Aircraft loans can be a great option for people who want to borrow money and make smaller monthly payments. These types of loans also have longer repayment periods, so you must do your research before getting one. In the long run, it can be more expensive to take out a loan.
Why? Because in general terms, longer-term loans will have higher interest rates and payback periods which means you will end up spending that much more than if you had just taken shorter-term ones.
A loan term is the length of time it will take for a borrower to pay off their debt. The more payments they make, the sooner this date becomes reality.
Loans can be short-term or long-term notes, and there are many different types available to suit your needs perfectly.
Some that might better fit what you need now include variable-rate mortgages and fixed rates, which have lower interest costs over long periods but may increase periodically depending on market conditions such as adjustable mortgage loans.
Learn more about loans and how long it lasts.
What is an Aircraft Loan?
A loan means a debt obligation sold to an investor that can be used as collateral for loans, such as those marketed and made available by lenders. This type of financing is typically offered in exchange for kit or other aircraft accessories with varying prices attached depending on their value.
Provided, however, that a loan (or similar financing arrangement) provided by someone other than an aircraft manufacturer for purchase of the plane as part of their business plan should not be deemed an aircraft loan.
It is important to note that unless the proceeds from a loan or similar financing arrangement have been advertised, specifically, as being used for the acquisition of an airplane, then it cannot be considered ” aircraft-related.” And so will not qualify under your finance policy guidelines.
A type of aircraft loan is its identity. It starts with the type and propulsion, like piston-driven or turboprop planes.
In today’s market, you won’t find many manufactured before 1960 due to their limitations on power output that makes it difficult for them to fly long distances without stopping at an airport.
The serial number is a unique code for each aircraft.
If you are looking to buy an airplane, the manufacturer and model must be specified at registration time – once they are known, more detailed identification can take place during construction or upon delivery of new units (depending on if purchased pre-existing).
The search process also includes identifying which type of your desired plane falls into general aviation versus military “military procurement agency.”
The registration code adorns the exterior of a craft and identifies its country. The Certificate Of Registration lists serial numbers.
But it also includes information about financing documents like loans or leases, which are separate from aircrafts’ registration numbers to distinguish between them.
United States registrations start with N while other countries use another letter following their alpha designation (EIA).
The engines and propellers carry various identifying numbers to make them identifiable, including their make and model. You can find this information in the contract of sale, which is installed when you buy it from an official dealer.
Time = Money
A term is the amount of time that an aircraft loan lasts. For example, a typical commercial airplane might have an amortization period between 10-15 years, and most people prefer shorter terms because they depreciate faster than longer ones do.
Meaning there could be large changes in price if you bought one today but not again until after 15 or 20 more years.
| Aircraft Category | Down Payment | Terms | Sample Rates |
| Experimental / Kit (Airworthy) | 15% | Up to 20 years | 5.75-6.80% |
| Kits | 20% | Up to 10 years | 7.25-7.50% |
| Light Sport | 20% | Up to 15 years | 5.25-6.15% |
| Piston Single | 15% | Up to 20 years | 5.15-6.50% |
| Piston Twin | 20-30% | Up to 15 years | 5.95-6.50% |
| Turboprop & Turbine | 15-25% | Up to 20 years | <4.00-5.00% |
| Helicopters | 20-30% | Up to 10 years | 5.00-6.50% |
| Warbirds / Antiques | 30% | Up to 10 years | 5.50-6.50% |
Time is of The Essence
When considering different aircraft loans options, the length of your loan term can affect how much you’ll pay each month and what kind of interest rate that will be.
Your debt-to-income ratio, your lender, and credit score can impact how much a personal loan will cost. Checking for this information before applying could help you get the best possible terms to meet all of your needs as well.
Consider a financing company that understands your situation and is reliable for financing matters. JetLoan Capital takes care of the jet financing services, from financial review to proposal, credit underwriting, documentation, and closing/funding.
