What are my options for financing an aircraft that will need an OE almost immediately after purchase – Aviation Finance


Question: I see on AOPA Finance that I can potentially finance an engine overhaul with enough equity on the plane. What are my options for financing an aircraft that will need an EO almost immediately after purchase? I’m willing to put enough funds on the note that there is enough equity on the plane for an EO loan if I can fit it in. To be explicit, the plane costs $ 37,500 and the EO estimate for this engine is $ 24,000. I don’t know what the fairness requirement is, but let’s say it’s 40%. So what I’m hoping for is that I can get a loan of $ 46,500 by depositing $ 15,000 on the plane, the loan then supplementing the purchase price with $ 22,500, leaving $ 24,000 in the note. for the OE. If the OE exceeds that, I would just eat that cost myself.

A: Turning a redesign into a purchase is a fairly straightforward process. As part of our internal review and lender underwriting, two values ​​for the aircraft will be determined. One as is for purchase and a second with a zero time engine. Funding can be up to 85% of final value with revision included. In your example, assuming the value is roughly equal to cost, the financing would look like $ 31,875 for the purchase (85% of $ 37,500) and $ 20,400 for the motor for a total loan of 52 $ 275. The initial $ 31,875 would be paid at the time of purchase and the remaining $ 20,400 would be paid once the engine is installed and approved by the A&P. We would be happy to discuss the details in more detail if you wish. Call us at 800.627.5263.

Question: I am buying an airplane through my LLC and an airplane to rent at the local aviation school. Since the LLC will be new and will not have real business credit, how will this affect the lending rate? Would AOPA Finance require a personal guarantee from members to support the loan? If so, is it a much more complicated process than buying the plane myself?

A: Owning an aircraft through an LLC does not affect the structure of the loan. The use, however, will be. Flight school leasebacks typically require a minimum down payment of 30% with shorter terms and higher rates. This is due to the increased usage and faster amortization than a personal-use aircraft. All members of the LLC would be required to personally guarantee the loan. Lenders will rely on personal income to determine creditworthiness, not the projected income of the LLC. Since this is a newly formed LLC, the process is no different than applying as an individual. Please give us a call so that we can discuss your specific situation in more detail and help you start the approval process.

Do you have questions for Adam? He is happy to answer them. Submit your questions here. Excellent rates. Excellent terms. Helpful and responsive representatives. Three good reasons to turn to AOPA aeronautical financing when you buy an airplane. If you need a reliable source of funding with people who are by your side, just call 800.62.PLANE (75263) or click here to request a quote.

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