Aircraft Financing Advise

[MovingOn]

.......

[designrs]

I was trying to get about $140k loan. So yes, we are in a different situation. Thanks for the advice on NAFCO... should be worth a call.

[FastEddieB]

Do you own any securities?

A margin loan against them is another way to go.

[3Dreaming]

I have done this before, so it might be worth a try. If you have more money in the bank than what you want to borrow, then talk to the banker and borrow against your own money. When I did this interest was just 1-2% above what my account was drawing. I think this would serve your purpose of building credit. I did this when I needed to make a purchase, and wanted to keep my savings for an emergency. The banker said it was a no brainer.

[mcurcio1989]

Owning and operating an airplane is a very expensive preposition. If I couldn't pay cash, I wouldn't buy one. I've owned 3 in the past, but prefer to rent for now.

Well in my case I can pay cash but I would prefer to take this opportunity to build some credit history and I would rather have the money. My local EAA group allows free usage (fuel) of their LSA's but for me the dream of flying is largely tied to an amphibian and that is not something you can rent out out in many locations.

I may be naive but the aircraft I am looking at is really specifically designed for people like me and in all the research I have done I really think the costs will be very reasonable.

^^Yeah I would def give NAFCO a call. I talked to a guy named Rick and he was very helpful and friendly. I did not get the feeling that I was talking to a big bank or that I was just another insignificant customer.

[mcurcio1989]

I have done this before, so it might be worth a try. If you have more money in the bank than what you want to borrow, then talk to the banker and borrow against your own money. When I did this interest was just 1-2% above what my account was drawing. I think this would serve your purpose of building credit. I did this when I needed to make a purchase, and wanted to keep my savings for an emergency. The banker said it was a no brainer.

The guy at nafco briefly mentioned this but he did say that it was something that is really only done by credit unions anymore. It would serve my purpose of building credit but in that case the money is kind of tied up as if it were in a CD correct? You said you can use it in an emergency but how does that work because then the loan would no longer be backed? can you remove the value of each payment out of your account after a payment or is it locked in until the "loan" matures?

It just seems like then I'm tying up twice the amount of money for the duration of the "loan"

Also do you know what they call this? I would like to look into it but I'd prefer not to try explaining it to the credit unions and sound like an idiot (not to imply that I am not in this regard).

[FastEddieB]

I think what you're describing is a "secured loan".

But money sitting in a bank earns essentially nothing at today's rates.

Again...

...how about taking the cash that you have and opening a brokerage account?

Buy something suitable for "widows and orphans" - dividend paying utility stocks (3% to 5% dividend yield is not difficult to find) or a diversified mutual fund or municipal bonds or something.

You can then set it up as a margin account and borrow about 50% of the value of the portfolio.

Pros:

Building credit.

Pay back as quickly or slowly as you like.

Reasonable interest rate.

You accumulate assets, which you still own once the margin loan is paid off.


Cons:

Securities can always lose value - a margin call would mean you would have to add to the account to cover your loan.

Interest rate is not the lowest out there.

Ties up double the money as just paying cash (but in a good way).



Just a thought.

[MovingOn]

.......

[mcurcio1989]

^Interesting fortunately being single and having incredibly low cost of living I could easily get by on $300 a month in the event that I was without a job. With my salary and budgeting in all the maintenance, insurance, storage, etc. associated with the plane I am looking at, keeping up on a loan payment will not be the slightest bit challenging.

Right now it would def be tight for me to buy with cash but I have an RV on the market that I will get 20k out of on my end no problem. So once that sells I can easily buy with all cash. However, I was hoping to use that money to go in on some house projects with my brother. I was originally planning on doing the airplane thing a year from now after selling the rv and doing a couple houses but then the option of financing made me want to give it a swing for this year.

[mcurcio1989]

In reading about signature loans it sounds like the main advantage for me would be that If I do not meet the credit approval I may be able to have a co-signer. The obvious negative is that I am going to be raped on the interest I do believe and I would be on the upper end of a signature loan but. . I could always get it for just a portion of the amount that would reduce my interest and banks percieved risk.

BTW - NAFCO said that a co-signer on there loan does nothing because bother signers have to be individually approved. Is this the general practice or is it there policy. I sort of understand why that may be the case with aircraft since they are often bought with a partner just curious of that is standard procedure or just there policy.

[MovingOn]

.......

[mcurcio1989]

Well the only person I would ever consider asking is my dad and I'm not sure he would be willing to anyways.The only person I would ever consider co-signing for would be responsible offspring - in the event that I have any.

[mcurcio1989]

I ended up selling some things that gave me the money to buy in cash. I actually attempted to get a loan through nafco but they denied me so I ended up just buying in cash. For various reasons I am not going to go into here I decided to buy new which ended up costing more than I originally anticipated but I'm getting a lot more for the money. For future reference what I have found is that it does not matter how much cash you have in the bank, what your credit score is etc. They want to see that you have paid a loan of for the requested amount (or more) in the past. So, if you are a home owner, have a 650 or higher credit score, and have been employed at your current job for more than 2 years I would think getting loan through nafco should be fairly easy.

[MovingOn]

.......

[Flocker]

Congratulations. What airplane did you buy?

Post pics too!