What do you guys think about this loan package!?

[EMmariano]

Hello guys, I am pretty new here. So please welcome me.

I am a 22 year old philosophy graduate, and currently working. I intend to become a commercial pilot one day but I dont have the resources to send me into one. But then, there is this loan package called "study now, pay later" from a major airline in my country. They offer pilot training that would lead to a commercial pilot license with an instrument rating, and 217 flight hours under my belt.

Here is the details:

I had summarized the loan details. Its a rough estimate for now, but this is generally what its going to be. I had indicated which part I am not sure about or only a rough estimate;

a.) The loan is immediately payable after 2 years. (so there is a two year leeway)
b.) The loan is 15 years to pay.
c.) The original $40,000 will become $60,000 in the 15th year. If we follow the monthly paying rate for 15 years, so the end interest is $20,000.
d.) Three missed payment, they will take the collateral. (Not sure if it has to be consecutive or not)
e.) Parents income must be above $3,000 a month.
f.) The loan needs a collateral. And only 75% appraisal value of a collateral will be credited for the loan.

I have the necessary requirements and we have a collateral, and my parents earns pretty much that $3,000 a month requirement.

My question is if it is wise for me to pursue an airline business during such economic crisis? Although the airline that would provide my training does prioritize their students for an opening in their ranks.

Do this 217 flight experience will get me anywhere landing a 2nd officer job? Thanks!

[Bealzebub]

This is down to your parents really. $60,000 flat over 15 years is a repayment schedule of $334 per month. If your parents feel they can comfortably afford this loan and are prepared to help you in this way then fine. In reality they would have to take the viewpoint that the money is a write off.

The reality of obtaining a return on completion of the training is in all probability remote. The likelyhood of enormous cost overruns is very high and even then there are simply no guarantees.

I am sure your parents (like most parents) are always trying to do the best for their children, but they are rarely suicidal when it comes to the families assets no matter what dreams their progeny may be chasing.

The way to look at this is to substitute the "flying training" bit for a "automobile" or "vacation". Sometimes those things can be dreams to, but as expenditure they are more common and better understood. If you cant afford to potentially write the cost off, then do not borrow money you cannot cover to purchase it.

[skyhighbird]

Hi,

I'm surprised the airline in question is giving out a loan but without it being linked to some form of sponsorship or even some "marketing nonsense" saying that it is possible to get a job at the end with that specific airline - if only for marketing/advertising purposes to get people to apply.

Where did you get this information from. Was it from the airline website itself? I must admit that I am slightly suspicious. Airlines are airlines, not banks. Do you have anymore details?

As per your question as to whether its good to start now, that in itself is a debate and is currently ongoing on many threads here. Plus I dont think the regular prruners on this forum would have much information on the current economic position of the Philippines.

Also 217 hours is a typical definition of "low hour cadet". In europe, if you listen to senior pruners, they will tell you that at present a low hour cadet gets you nowhere unless you sell yourself to a pay-to-fly scheme.

You mention major airline - Philippine airlines? Cebu Pacific?

Send more details if you have it

[quant]

TBH my advice would be not to take out any loan! work hard and save :p

[EMmariano]

I'm from the Philippines. And the airline that offers that training is Philippine Air Lines. The bank (Allied Bank) that would offer this loan package is closely related to PAL since it is owned by the same person.

I guess, most of our local pilots here are being absorb by international ones since they are offering them much higher salaries. About 3x as much as what they would normally earn here.

Also, here are the details regarding the training guys.

Breakdown of Ab-initio training curriculum that would qualify a trainee
upon graduation for a Commercial Pilot License with Instrument Rating:

A.) Private Pilot Training Course:
i. Ground Training - 145 classroom training hours,
ii. Simulator, Basic Instrument Flying Procedure – 10 hours, and
iii. Flight Training – 53+30 hours.

B.) Commercial Pilot Training Course (with Instrument Rating):
i. Ground Training – 123 classroom training hours,
ii. Simulator, Advanced Instrument Flying Procedure – 20 hours, and
iii. Flight Training – 163+30 hours

Upon graduation, a trainee will have logged 217+00 flight hours to his
credit.

Thank you so much for your opinions. I would take them seriously under consideration. :ok:

And "Quant", I originally plan to work hard and save as much as I can, and start my training before reaching age 30. But this loan package does provide me an easier way to reach my goals.

[Mach086]

Allied bank in partnership with PAL sounds very fishy - see at the end.
I must admit though that I am surprised that PAL are offering this in conjunction with Allied bank.

You perhaps are right then that there is a mass exodus of PAL pilots. I read on the South-East asian forum that the PAL aviation batches are increasing so putting this and your loan together, its seems there may just be a genuine need for pilots in that area.

There you go wanabee pilots in europe! Marry yourself a nice filipina/ filipno, get dual citizenship and fly for Philippine Airlines!

EMariano, everything here sounds above board-up to a point. And there apparently seems to be a need for pilots in your region so I guess I can't really say hold of until the recession ends.

However remember, there is never a guarantee of a job. make sure you have a back up plan and make sure these payments can be made even if you are not working yet.

And just to warn you, just because it is Allied bank and PAL, it does NOT mean you will get 'preference' if you apply to PAL.

Call me a cynic but if the boss of PAL also owns Allied bank, something tells me that this is an ingenious way of making money from loans (20%) by using PAL as a very attractive brand name in order to attract customers.

[chongololo]

Read the fine print carefully, in fact it may even be worth hiring a financial lawayer to look over the details to make sure it's legit.
That might seem like over kill but these days there are many scams out there.
Tread carefully and good luck.

[EMmariano]

Hey guys, I just want to add some details. This is from "Greg Bockelman" (http://www.studentpilot.com/interact/forum/showthread.php?p=436381#post436381) in http://www.airlinepilotforums.com/fl...udentpilot.com (http://www.airlinepilotforums.com/flight-training/www.studentpilot.com)

Quote:
Hmm. What airline and what country? There are places in the good ole USA that are more than willing to take your money and make promises they cannot deliver.

I'm from the Philippines.

Quote:
That is a tad less than 6% interest rate. Red flag one for me because that is a low rate for this kind of loan.

The airline that offers that training is Philippine Air Lines. The bank (Allied Bank) that would offer this loan package is closely related to PAL since it is owned by the same person.

Quote:
What is the collateral? Another flag.

I got my parents' approval to use our house in Manila as a collateral. Its probably worth around $70,000 in my estimate. Since we have a neighbor that sold their house at $44,000 but is only haft of what our lot area is.

Quote:
How do they feel about losing the collateral if you default?

Although this might happen, we do have another house just outside of Manila. We can stay there if anything goes wrong.

But I had thought about this, so I have another back-up plan. There is this government monetary assistance agency called PAG-IBIG, that can provide filipinos a way to purchase their own house. I just need to be a contributor of this agency for 2 or 3 years, and the monthly payment is very, very cheap (I'm shy to say it here, since its very cheap hehe). Then I can take out another loan which is a 30 years to pay, with very low interest rate. Which would enable me to buy my parents' house that we had used as a collateral to pay for the training, and transfer the property to my name. So in short, if I can buy my parents' house and transfer the title in my name, and the money that I used to buy it, will be use to repay Allied Bank's loan package.

Back-up Plan Summary:

Allied Bank's Loan Package
-2 years leeway, before the my very 1st repayment of the loan.
-if in an event that we cannot afford to repay the loan through normal means, i would take out another loan from a government agency that offers very low interest rate, and is payable in 30 years.
-thus saving my parent's property, repaying the loan completely and transferring the title to my name.

Quote:
The time to prepare for a career in Aviation is when times are bad. That way, when things pick up, you are in a position to take advantage of it.

Thank you for such encouraging words. Hehe.

Quote:
That is a plus, but how much are you willing to bet on this? The financial stakes are pretty high.

Realistically speaking, it would be hard, if not even remotely possible for me to land a aviation career immediately after graduation. I was hoping to be able to prove myself in the training so that they might offer me a co-pilot job within PAL, or they might really consider me since they claim to prioritize their graduates. I hope this is true.

Quote:
Depends. What does the sponsoring airline have to say about that? Otherwise, 217 won't get you much especially in this economy.

yes sir, i had noticed that. Even Philippine Air Lines do require 500 flight experience. but they would prioritize their graduates into a job in their air lines if there are vacancies. They tell me that they are prepared to waive that flight experience, if ever, for their graduates.

any ideas how can I earn easy and cheap flight hours?

Quote:
My advice is to not go into debt. But that is me.

Thank you for this. I really appreciate it. I promise that I will take all your help in serious consideration.

[MartinCh]

as Bealzebub states, the monthly loan (if counting 40k to repay with 50% total interest over 15 years) would be $333.3pcm.
That presumes fixed interest rate - I worked it out to 5.8% annual rate if compounded monthly, ie 180 repayments.
The values would be a bit different if considering deferred payment, by 2 years as you state. Is that 15 years from start of the loan or after 2 years, when paying back kicks in? I guess interest is accrued over repayment holiday so the 5.8% APR wouldn't be exactly so. If 2yr hols plus 13/15yr repayment period, the actual monthly payments would be touch more.
Can't find any equation handling repayment holidays, Excel doesn't show it, bit sleepy.

If you don't expect interest rate cuts (fixed repayments and % rate vs tracker, pros and cons - see US, UK etc), that's OK deal, compared to current loan rates in the UK or US. Sure, collateral and parents as guarantors.

It would be nice to be able to get such loan as unsecured (in Europe)- some of us don't or won't have anything as security or someone co-signing the contract.
As others mentioned, read and understand or have it checked.

I've got no idea regarding recruitment with PAL or anything around the region for that matter. I wish I had my funding ready. I though I had. Inheritance not being sold, projected savings - in GBP, ouch :ouch: (studies, can't just swap country right now) etc.

Mach086,
Do you know any Filipinas with US/OZ passport? :hmm: I'd help out with UK papers :cool: I know, mixing business and pleasure, blah blah. I'd like to have it all.
Doesn't speaking no Tagalog hinder the chances?