finance companies focus on specific type of aircraft (e.g. jets or corporate aircraft).

Visit your bank or credit union. After you've gotten loan information from airplane manufacturers, the AOPA and aircraft finance companies, consult with your local financial institution. In some cases, local banks and credit unions may be eager to win loan business from qualified bank customers. Loan rates may be competitive as well.

Evaluate your financing options. Gather your lender and loan rate information. Determine the loan package that best meets your needs for loan term, monthly payment and customer service capabilities. Prepare and submit your aircraft loan application.