How To Finance Aircraft Purchases

Step 1. Preview Your Financial Profile

Financing an aircraft requires formulating a realistic view of your financial profile. Completing a pre-qualification loan application will enable lenders to review your borrowing history, determine the credit amount you may qualify for, and calculate a reasonable purchasing budget based on that amount. This step will also uncover any credit issues to address before moving an application forward.

When using CurrencyAir, the online pre-qualification application only performs a soft credit pull, enabling CurrencyAir to determine your credit score more quickly and immediately begin targeting appropriate lenders based on your needs. A typical down payment is 15% or 20% for aircraft costing $1 million or more, and lenders will look to finance a percentage of the purchase price or the book or appraised value (whichever is lower).

Step 2. Pre-Qualifty For The Loan Online Application

After you complete a pre-qualification application through CurrencyAir, you may receive initial financing pre-approval in as little as three minutes. Once you submit your application, a CurrencyAir representative will contact you directly with a soft credit quote based on your information and explain what you can expect in the subsequent financing process.

Step 3. Provide Your Financial Information

Along with a signed and dated loan application, you will need to provide a Personal Financial Statement (PFS) to obtain financing. CurrencyAir incorporates this into its online application, or you can upload your own application file. You will also need to provide copies of bank and brokerage statements as listed in the PFS; all pages of such statements are required so the lender can verify the holder, date, and balance of the accounts.

Other information required includes two years of individual federal tax returns complete with schedules and all statements, W-2 and/or K-1 forms related to businesses you hold ownership in, a current pay stub, aircraft specification sheet, and government-approved identification (preferably a color copy of a driver’s license). Business owners will need to provide two years of business tax returns, a debt schedule, interim financial statements, and copies of business-related bank statements.

Step 4. Select The Aircraft You Want To Finance

If you have yet to decide what aircraft you wish to purchase, acquiring financing pre-approval will help pinpoint the aircraft that fits within your budget. Once you have decided on the aircraft, you will need to determine its value. CurrencyAir helps here by evaluating the aircraft year, make, model, registration, serial number, total flight and engine hours, and other data contained in the aircraft specifications sheet you provide.

Before closing, you will be asked to submit logbook copies and/or Continuous Airworthiness Maintenance Program (CAMP) and maintenance status reports, plus the aircraft’s anticipated annual flight hours, base location, and mission.

It's best to do a title search early in the aircraft-buying process to uncover any liens or clouds that could interfere with assuming a clear title. A reputable escrow-title agent ensures that all title work is completed properly with the FAA.

Step 5. Negotiate A Final Purchase Price & Sale Agreement

With the aircraft value in hand, it’s time to negotiate a purchase and sale agreement with the seller. You will need to acquire a fully executed copy that states the purchase price and identifies the buyer and seller. The buyer is the person or entity registering the aircraft with the Federal Aviation Administration.

The sale agreement should note:

Step 6. Close On The Aircraft

Keep in mind that financing an aircraft can take weeks to complete, and lenders typically require 48 hours minimum notice to schedule the closing after receiving all necessary items. When using CurrencyAir, a representative will help to ensure that all necessary paperwork is finished and a closing date is scheduled.

Before closing, acquire aircraft insurance, naming the lender as the lienholder and following the lender’s insurance guidelines. The escrow company will also provide a pre-closing statement that outlines all closing costs and notes any supplied/expected funds (such as loan proceeds), the buyer’s down payment amount, and escrow costs.

To ensure a clean title and smooth transfer, the escrow-title company and your CurrencyAir rep will also help gather and complete all FAA-related documents that may be required, including an FAA application for registration, bill of sale, security agreement, and clean title.

Your CurrencyAir adviser will help coordinate all aspects of closing between the buyer, seller, lender, insurance company, and the FAA.