Sport Pilot Talk

OK, I've got to vent for a sec and share this, maybe someone can tell me if I'm barking up the wrong trees or if this is normal for aircraft financing. Currently, if the weather will finally cooperate all I have to do is fly my solo x-country and a check ride and I should have a license, the last few weeks have been either IFR or 15kt winds gusting to 20, it makes for great xwind practice but not good for solo xcountry work. OK, so I have begun to look into purchasing a plane in the next year. I've got 15k down-payment, credit score over 800, debt to income ratio of 10%, and am looking at used reasonably priced lower hour (>50% TBO left) aircraft in the 50-65k range. My wife works and that's not counting her in the equation either. My credit union is able to finance, but for 15 years and they won't touch an experimental or something without an established book value, no kits either. The more I try the less optimistic I get, for crying out loud I'm trying to finance about what a car costs, it's not a Cirrus! Is anyone else experiencing trouble or has gotten the run around? I've done the math, it's affordable and I'm well within my economic grasp, I just don't get it, I had a banker friend actually say your borrowing too little and they don't understand LSA and don't want the risk of taking a questionable asset as collateral, my response: what?!?!

Another option is to borrow money from your 401k.
Usually, loan rates are market equivalent and you end up paying yourself back, including the interest.

Try US Aviation Finance. I paid mine off this year, but I financed through them initially and it was pretty painless.

Or maybe a friend or family... with the proper paperwork and assurances, they may prefer 5-7% interest from you, over the pittance they're getting from Banks/CDs. I was lucky enough to be able to do that, and he was happy to make a good return.

I like the 401K/insurance loan ideas, too.

I think it's normal for a credit union that doesn't do a lot of aircraft finance. I would look at the alternative sources mentioned here or look for an aircraft finance specialty firm; there are several around. Your aircraft insurance broker or aircraft dealer may have suggestions; you can also browse some of the owner sites (Cirrus, Tecnam, Beech, etc.) to get suggestions. Experimental aircraft may be harder/more costly to finance and insure than SLSA aircraft, but you will figure out those parameters with your insurance broker and financing source. I would do the finance diligence in conjunction with insurance diligence as well as you might find limitations around aircraft choices on the insurance side.

For what it's worth, I paid cash for my aircraft despite the pain ... because I don't like financing a depreciating asset. But that's just my personal preference ...

Cheers!

And PS: being not too far from you in Houston, I feel your pain on the recent weather... good luck getting over the finish line!!

Those are some great ideas! I have considered borrowing against the house or my retirement but ruled that out, for me those are stable assets and I don't want to jeopardise those because those can effect my families future. I could pay cash but man I'd rather not drop that much of my nest egg at once. I guess I can just wait a bit longer and keep saving, I was just very surprised at how hard this was turning out to be. When I bought my boat and cars they basically gave me whatever I wanted at very low rates or I paid cash. I assumed (incorrectly I guess) that the aircraft markets would be similar. Boy was I wrong!

LightStream loans. I purchased a used experimental LSA. I made the mistake of thinking the AOPA financing would be easy. Not. When they initially contacted me they weren't sure how much the plane was worth so couldn't immediately tell me if they would loan me the amount I needed. Plus they wanted a ton of paperwork. I went online and found LightStream on a Friday. They offer used plane loans. All I needed was a pay stub. I was approved in about 2 hours, no fee and 1.25% less than what the AOPA lender was asking. Had the money direct deposited by Monday afternoon. 80% of the purchase price. No lien either.

RC so if I am reading this correctly it was a personal loan not using the aircraft as collateral???

I used a home equity line of credit for a portion of the purchase price of my Cirrus.

Good rate back in 2003 and I knew I would be able to pay it off at an accelerated rate, which I did.

Just a thought if you have home equity to borrow against.

Technically it was a used aircraft loan. They just tell you don't bother to have use named as lienholder. Ok with me. I got it at 5.29% for 7 years.

+1 on light stream if you don't use an equity line. 3.24% for 3 years and said before, they aren't a lie holder. You sign that you use the money for the indicated purchase.

Wings Financial Credit Union is another alternative. They do aircraft loans and are familiar with them.