You Have Been Warned!!!!

[CUSTER]

What ever you do, do not pay up front.

I am a Q.F.I with a flying club and like most other clubs we have been affected (since xmas) by the bad wx etc etc etc. Income as a result of this has been very much on the slow side.

The other day at an instructor meeting we were told that we had to generate (extra) income to the club. I.E try to persuade our students to pay a lump sum up front in return for the usual incentives (% discount,free books,buy X hrs and get Y hrs for free).

This IMHO is totally wrong and just robbing YOU.

I am now doing the opposite I'm telling all my students NOT to pay up front and to pay as you go or use a credit card , but guess what? pay by credit card and 3% gets added to the bill.

Something needs to be done and done quickly to stop this rip off mentality, but by who i don't know.
Please do not be the one who gets caught out by the unscrupulous who are taking advantage of your very expensive dream career, the savings at the end of the day are not that great and to be blunt i'd rather spend an extra £100 than lose a £1000. wouldn't YOU.

And before you ask yes i am looking to work somewhere else.

[Wee Weasley Welshman]

Thank you for that Custer.

WWW

[MJR]

If I may just make the comment that it is not necessarily the case that all FTO's offering money up front packages are in the business of ripping people off. I work part time for a FTO which does just that and has done so for a long time. The reason being that because it can budget better it can offer the student a significant discount on the hourly rate. My FTO does not make a surcharge for credit cards however, but this is not unheard of, albeit it tends to be with a smaller organisation unable to absorb the bank charges. As I am sure we all know a certain level of protection is afforded by using a credit card.

I appreciate Custers sentiment in trying to protect peoples cash but the last thing we need is generalised statements about practices which can be in fact in everyones best interest.

[Polar_stereographic]

I think that MJR has a point.

It's long been the practice, that is in all the time that I've been in aviation (15 years plus), to offer a discount for up front payment.

I don't see whats wrong with that. It brings the FTO's cost down, and that is reflected in the rate.

Naturally there is a risk, and the trick is to try and establish how big a risk it is. Putting down a grand for hours building, knowing that you'll fly that off in a month is to me an acceptable risk. I would not be so inclined to put money down that's going to take months and months to use up as the risk therefore increases.

Like all things, it's a case of evaluating the benefit versus risk, and it might be worth the risk in some cases. Always worth sniffing around, asking searching questions. If it looks iffy, you know the risk is greater. If it's a sound FTO, busy club, been around for ages etc, no guarantee, but probably reduces the risk.

Each one to their own, and this is my point of view.

PS

[AMEX]

AMS
I think Custer's warning is about a certain type of flying school you can find in any country but who have no knowledge of the word Honesty. So if you think you can get your money back just because you asked for it, I am afraid you are mistaken. I know because I have tried it and burnt my fingers. The help of a lawyer didn't change a thing. It took many years and a fair amount of money to be told by the court there was nothing that could be done anymore....
As someone mentioned above, perhaps you can pay small chunk at a time just to get that 5% discount but never pay up front. Do run a search on this website and I am sure you will find a goldmine of good advices (SECOAT's demise had a very significant impact on many student pilot's nerves).
I know we are all short of £££ but the real saving is not in the 5% discount you might get but in how quickly you get the hang of flying which is often connected with the amount of pre study done before a course, flight, flight test,...., back seat rides you may have done, etc.

[Julian]

Good point.

I recently heard a story of one school which gave you a discount if you paid money up front but if after your flying you had any money left you did not want to fly off they would levy a 25% admin fee on the balance!!!

Think the moral is pay in the smallest amounts possible....

Julian.

[Polar_stereographic]

Absolutly. Buyer be ware and all that.

It's amazing how gullable people can be. I think the worst example is what European Flyers used to do with that Eusoshare scheme, where they where sold a share for reduced rent - only thing was you did not own any hardware, so when it went belly up, you had nothing to show for it.

That's not to say that there are not some good deals around if you pay up front, most of which (note the word MOST) are reputable. The sharks are by far in the minority, but it's up to you to work out who they are because they sure as hell are not going to tell you.

Reality check time. Do your homework and evaluate if it's for you or not.

PS

[CUSTER]

I have to agree that a saving of any sort is always welcomed.

I dont think i explained myself well enough in my first post, if the saving offered to the student is genuine and honourable it is worth having.In the case that i am refering the cash flow at the club has been lacking in the last few months and rumours about not being paid have on occasion been muted.
We (instructors) are being pushed to inprove the cash flow, not to offer the student a genuine discount but to improve the financial standing of a business and in my opinion prop it up. If the said business goes belly up a fair number of students are going to be out of pocket. Only this week I advised one student who wanted to pay £3500 up front for hour building to pay monthly, but only because i know what is going on behind the scenes

At the end of the day all i want to do is highlight the fact that this sort of practice is going on, At some places not all and to hopefully stop a few of us being taken for a ride.

The message has to be don't give up your cash until you are absolutley certain of the financial security of the place you intend to train.

[Send Clowns]

Before I post my comment I must say I work for an FTO/flying club (on the FTO side), but also suffered both in losing a job and from having paid upfront for some training in an FTO that went down.

The concept of paying upfront is not just a rip off for the company. The extra commitment from the student not only allows better planning by the school but also helps secure its line of credit, reducing interest costs. Thus it has real value reflected in the discount it allows.

If the 3% surcharce for credit cards is a rip off, complain to Visa. It is a disgrace that had I paid a £7000 installment this way to my training provider they would have charged £210 for one transaction, and the schools cannot just absorb that kind of fee, it would be unfair on the cash customer. There are other ways of protecting prepayments - my FTO would allow an escrow account (joint holding, only paying the company as the training was given) if a student requested, though it did not publicise this (it is better for the company to have the cash, it reduces interest, so this was not in their interest to encourage).

On the other hand there are training providers, such as my current employer, which do not allow a student to pay upfront for flying.

This is another factor in deciding which training provider to use, and another reason why I would advise anyone thinking of embarking on such an expensive course to compare all availabe options across as broad a spectrum as possible, and across as many criteria as can be judged.

Having said all that, it does sound like Custer's concerns are perhaps justified in this case.

[niknak]

Good comments one and all, however, there is an alternative to using the credit card.
If you can afford to pay up front by using a credit card or your own savings, then its highly likely that a bank or financial institution will be prepared to lend you the money to do so.
Until you've repaid the total amount owing, the finacial institution who lent you the money have a legal obligation to refund you should the flying school become insolvent.
(Remortgaing doesn't cover this scenario).

[Ludwig]

Niknak, I'm not sure about your last thought re the banks obligation to refund you if the FTO goes bust. I think you will find that if they lend you the money which you then give to the FTO, that's your problem. The reason the credit card company thing works is becasue of the contractual relationship between the credit card company and the supplier. Any lawyers like to comment?

Custer, Am I missing something, surely the object of any business is to make money for its owners, not provide employment to staff or even services to punters. The services is the means to the end, and the staff merely tool to get there. If you think the outfit you work for are dodgy, or you don't like their style, why don't you leave and go and work somewhere else?

So we can all avoid it, perhaps you would like to tel us who this dodgy operator is?

[Julian]

I believe it depends on if its a personal loan or a loan given for a specific purpose. Probably something to do with the consumer credit act, no doubt someone on here will have more legal knowledge than me..which isnt hard really :)

Anyway, a friend was having their bathroom completely remodelled and was going to pay cash, the salesman offered them a discount if they took out credit as they got a kickback - the loan could be repayed as soon as the first payment was required and therefore both parties won.

Once everything was set up the company decided they had misquoted the price of the work and tried to ask for more money. The fact that my friend had signed a loan agreement turned in his favour as the contract was in fact between the loan company and the contractor and in the end they did the work for the original price quoted. No doubt they were leaned on heavily by the loan company!

Julian.

[Gunner B12]

I have no experience of this so please do not bite.

Have any of you in this situation, ie being offered such a discount asked for a directors guarantee on the payment?

Any reputable company director who is not trying to prop up a failing cash flow should have no problem signing such a guarantee. this would negate his limited liability and then the only problem you would have is whether he has the assetts to back his word.

I may be totally wrong but someone should be able to clarify this. The thing is, if they wont committ to you, don't committ to them.

[Rich-Fine-Green]

I know a school in Aussie that charged an extra 3% for credit cards.

Everyone complained.

Solution: They increased rates by 5% then offered a 5% cash discount.

No complaints, No credit cards, No bad debts, More business.

Go figure that one!