Aircraft Financing for Beginners

Learn some of the basics involved in private aircraft financing

Private aircraft financing has a lot of similarities to automobile financing, just on grander terms. Things like taxes, loan document fees and a potential borrower’s credit history all come into play. Also, much like car or home loans, aircraft loan rates are forever fluctuating.

Take the time to familiarize yourself with the process of private aircraft financing so that you'll know what to expect while going through the process. Here are some resourceful links to help get you started. Think of this little tutorial as aircraft financing for beginners.

1. Learn about aircraft financing rates that you'll come across when financing an airplane.

2. Utilize an aircraft loan calculator to calculate the cost of commercial aircraft loans.

3. Educate yourself on the insurance required when securing private aircraft financing.

 

Educate yourself on aircraft loan rates and how they are calculated

Aircraft loan rates are calculated in a similar fashion to that of a car loan. However, the price of the aircraft is usually significantly more than a vehicle; therefore, the time line for purchase can be considerably longer. But most aircraft financing loans are structured on a monthly basis with interest rates comparable to the current cost of money. (Meaning they'll be in the neighborhood of current car loan rates based on the credit and financial history of the borrower.)
Try: Visit the website for US Aircraft Finance for additional information on aircraft financing rates. Warren West, another aircraft financier, also discusses interest rates in terms of the current libor and prime interest rate.

Use a loan calculator to calculate aircraft loan rates and how much you can afford

When it comes to airplane financing, one must determine how much airplane you can afford. Using a loan calculator will help determine that amount. By plugging in the cost of the plane, any applicable taxes, loan processing fees, sales tax and any other pertinent information, one may calculate how much plane you can buy. This is similar to how a home mortgage or car loan is figured.
Try: Go to the website for E-Aircraft Loans to utilize a free cost calculator. The company AV Fund Source also provides a loan calculator for potential clients to utilize.

Learn about the insurance required when securing commercial aircraft loans

Much like the purchase of a home or a car, aircraft financing terms stipulate that one must carry a certain amount of insurance along with the plane. Because private aircrafts can be quite pricey, the monthly payment on the insurance can be quite significant. Be sure that you factor in insurance costs along with your purchase, operational and tax costs when buying a private aircraft.
Try: Visit the website for Rukavina Aircraft Insurance to learn more about the many forms of aircraft insurance they offer. Also check out the website for Aircraft Banking Insurance. They detail the costs and coverage associated with private aircraft insurance.

Copyright © 2011 Business.com, Inc. All Rights Reserved.

---