AOPA Pilot Magazine - October 2018 - 106

NEWS & NOTES

AVIATION FINANCE

Five things you need to tell your finance broker
What you need to tell us to save you money
BY ADAM MEREDITH
OUR GOAL AT AOPA AVIATION FINANCE is
to save you as much money in interest rate
and loan fees as possible. To best do that, we
need answers to these five questions:
How will you own it? Who is going to
own the airplane? Will it be a sole-purpose,
limited liability company you establish?
That information is needed in advance to
correctly fill out the loan documentation.
Are you going to have multiple co-owners?
Some lenders won't deal with an aircraft
that has multiple partners; others limit
how many partners they'll accept.
How will you use it? Revenuegenerating aircraft are often referred to as
"essential-use" aircraft. These include aircraft used in charter operations, helicopter
tours, pipeline patrol, and parachute jumping. In general, if your plans entail essential
use of your aircraft, fewer lenders may be
willing to give you a loan. Likewise, if you
want to use the aircraft for flight training,
in a flying club, or on leaseback, these all
also fall into the essential use category.

How long will you keep it? Most of
our customers have their aircraft less than
four to five years. If that is your intent, you
may want to consider an adjustable-rate
loan instead of a fixed-rate loan. Let's say
you want a $500,000 loan. If you went with
an adjustable-rate loan (fixed for the first
five years, then adjusting annually) you
could save nearly $14,000 in interest over
the course of those five years compared to
a 20-year fixed-rate loan.
Any past problems? Tell us up front if
you have any past credit issues. Were there
past disputes or bankruptcies? Insurance
companies using heavy-handed tactics?
Don't just hope it won't be uncovered
during the loan application, because it
eventually will be uncovered. You're better off discussing any past problems at the
start of the application process.
How do you make your money? What
does your cash flow look like? The end-ofyear results may be good, but did the cash
come in lumps? Is it dependent on the

seasons, or whenever you happen to buy
and sell a company? Do you get paid a commission only when you make a sale? Do you
plan to retire?
Considering aircraft ownership? AOPA
Aviation Finance will make your purchase
experience as smooth as possible. For information about aircraft financing, visit www.
aopafinance.com or call 1-800-62-PLANE
(75263).
ADAM MEREDITH is president of AOPA

Aviation Finance.

TELL US IN ADVANCE:
* Ownership
* Use
* Length of ownership
* Past credit problems
* Income source

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106 | AOPA PILOT October 2018

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AOPA Pilot Magazine - October 2018

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