Aircraft financing - how does it work?
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How does it work?
You borrow money and use the borrowed money to buy a plane. In return you repay the lender more than you borrowed...or have I missed something....
You borrow money and use the borrowed money to buy a plane. In return you repay the lender more than you borrowed...or have I missed something....
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I understand that, obviously.
I was more after what the terms are. Is it like a car loan where you have to pay the remainder after 36 months? Or does it run over a longer period? What's the interest rates etc? Cash deposits?
Also, it's very likely that the aircraft you're buying comes from somewhere abroad, so you have to be able access the funds as it's not going through a dealer. How does that practically work? Does the aircraft need inspection by the lender, etc, etc.
I wanted some shared experiences, but it's clear that no one on this forum has financed their aircraft this way.
I was more after what the terms are. Is it like a car loan where you have to pay the remainder after 36 months? Or does it run over a longer period? What's the interest rates etc? Cash deposits?
Also, it's very likely that the aircraft you're buying comes from somewhere abroad, so you have to be able access the funds as it's not going through a dealer. How does that practically work? Does the aircraft need inspection by the lender, etc, etc.
I wanted some shared experiences, but it's clear that no one on this forum has financed their aircraft this way.
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Look again at post 8.
The amount you can borrow and the required deposit will depend on your personal circumstances.
PCP payment schemes are available only on new aircraft and over a period of up to 10 years.
For most people a personal loan is the way to go then nobody else has a lien on the aircraft. The money is in your account so you can buy from anywhere.
DO.
The amount you can borrow and the required deposit will depend on your personal circumstances.
PCP payment schemes are available only on new aircraft and over a period of up to 10 years.
For most people a personal loan is the way to go then nobody else has a lien on the aircraft. The money is in your account so you can buy from anywhere.
DO.
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I thought maybe this would be interesting.
Spoken to Close Aviation now and basically they finance against the aircraft, but quite conservatively. They look for re-salability. High time engines, high timed aircraft are obviously less attractive.
They said that for a very common type of aircraft, like a Cessna, Piper or Cirrus, 20-25% down is the norm. For more exotic types that there isn't a huge base of in Europe (like the Lake), it'd be around 30-35%. The loan runs over 5 years and can either have a ballon payment at the end, or be mortgaged down. It is possible to remortgage for engine service and upgrades. They didn't want to give me a rate (as it's variable), but they said it'd be in the range of a "car finance APR".
Spoken to Close Aviation now and basically they finance against the aircraft, but quite conservatively. They look for re-salability. High time engines, high timed aircraft are obviously less attractive.
They said that for a very common type of aircraft, like a Cessna, Piper or Cirrus, 20-25% down is the norm. For more exotic types that there isn't a huge base of in Europe (like the Lake), it'd be around 30-35%. The loan runs over 5 years and can either have a ballon payment at the end, or be mortgaged down. It is possible to remortgage for engine service and upgrades. They didn't want to give me a rate (as it's variable), but they said it'd be in the range of a "car finance APR".
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Hi,
I have discussed the same thing in Sweden with Siemens, GE, and a couple of others. The terms they offered were similar to your description, with about 15% down payment and a 5 year term with a balloon payment at the end that is typically rolled over to another 5 year term.
I was mainly interested in N-reg aircraft, but no one here was interested unless it was for biz jet type money.
I believe financing this kind of purchase is intelligent because it keeps your money free to work with. I have always made more with my money than what the interest payments to the bank are. However, with the amount of money you're talking about I guess it's easiest to pay cash, or use a line of credit.
If money is the main concern, I would suggest a joining solid group with a suitable aircraft and less than 10 members. I have been unable to find a decent group in Stockholm, and as result, I belong to several flying clubs and still can't get an aircraft on short notice or a weekend.
Good Luck!
I have discussed the same thing in Sweden with Siemens, GE, and a couple of others. The terms they offered were similar to your description, with about 15% down payment and a 5 year term with a balloon payment at the end that is typically rolled over to another 5 year term.
I was mainly interested in N-reg aircraft, but no one here was interested unless it was for biz jet type money.
I believe financing this kind of purchase is intelligent because it keeps your money free to work with. I have always made more with my money than what the interest payments to the bank are. However, with the amount of money you're talking about I guess it's easiest to pay cash, or use a line of credit.
If money is the main concern, I would suggest a joining solid group with a suitable aircraft and less than 10 members. I have been unable to find a decent group in Stockholm, and as result, I belong to several flying clubs and still can't get an aircraft on short notice or a weekend.
Good Luck!
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I have always made more with my money than what the interest payments to the bank are.
Perhaps you are one of the smart ones. But an awful lot of "City types" thought the same, until the economy took a dive, and then their vast geared-up paper fortunes were worth zilch. One would think somebody worth $100M would have stashed away $10M for a rainy day, but these people thought that that would be a waste, reducing their working capital by 10%... so all they ended up with was some Ferrari (bought on finance too), and a house with a 100% mortgage
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Just to get a rough quote, I contacted Hayward Aviation about insurance for a Lake and this was their response:
"Many thanks for your proposal form unfortunately we are unable to provide any terms for this Risk at this moment in time"
WTF?
The form they made you fill in was also pretty strange and not very straightforward - it would have been better if I could have been guided by someone over the phone and talked to a human being.
I didn't know what to put down on "liability", so I put down £250.000. Maybe that's what they didn't like. For "hull replacement" I put down £0. Maybe they didn't like that either. Any which way, I was just guessing - how are you supposed to know if you can't talk to anyone before submitting a form?
I'd like to talk to a human being - so what other aircraft insurers/brokers are there out there?
"Many thanks for your proposal form unfortunately we are unable to provide any terms for this Risk at this moment in time"
WTF?
The form they made you fill in was also pretty strange and not very straightforward - it would have been better if I could have been guided by someone over the phone and talked to a human being.
I didn't know what to put down on "liability", so I put down £250.000. Maybe that's what they didn't like. For "hull replacement" I put down £0. Maybe they didn't like that either. Any which way, I was just guessing - how are you supposed to know if you can't talk to anyone before submitting a form?
I'd like to talk to a human being - so what other aircraft insurers/brokers are there out there?
Last edited by AdamFrisch; 24th Dec 2009 at 09:24.
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Adam,
Try Terry Joint at Joint Aviation Services Ltd. 0142088664.
Good to deal with and competitive but I've never had to make a claim.
I think valuing the hull at 0 was some of the problem and the liability too low.
www.jointaviation.com
DO.
Try Terry Joint at Joint Aviation Services Ltd. 0142088664.
Good to deal with and competitive but I've never had to make a claim.
I think valuing the hull at 0 was some of the problem and the liability too low.
www.jointaviation.com
DO.
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Adam, if you look at the G-INFO UK register database on the CAA website, and search for a Lake as a sample eg G-BASO you will find the minimum liability insurance required by law for this aircraft for non-commercial operation is shown as an estimated £3,228,720 (specifically 3.3M SDRs which is a contrived 'basket' of currencies). I suspect this may be where your form fell short - by nearly £3Million!! Hull insurance is not mandatory, so £0 there should not have been a problem.
Personally I have insured my machine with Traffords for some years; I am pleased with their price and admin service, but I've not had to claim and I hope I never will.
Slip
Personally I have insured my machine with Traffords for some years; I am pleased with their price and admin service, but I've not had to claim and I hope I never will.
Slip
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Adam,
You are probably running into a lack of famialiarity with the Lake as a type. They are not a common aircraft, and insurer's sometimes aren't familiar with how to assess their associated risks. Some of those risks are:
Land on the runway with the wheels retracted = bad. Some damage and some recovery costs. Land in the water with the wheels extended = destroyed airplane, people in the water (maybe drowning) and much more expensive recovery ('cause it was not at an airport, and possibly not even near a road). Pull the plane too far onto the beach, then push it back in and takeoff on the water, and you could be taking 500 pounds of water with you unexpectedly = bad for gross weight and C of G. Allow water in the bilge to freeze during your flight, and the flight controls can freeze solid = bad for landing. A trained float plane pilot will have a real challenge flying a Lake well. They fly very differenly on the water that a float plane - though excellently. They can be challenging to dock compared to the float plane, so things can get broken off the plane (or dock I guess!). After those risk factors, you have to add all of the variability of flying off the water at all.
They are a very good airplane, for the use for which they are intended, and a delight to fly. If you want more information, and are serious, I suggest you come to Canada, and fly one first. One of my clients is the Canadian expert on Lakes. His company is: Lake Central Air Services
Check out the section on the Lake fly in every September.
The following is a Lake I did the design approval flight testing on, which included active vibration testing of the boom (shaking it with a motor in flight to see if it comes off), a dive to 110% of Vne, and spinning. The plane was a delight, and serves its owner well doing its work. There is also an amphibious flying boat expect in Norway with whom I could connect you if you would like to PM me.
Pilot DAR
You are probably running into a lack of famialiarity with the Lake as a type. They are not a common aircraft, and insurer's sometimes aren't familiar with how to assess their associated risks. Some of those risks are:
Land on the runway with the wheels retracted = bad. Some damage and some recovery costs. Land in the water with the wheels extended = destroyed airplane, people in the water (maybe drowning) and much more expensive recovery ('cause it was not at an airport, and possibly not even near a road). Pull the plane too far onto the beach, then push it back in and takeoff on the water, and you could be taking 500 pounds of water with you unexpectedly = bad for gross weight and C of G. Allow water in the bilge to freeze during your flight, and the flight controls can freeze solid = bad for landing. A trained float plane pilot will have a real challenge flying a Lake well. They fly very differenly on the water that a float plane - though excellently. They can be challenging to dock compared to the float plane, so things can get broken off the plane (or dock I guess!). After those risk factors, you have to add all of the variability of flying off the water at all.
They are a very good airplane, for the use for which they are intended, and a delight to fly. If you want more information, and are serious, I suggest you come to Canada, and fly one first. One of my clients is the Canadian expert on Lakes. His company is: Lake Central Air Services
Check out the section on the Lake fly in every September.
The following is a Lake I did the design approval flight testing on, which included active vibration testing of the boom (shaking it with a motor in flight to see if it comes off), a dive to 110% of Vne, and spinning. The plane was a delight, and serves its owner well doing its work. There is also an amphibious flying boat expect in Norway with whom I could connect you if you would like to PM me.
Pilot DAR
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I suspect you're right DAR.
I had come across your friends website, but not emailed him. I was going to do the factory Lake course in Florida (if I decide to buy a lake), but Canada certainly could be interesting. I'll drop him a line.
Thankfully, you don't need to go through all that TSA nightmare to do a seaplane rating in the US (as long as you have the piggyback) and I'm sure Canada is even easier. Speaking of which - do you need a Canadian validation to be able to train there?
Some of them who've responded recommend a float plane SES first and then transition to Lake, but I'd rather spend all that time in the Lake getting that right. The factory one is 10-15hrs, depending on skills. I could do it on the cheap in Arizona in 5hrs, but I think that would be cutting it a bit close to the bone.
SlipSlider - yes there are 2 Lake Buccaneers on the register, 4 if you count Renegades. I've been trying to get a hold of the owners to hear about their experiences servicing, insuring etc, but no luck yet. Thanks for you tip.
I had come across your friends website, but not emailed him. I was going to do the factory Lake course in Florida (if I decide to buy a lake), but Canada certainly could be interesting. I'll drop him a line.
Thankfully, you don't need to go through all that TSA nightmare to do a seaplane rating in the US (as long as you have the piggyback) and I'm sure Canada is even easier. Speaking of which - do you need a Canadian validation to be able to train there?
Some of them who've responded recommend a float plane SES first and then transition to Lake, but I'd rather spend all that time in the Lake getting that right. The factory one is 10-15hrs, depending on skills. I could do it on the cheap in Arizona in 5hrs, but I think that would be cutting it a bit close to the bone.
SlipSlider - yes there are 2 Lake Buccaneers on the register, 4 if you count Renegades. I've been trying to get a hold of the owners to hear about their experiences servicing, insuring etc, but no luck yet. Thanks for you tip.
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Adam,
You will find the water flying opportunities in Ontario much more realistic and varied than those you could find in Florida or Arizona. There are thousands of different lakes (the water filled type) around here, which offer a broad range of challenges, and touring opporunities.
I suggest that if a Lake amphib is your objective, get your float rating in that type, and avoid the float planes for now. Not to say that float plane flying is not wonderful, but you'd have too much to unlearn to transition to a Lake.
Another choice would be a Teal. tail dragger, and challenging on the runway, but great in the water (same as a Lake) and more versitile than a Lake when it comes to beaching or parking against the bottom (on the wheels in the water).
I can offer more info if you need it.
Here is one of the Teals I fly (#34), on Georgain Bay (Lake Huron)
Here is the other (#19) before paint, on a bay of Lake Ontario
You will find the water flying opportunities in Ontario much more realistic and varied than those you could find in Florida or Arizona. There are thousands of different lakes (the water filled type) around here, which offer a broad range of challenges, and touring opporunities.
I suggest that if a Lake amphib is your objective, get your float rating in that type, and avoid the float planes for now. Not to say that float plane flying is not wonderful, but you'd have too much to unlearn to transition to a Lake.
Another choice would be a Teal. tail dragger, and challenging on the runway, but great in the water (same as a Lake) and more versitile than a Lake when it comes to beaching or parking against the bottom (on the wheels in the water).
I can offer more info if you need it.
Here is one of the Teals I fly (#34), on Georgain Bay (Lake Huron)
Here is the other (#19) before paint, on a bay of Lake Ontario
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A light aircraft is not a means to travel, when weather is the least concern for any other mode of transport.
Mine, alas, is strictly a toy in spite of great ambitions of business flying.
In my early aviation "career" (a term I use rather loosely!), I had a C-150 based in Alexandria, Ontario and a girlfriend (now my wife) based in Kingston, Ontario.
A few interesting observations: one, in a stiff headwind I could just about keep up with the trucks (sorry, lorries) on the 401. The Turbo Train would blast by me however, as would some of the scofflaws on the road.
Second, once I flew out on a weekend to see her. Unfortunately the weather went sour by the end of the weekend. I had to leave the plane there, and take the train home (with connection in Montreal, very long...). I paid for a week's parking for the plane, and two train fares (home and back to fetch the plane). Daily parking is a lot more expensive than annual tie-down fees, per day. I paid something like $21 for parking (this was in 1982), plus I forget how much for train fare. And it was a royal PITA.
Third, airports are not always conveniently located. Kingston airport for instance was maybe 15 min. from my GF's apartment. Throw in a half hour to drive to the plane and another half hour to prep it, fuel it and file a flight plan, and 15 min. at the other end to park it and tie it down, and I've just burned up 1h30 min. The drive to Kingston was about 3 hours by car at reasonable speeds (i.e. one that won't get you arrested). The plane, with no headwind, would just about do 100 mph, and the car averaged about 55 mph. The road there was relatively straight. So the plane would take just under an hour and a half of flying, plus an hour and a half of all the other stuff... result is that door to door, the car was just about as quick. Throw in a headwind and all bets are off...
Still no better way to put a smile on my face than a couple of hours aloft though
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I own my own aircraft (3 at the moment) and i would say do whatever you can to own it youself, I have seen lots of pilots get their licences and then just disapear due to the cost/inconvenience of club plane flying. we are always poping to spain etc for the weekend in groups of 4 or 5 planes. its a good adventure every time!
if you pick the right type of plane depreciation can be very low. RVs are good value to buy, (you can get a just finished one for 60-70K) they dont depreciate and tour better than any of the club planes (170kts is easily achieveble in the cruise) I Loved my RV6 so much i have just ordered an RV8 to build.
you could buy a CTSW (microlight) or CTLS (group A) there are about 8 of these at our field (oops 7, one is up a tree ) and the last one i saw sell at 16 months old sold for a good profit over new. they cruise at 100+ knots, 1000 miles range and very cheap to run. or an Ikarus C42 (not as fast) but they do a cheap float set for them that is easily removable)
You have just got to look and think outside the box a bit. Your not far from Damyns Hall (EGML) by the Dartford crossing. pop in and someone will take you for a ride in any of the recommended planes above.
Dave
if you pick the right type of plane depreciation can be very low. RVs are good value to buy, (you can get a just finished one for 60-70K) they dont depreciate and tour better than any of the club planes (170kts is easily achieveble in the cruise) I Loved my RV6 so much i have just ordered an RV8 to build.
you could buy a CTSW (microlight) or CTLS (group A) there are about 8 of these at our field (oops 7, one is up a tree
) and the last one i saw sell at 16 months old sold for a good profit over new. they cruise at 100+ knots, 1000 miles range and very cheap to run. or an Ikarus C42 (not as fast) but they do a cheap float set for them that is easily removable)You have just got to look and think outside the box a bit. Your not far from Damyns Hall (EGML) by the Dartford crossing. pop in and someone will take you for a ride in any of the recommended planes above.
Dave
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how about buying an aircraft in share with some club, and have month-two a year for yourself, dry ?
Possible ?
70 quid an hour, in shared aircraft seems a bit high doesn't it.
Possible ?
70 quid an hour, in shared aircraft seems a bit high doesn't it.
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I don't think £70p/h is alot of money considering that includes the hourly rate and my monthlies . I have not had to put my hand in pocket for anything that has needed to be done since feb this year we have done 500hr mag service, annual, a few 50hr checks, shimmy damper, brakes over hauled and we still have a very healthy engine fund !
I don't think a group should skimp on the hourly rate that extra £10 p/h soon adds up in the kitty
I don't think a group should skimp on the hourly rate that extra £10 p/h soon adds up in the kitty
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so it is dry,right ?
Am I right thinking the following:
When you borrow a plane from club, or something - and you want to go for 6-8h, that you:
a) pay for the engine running, and probably overnight - if it is longer than a day,
b) fuel is included,
c) that is pretty much the only charge.
If that's all true, than it sounds really good in comparison.
In a shared environment, the whole reason for paying the share cost seems to be to cut any unnecessary costs of flying. Thus £70/h still sounds pretty high. But probably depends on how much you fly, that is, it is probably less an hour if you fly a lot - cos the cost is constant per year/month/whatever.
Am I right thinking the following:
When you borrow a plane from club, or something - and you want to go for 6-8h, that you:
a) pay for the engine running, and probably overnight - if it is longer than a day,
b) fuel is included,
c) that is pretty much the only charge.
If that's all true, than it sounds really good in comparison.
In a shared environment, the whole reason for paying the share cost seems to be to cut any unnecessary costs of flying. Thus £70/h still sounds pretty high. But probably depends on how much you fly, that is, it is probably less an hour if you fly a lot - cos the cost is constant per year/month/whatever.
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£70/hr could be the wet cost of something like a C152, or a dry cost of something like a TB20. I used to rent out my TB20 for £80/hr dry, and would have made a profit on that had I reached any reasonable level of utilisation.
The key thing is that one must not see a syndicate as what one can get out of it. That is how renters see things. But a syndicate must be seen as a group venture, and the total cost has to be recovered somehow...
The key thing is that one must not see a syndicate as what one can get out of it. That is how renters see things. But a syndicate must be seen as a group venture, and the total cost has to be recovered somehow...
