LOANS AND FINANCING
AIRCRAFT LOANS
At United Aircraft Finance, we offer traditional finance loans designed specifically for Piston, Turboprop, and Jet aircraft. With loan terms ranging from 15 to 20 years, we provide flexible financing options to suit your needs. The down payment required for these loans typically falls between 15% and 30% of the aircraft's value, taking into consideration factors such as usage, age, and airframe hours. We understand the importance of tailoring financing solutions that align with your specific aircraft requirements and financial circumstances. Whether you're looking to acquire a Piston, Turboprop, or Jet, our team will work closely with you to structure a loan that fits your budget and allows you to embark on your aviation journey with confidence.
AIRCRAFT LEASING
At United Aircraft Finance, we understand the importance of acquiring essential business equipment that helps generate revenue. That's why we offer 100% financing options for aircraft, enabling you to start benefiting from this valuable asset right away. Our leasing plans provide flexibility with terms of up to 7 years, allowing you to choose fixed payments or opt for a balloon payment structure. With the balloon payment option, your payments will be comparable to a traditional term loan. It's important to note that this financing type is exclusively available to businesses rather than individuals. If your aircraft is considered essential business equipment, we can help you explore financing solutions that align with your specific needs and contribute to the growth and success of your enterprise.
Quick Tips On Traditional Airplane Financing
Affects Aircraft Valuation
Damage History: Classified as Minor, Moderate, and Major.
Minor: Little to no effect on the valuation of your airplane
Moderate: Can affect your valuation up to 20%
Major: Will significantly discount your valuation. Traditional lending is complex or will not finance at all.
Missing Logbooks.
Up to 15% reduction in value with incomplete logbooks. (Airframe to origination, engine to 0 SMOH, propeller is available)
New Avionics
Will often be discounted to 80% value of the avionics (no installation labor) immediately and 50% in the first 1-2 years.
Non-compliance of FAA Airworthiness Directives (ADs)
Low-time airplanes can increase the valuation
Mechanics liens on the aircraft
INSURANCE
When seeking aircraft financing, lenders typically have specific insurance requirements that must be met. These requirements include obtaining aircraft insurance coverage for full hull and ground in motion, as well as not-in-motion incidents, with a deductible of $1,000 or less. The minimum liability coverage should be $1 million to ensure sufficient protection. Additionally, the insurance policy should contain a breach of warranty clause, safeguarding the lender in case the pilot deviates from the coverage outlined in the insurance plan. It is essential that the insurance policy includes a lien-holder endorsement, which acknowledges the lender's interest in the aircraft and provides them with the necessary protection. While title insurance is generally not mandatory, it may be required if there are concerns or uncertainties regarding the aircraft's ownership history.
HOW MUCH CAN I AFFORD?
Several factors can affect your borrowing ability when it comes to financing an airplane purchase. One crucial aspect is your debt-to-income ratio, which measures the total payments you make each month on your debt in relation to your income. Lenders consider this ratio as an indicator of your repayment capability. Maintaining a low debt-to-income ratio, ideally around 30-35% maximum, can enhance your borrowing potential and increase the likelihood of loan approval, assuming your credit score is satisfactory.
Having an acceptable credit score is another vital factor that lenders evaluate. A solid credit history demonstrates your reliability in managing debt and repaying loans on time. Additionally, having enough liquidity is essential, as it ensures you can cover the down payment, purchase taxes, insurance, and hangar rent, with sufficient cash reserves remaining for several months of living costs. It's important to note that 401K values are typically not considered as liquidity unless you are close to retirement and can access the funds without penalty.
Having comparable debt, which refers to previous loans or financial obligations, can also play a role in your borrowing ability. Lenders may assess your ability to handle multiple debts simultaneously and evaluate your track record in meeting repayment obligations.
Verification of personal income is crucial for lenders to assess your financial stability. They typically require three years of 1040 taxes and W-2 or 1099 forms as evidence of consistent income.
Providing a personal financial statement offers a comprehensive view of your assets, liabilities, and net worth. This document helps lenders gauge your overall financial position and assess your ability to manage the financial responsibilities of aircraft ownership.
Lastly, prior experience with airplane ownership is often viewed favorably by lenders. It demonstrates your understanding of the true costs and responsibilities associated with owning and maintaining an aircraft.
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