How to obtain a big loan for pilot training?
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How to obtain a big loan for pilot training?
Hi everyone,
Could those of you who have experience with taking out big loans for pilot training suggest what is a good way of approaching a bank to obtain a loan?
Given that most cadet schemes are £60-85K, I doubt that most people can pull out that sort of money from their own pockets. I am looking for around 25-30K from the bank at the moment.
The thing I don't get is - banks look at your income over the last 4 weeks to assess whether or not you are eligible... but how does that help if training takes 2 years? I thought the whole idea is that once you get a job at the end, you can pay the loan off and that's what they should be looking at.
I've applied for the FlyBe/ PTC scheme hence looking around for loan possibilities right now just in case. So far I have been refused by my bank as they say that they can't afford to take the risk in case training goes "wrong", and also because I haven't been working for the last 4 weeks (hence no income), although I find that highly irrelevant as no one can work during their training anyway. I also have a meeting with Barcleys on Friday as they are linked with PTC but I'm guessing they might say the same thing... there must be a way round this surely?
If not, I guess its another few years of saving up
Any help much appreciated.
Could those of you who have experience with taking out big loans for pilot training suggest what is a good way of approaching a bank to obtain a loan?
Given that most cadet schemes are £60-85K, I doubt that most people can pull out that sort of money from their own pockets. I am looking for around 25-30K from the bank at the moment.
The thing I don't get is - banks look at your income over the last 4 weeks to assess whether or not you are eligible... but how does that help if training takes 2 years? I thought the whole idea is that once you get a job at the end, you can pay the loan off and that's what they should be looking at.
I've applied for the FlyBe/ PTC scheme hence looking around for loan possibilities right now just in case. So far I have been refused by my bank as they say that they can't afford to take the risk in case training goes "wrong", and also because I haven't been working for the last 4 weeks (hence no income), although I find that highly irrelevant as no one can work during their training anyway. I also have a meeting with Barcleys on Friday as they are linked with PTC but I'm guessing they might say the same thing... there must be a way round this surely?
If not, I guess its another few years of saving up
Any help much appreciated.
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Your going to have to secure it off some form of capital.
And the banks are correct it is an unacceptable level of risk lending for pilot training.
I have a sneaky suspicion that the number of bankrupcys is going to go through the roof in the next 36 months. Not that they have given unsecured loans to pilots for years.
And the banks are correct it is an unacceptable level of risk lending for pilot training.
I have a sneaky suspicion that the number of bankrupcys is going to go through the roof in the next 36 months. Not that they have given unsecured loans to pilots for years.
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You need your parents to underwrite the loan for you.
So basically it's not possible then?
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Not a chance in hell.
Unless you can get another family member to do it.
I was in the same situation as you when I was 20 with a cabair scholorship which meant working as a slave for 2 years as an instructor living in a caravan.
My parents refused point blankly to cover the loan.
10 years later I earned all the money and completed the training for 20k less than they were asking at the time.
Unless you can get another family member to do it.
I was in the same situation as you when I was 20 with a cabair scholorship which meant working as a slave for 2 years as an instructor living in a caravan.
My parents refused point blankly to cover the loan.
10 years later I earned all the money and completed the training for 20k less than they were asking at the time.
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Not a chance in hell.
Unless you can get another family member to do it.
Unless you can get another family member to do it.
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your young start looking at ways of earning the cash.
Once you put your mind to it and understand that you have to sacrifice alot to get to where you want to go it actually doesn't take that long to get it together. Especially if you not paying through the nose for the premium priced product.
Work hard for the next 5 years and save every penny and you might be suprised how much better off you are in the furture compared to if you did borrow.
Once you put your mind to it and understand that you have to sacrifice alot to get to where you want to go it actually doesn't take that long to get it together. Especially if you not paying through the nose for the premium priced product.
Work hard for the next 5 years and save every penny and you might be suprised how much better off you are in the furture compared to if you did borrow.
I was in the same situation as you when I was 20 with a cabair scholorship which meant working as a slave for 2 years as an instructor living in a caravan.
My parents refused point blankly to cover the loan.
10 years later I earned all the money and completed the training for 20k less than they were asking at the time.
My parents refused point blankly to cover the loan.
10 years later I earned all the money and completed the training for 20k less than they were asking at the time.
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your young start looking at ways of earning the cash.
Once you put your mind to it and understand that you have to sacrifice alot to get to where you want to go it actually doesn't take that long to get it together. Especially if you not paying through the nose for the premium priced product.
Work hard for the next 5 years and save every penny and you might be suprised how much better off you are in the furture compared to if you did borrow.
Once you put your mind to it and understand that you have to sacrifice alot to get to where you want to go it actually doesn't take that long to get it together. Especially if you not paying through the nose for the premium priced product.
Work hard for the next 5 years and save every penny and you might be suprised how much better off you are in the furture compared to if you did borrow.
Thanks
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A bank in the UK will nearly always apply a maximum lending ceiling of £25,000 for unsecured borrowing. Even then it will want to be convinced that you are both a good credit risk (from your established credit history report) and able to satisfy the repayment schedule from your income. They are not really interested in what you might be earning as a result of the loan, nor within certain bounds do they much care what you want the money for, other than certain regulatory restrictions that apply to specific types of borrowing.
For sums larger than this, you are almost certainly going to be looking at secured borrowing. The "security" is normally an asset acceptable to the bank. Nearly always this involves a house where the unencumbered portion of the value (the equity) exceeds the value of the loan being sought. If agreement is reached, the lender (bank) will take a legal charge over the property. In essence this becomes a second mortgage, and allows the lender to apply for a forced sale of the property in the event the borrower defaults on the terms of the loan.
Notwithstanding this security, the lender will also want to satisfy themselves that the borrower can still meet the loan payments from their income.
Where a borrower doesn't have the necessary security or income or both, a guarantor can in some circumstances provide the necessary surity. Provided the guarantor can satisfy the lenders normal borrowing criteria (with regards to security and income,) then they agree that in the event of the primary borrower defaulting on the loan, they accept the same liability wholly as if they were the primary borrower.
There is no particular upper limit for this type of borrowing save as to the income multiples of either or the borrower and guarantor, or the percentage of equity in the property or securing asset.
In the UK and Spain, a bank called BBVA specializes in this type of secured lending and has tailored products that it markets through the main training providers. They may lend the entire course fees, and if required, monies to cover living costs during the course. They will also provide a "repayment holiday" of around 18-24 months to enable no repayments to be required for the duration of the course and a short period thereafter. They might if required, also allow a further repayment holiday of 25% of the normal repayment instalments for the first 2 years of the repayment schedule. There are additional set up costs (fees) for the loan. You should also understand that the "repayment holiday" is simply a vehicle to allow a staged increase in the repayment schedule. The variable rate interest (currently 3% set at Base rate +2.5%) will continue to accrue from the date the monies are drawn down. For any given repayment term that clearly results in a much higher level of instalments for the rest of the repayment term beyond the "holiday"!
Just as with any secured lending the rate of interest can rise substantially if the Bank of England base rate rises (the margin currently +2.5%) will remain the same margin throughout the loan. The bank will want to ensure that any borrowing plus existing mortage (there can only be one) does not exceed around 60% of the current market value of the property. They will also want to ensure the lender, or more likely the guarantor, can afford the normal schedule of repayments in the event that the primary borrower defaults.
This type of borrowing is the most common vehicle with the big integrated providers, and clearly it comes with significant risk. It won't suit everybody, and in many cases most would be borrowers wouldn't qualify for it.
For the British airways FPP scheme, the airline stated that it might in certain circumstances stand as guarantor for qualified applicants who couldn't raise the necessary security through their own means.
Secured borrowing is (subject to their own terms,) potentially available to qualified, quality, and suitable applicants, though most major lending institutions, although the one mentioned specializes a product in this particular arena. The borrowing criteria are going to be broadly similar.
For sums larger than this, you are almost certainly going to be looking at secured borrowing. The "security" is normally an asset acceptable to the bank. Nearly always this involves a house where the unencumbered portion of the value (the equity) exceeds the value of the loan being sought. If agreement is reached, the lender (bank) will take a legal charge over the property. In essence this becomes a second mortgage, and allows the lender to apply for a forced sale of the property in the event the borrower defaults on the terms of the loan.
Notwithstanding this security, the lender will also want to satisfy themselves that the borrower can still meet the loan payments from their income.
Where a borrower doesn't have the necessary security or income or both, a guarantor can in some circumstances provide the necessary surity. Provided the guarantor can satisfy the lenders normal borrowing criteria (with regards to security and income,) then they agree that in the event of the primary borrower defaulting on the loan, they accept the same liability wholly as if they were the primary borrower.
There is no particular upper limit for this type of borrowing save as to the income multiples of either or the borrower and guarantor, or the percentage of equity in the property or securing asset.
In the UK and Spain, a bank called BBVA specializes in this type of secured lending and has tailored products that it markets through the main training providers. They may lend the entire course fees, and if required, monies to cover living costs during the course. They will also provide a "repayment holiday" of around 18-24 months to enable no repayments to be required for the duration of the course and a short period thereafter. They might if required, also allow a further repayment holiday of 25% of the normal repayment instalments for the first 2 years of the repayment schedule. There are additional set up costs (fees) for the loan. You should also understand that the "repayment holiday" is simply a vehicle to allow a staged increase in the repayment schedule. The variable rate interest (currently 3% set at Base rate +2.5%) will continue to accrue from the date the monies are drawn down. For any given repayment term that clearly results in a much higher level of instalments for the rest of the repayment term beyond the "holiday"!
Just as with any secured lending the rate of interest can rise substantially if the Bank of England base rate rises (the margin currently +2.5%) will remain the same margin throughout the loan. The bank will want to ensure that any borrowing plus existing mortage (there can only be one) does not exceed around 60% of the current market value of the property. They will also want to ensure the lender, or more likely the guarantor, can afford the normal schedule of repayments in the event that the primary borrower defaults.
This type of borrowing is the most common vehicle with the big integrated providers, and clearly it comes with significant risk. It won't suit everybody, and in many cases most would be borrowers wouldn't qualify for it.
For the British airways FPP scheme, the airline stated that it might in certain circumstances stand as guarantor for qualified applicants who couldn't raise the necessary security through their own means.
Secured borrowing is (subject to their own terms,) potentially available to qualified, quality, and suitable applicants, though most major lending institutions, although the one mentioned specializes a product in this particular arena. The borrowing criteria are going to be broadly similar.
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I know you mentioned a figure in your post, but I would definately advise you to over-budget as much as you possibly can. The flight training can cost anywhere between £40-£70k depending on method, time frame and providor, but really this is just a baseline cost. You will also need to factor in any said loan repayments, 2+ years of no work whilst training, lodging, food, car insurance, petrol and all the little stuff down to hair cuts that all add up whilst not in employment.
It isnt all doom and gloom - far from it. Just be realistic and over budget is all im encouraging. With that being said, if you can get onto some kind of mentored scheme, alot of these come with some kind of bursary system or part sponsorship. Yes, these are extremely competitive to obtain, but such is the nature of the entire industry.
Unfortunately the current economic state has had a negative effect on banks lending (but hey, its the over-lending that contributed to the issue in the first place!). With that said, there are still banks out there that are still lending - and if you can get onto a mentored scheme, any form of paperwork with an airlines name written all over it does help when trying to obtain a loan.
As I am sure you have read numerous times on this forum though, qualifying with your licences is by far the easiest part. Jumping from a twin prop 4-seater aircraft up to an airliner with 2 jet engines and close to 200 seats is an extremely difficult thing to do. Whilst I do not proclaim to be anything close to an expert on the industry, times have changed. Banks arent really taking risks, and nor are airlines. Expect to pay your way into an airline (if your lucky), or float around for several years in GA networking/instructing/sweating your butt off. Neither is a bad thing, just depends how you see it.
Have you tried applying for the Cathay Pacific cadet scheme? Its fully mentored, fully paid for, and with a job on a wide-bodied airline at the end of it all. And the best bit is that they are actively recruiting as we speak. I personally know of 2 friends who have been offered a placement on the scheme this past week alone. What a way to start a career!
Best of luck with it all. Persistance and positive thinking will get you to where you want to be eventually...
It isnt all doom and gloom - far from it. Just be realistic and over budget is all im encouraging. With that being said, if you can get onto some kind of mentored scheme, alot of these come with some kind of bursary system or part sponsorship. Yes, these are extremely competitive to obtain, but such is the nature of the entire industry.
Unfortunately the current economic state has had a negative effect on banks lending (but hey, its the over-lending that contributed to the issue in the first place!). With that said, there are still banks out there that are still lending - and if you can get onto a mentored scheme, any form of paperwork with an airlines name written all over it does help when trying to obtain a loan.
As I am sure you have read numerous times on this forum though, qualifying with your licences is by far the easiest part. Jumping from a twin prop 4-seater aircraft up to an airliner with 2 jet engines and close to 200 seats is an extremely difficult thing to do. Whilst I do not proclaim to be anything close to an expert on the industry, times have changed. Banks arent really taking risks, and nor are airlines. Expect to pay your way into an airline (if your lucky), or float around for several years in GA networking/instructing/sweating your butt off. Neither is a bad thing, just depends how you see it.
Have you tried applying for the Cathay Pacific cadet scheme? Its fully mentored, fully paid for, and with a job on a wide-bodied airline at the end of it all. And the best bit is that they are actively recruiting as we speak. I personally know of 2 friends who have been offered a placement on the scheme this past week alone. What a way to start a career!
Best of luck with it all. Persistance and positive thinking will get you to where you want to be eventually...
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Tsym, you mention Cathay, but I applied about 15 months ago and still haven't got a reply....I've emailed them a few times because I know 4 people who are on the scheme....and another one who recently had an interview in London (who applied over 2 years before this!!!!), but when I emailed asking about that, they told me they weren't interviewing in London any time soon. I knew that wasn't true, so I wouldn't hold much hope for that scheme realistically.
How likely are BBVA to provide loans if you aren't with CTC? I thought that was a special arrangement for them.....do you think they would be interested in loaning for PTC/Flybe scheme?
How likely are BBVA to provide loans if you aren't with CTC? I thought that was a special arrangement for them.....do you think they would be interested in loaning for PTC/Flybe scheme?
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Have you thought about a stint in the forces?
The reason I ask is because you will be doing deployments for 1-6 months and you can't really spend any money whilst your gone. I'm not talking about military pilot training just a regular service job. It doesn't even have to be a fighting job. Logistics jobs/radar opeator/aviation ground crew all pay ok and and you only have to commit for a few years (not sure what the minimum is now).
You can save all your cash or do it as you go. I would do it as you go cause you would be less inclined to spend it on something else which can happen if you have a big chunk of money in the bank. It won't get you in to an integrated course but it will get you through modular for sure. In 4 years time the job situation should have improved greatly by then.
Cheers
You can save all your cash or do it as you go. I would do it as you go cause you would be less inclined to spend it on something else which can happen if you have a big chunk of money in the bank. It won't get you in to an integrated course but it will get you through modular for sure. In 4 years time the job situation should have improved greatly by then.
Cheers
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Bealzebub,
That is just about the most helpful reply I have ever read on this forum. Really appreciate all the info. I think I understand the whole concept much better now.
I am only thinking of a loan due to the FlyBe scheme with PTC. I am paying 50% of the cost myself. But I doubt I can secure the rest as I don't think I can ask anyone to act as a guarantor unfortunately. I will go to the Selection day for the experience given I already paid for it. Or maybe something will work out... we'll see.
I would never look at getting a loan unless a job was on offer at the end of training. Once again thanks for the info. I will see what I can conjure up.
Tsym,
I was just looking at the Cathy Pacific scheme today but it keeps telling me "We apologise the page that you requested is not available at the moment" when I try to click "application" or "career development" or "program". Dunno if that's just a recent problem... will see if it opens up tomorrow. Thanks.
That is just about the most helpful reply I have ever read on this forum. Really appreciate all the info. I think I understand the whole concept much better now.
I am only thinking of a loan due to the FlyBe scheme with PTC. I am paying 50% of the cost myself. But I doubt I can secure the rest as I don't think I can ask anyone to act as a guarantor unfortunately. I will go to the Selection day for the experience given I already paid for it. Or maybe something will work out... we'll see.
I would never look at getting a loan unless a job was on offer at the end of training. Once again thanks for the info. I will see what I can conjure up.
Tsym,
I was just looking at the Cathy Pacific scheme today but it keeps telling me "We apologise the page that you requested is not available at the moment" when I try to click "application" or "career development" or "program". Dunno if that's just a recent problem... will see if it opens up tomorrow. Thanks.
Last edited by Bearcat F8F; 11th Jan 2012 at 21:59.
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In response, one was completely ab-initio, the other had fATPL with ~200hrs. The latter had floated around in the general aviation world doing what he could to get by for the past 2yrs.
PJN reported earlier this year that they were in need of 200+ pilots; The 2 guys mentioned above had offers made in the past week.
When applying for any schemes like this, you really are just playing the odds I guess. For every 1 that hears something back, there will be several hundred who dont. But hey, if you don't apply you stand less chance of hearing a thing in the first place.
I had another friend who got onto the scheme roughly 2 yrs ago too - he followed up his application with a courtesy phone call which was received nicely. I cannot speak for the 2 guys this week, but it won't necessarily go against you.
Besides this, I'd keep a close eye on the MCP schemes. FR are apparently extremely short on guys for the coming summer, and Ezy have (or so rumour has it) been trying to poach guys using recruitment stands outside of certain said airline crew rooms. Don't shoot the messenger - just passing on the very same rumours I had received from friends within those companies.
There are definately places out there for low hour guys; but paying for the type rating is pretty much a guarantee it seems. Just something else to factor into the costs.
PJN reported earlier this year that they were in need of 200+ pilots; The 2 guys mentioned above had offers made in the past week.
When applying for any schemes like this, you really are just playing the odds I guess. For every 1 that hears something back, there will be several hundred who dont. But hey, if you don't apply you stand less chance of hearing a thing in the first place.
I had another friend who got onto the scheme roughly 2 yrs ago too - he followed up his application with a courtesy phone call which was received nicely. I cannot speak for the 2 guys this week, but it won't necessarily go against you.
Besides this, I'd keep a close eye on the MCP schemes. FR are apparently extremely short on guys for the coming summer, and Ezy have (or so rumour has it) been trying to poach guys using recruitment stands outside of certain said airline crew rooms. Don't shoot the messenger - just passing on the very same rumours I had received from friends within those companies.
There are definately places out there for low hour guys; but paying for the type rating is pretty much a guarantee it seems. Just something else to factor into the costs.
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3 or 4 years ago there were 2 loan schemes available - the 'Professional Studies Loan' and the 'Career Development Loan'.
The Professional Studies Loan was offered by HSBC and for Pilot training you could borrow up to £75k ish, almost the full cost of an Integrated course. The loan had a deferred repayment date, typicaly you started repaying when you got your first job. And I believe the loan was even offered unsecured! I think however the loan was exclusive to Integrated students at OAA.......and maybe one or 2 other Integrated FTO's.
The Career Development Loan was slightly different. The total amount offered was only £8 to £10k(secured or unsecured). It did however come with a very low interest rate, mainly due to the fact it was partially government funded. The repayment date could also be deferred til you were earning again. The only 2 banks offering the scheme at the time were The Royal Bank of Scotland and, I think, Loyds TSB.
For both schemes you were expected to submit a Business Plan with your application. Obviously takes a bit of time and effort to compile one.....but hey ho...sometimes you have to jump through hoops if you want something.
Not sure if these types of schemes are still available in the present climate but im sure a bit of googling will turn something up, if its there.
The Professional Studies Loan was offered by HSBC and for Pilot training you could borrow up to £75k ish, almost the full cost of an Integrated course. The loan had a deferred repayment date, typicaly you started repaying when you got your first job. And I believe the loan was even offered unsecured! I think however the loan was exclusive to Integrated students at OAA.......and maybe one or 2 other Integrated FTO's.
The Career Development Loan was slightly different. The total amount offered was only £8 to £10k(secured or unsecured). It did however come with a very low interest rate, mainly due to the fact it was partially government funded. The repayment date could also be deferred til you were earning again. The only 2 banks offering the scheme at the time were The Royal Bank of Scotland and, I think, Loyds TSB.
For both schemes you were expected to submit a Business Plan with your application. Obviously takes a bit of time and effort to compile one.....but hey ho...sometimes you have to jump through hoops if you want something.
Not sure if these types of schemes are still available in the present climate but im sure a bit of googling will turn something up, if its there.
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Guys I keep getting the same screen for the Cathey Pacific application!
From here:
Cathay Pacific - Careers : Careers Home
When I click on Application, I get this:
http://www.cathaypacific.com/cpa/en_...ot_application
Its kinda difficult to apply when there's no place to apply...
MIKECR, career Development loan is still very much available. And it is around 10K like you said. This unfortunately doesn't help most of us looking to apply for cadet schemes. I would imagine most people get a loan for more than 30K.
I will phone up BBVA also to see if there's any chance!
From here:
Cathay Pacific - Careers : Careers Home
When I click on Application, I get this:
http://www.cathaypacific.com/cpa/en_...ot_application
Its kinda difficult to apply when there's no place to apply...
MIKECR, career Development loan is still very much available. And it is around 10K like you said. This unfortunately doesn't help most of us looking to apply for cadet schemes. I would imagine most people get a loan for more than 30K.
I will phone up BBVA also to see if there's any chance!
