The aircraft finance industry can be difficult to navigate. Many banks want to lend only to borrowers that don’t really need financing. If you’re looking for financing, you may have a hard time finding the right capital source. Below are some steps you can follow to ensure that you get the right financing for your purchase.
1) Start With the Plane
Many aircraft financiers aren’t very concerned about the aircraft itself. However, as the buyer, you should be. Make sure you are getting the right price on the right aircraft. Too much or too little plane can cause financial struggles.
2) Choose Your Buyer
This may seem like a strange consideration, but there are multiple options for who actually buys the plane. For example, a company may have a harder time getting a loan compared to the CEO or owner. Additionally, there are liability, regulation and operation considerations. Consider hiring counsel to help with this question.
3) You Don’t Have To Buy
Leasing is an option for aircraft just like other vehicles. Generally, the key consideration between buying and leasing is tax considerations. If you can’t use the depreciation, you probably want to lease.
4) Evaluate Your Financing Options
Your loan can be based on the value of the asset, your credit, your relationship with the lender or a combination of all three. Consider whether having a non-recourse option is a high priority. Examine all your available options.
5) Get Proposals
No matter how you look at it, buying an aircraft is a large purchase. So, get proposals from potential financiers before making a move. When you have multiple options available, you have more leverage and can find better terms. It just makes sense to shop the deal around.
Try to avoid situations in which you are rushing or overly limited. Take time to negotiate the deal and be ready to walk away if the price isn’t right. This may seem obvious, but many first-time buyers are uncertain of their leverage and fail to properly negotiate.
7) Make the Deal
Once you have everything in place, it is time to make the deal on financing and purchase the aircraft. This can take some time as even the most affordable planes are not inexpensive assets.
These steps will help you make smarter decisions when financing your business aircraft purchase. It can be a difficult space to navigate, but by following the above steps, you will have a leg up on other buyers.