Aviation Finance: What’s Involved in Purchasing a Plane?
Aircraft finance involves financing the purchase of an aircraft as well as its operation over the years that you own it. Planes can cost tens or hundreds of millions of dollars, and funding can be a complex issue. There are various ways to fund the purchase, some of which may be more suitable for you than others.
How to Fund the Purchasing of a Plane
When you start looking for an aircraft broker to help you purchase a plane, you will clearly need to know about the best way to fund your purchase.
There is a big distinction between cheaper private aircraft and more expensive commercial aircraft. For a smaller private aircraft for personal or corporate use, funding your purchase is more like getting a mortgage. A large loan may be required, which a bank may be able to help with.
This will often involve providing information to the lender about your own finances as well as about the aircraft. The lender then carries out an appraisal of the value of the aircraft, and they will usually carry out a title search before providing a security agreement. The borrower may also require a surety. This is all information that a good broker will be able to help you with.
For commercial aircraft, the process is different. These planes cost tens of millions of dollars, and the main ways to finance a purchase include secured lending, finance leasing and operating leasing.
Direct lending is similar to buying a private aircraft, and usually involves a security interest in the aircraft. Operating leasing involves taking out a lease on the aircraft using a Commercial Aircraft Sales and Leasing (CASL) company. This is usually a short-term arrangement of under 10 years. Finance leasing is a long-term arrangement, and the operator effectively owns the aircraft.
Thinking of Financing an Aircraft?
If you are thinking of buying an aircraft, Aeroclassifieds range of listings can cover any type of aircraft you are looking for. From helicopters to jets, our aircraft are perfect for business or commercial needs. Fill out our online contact form to get in touch, and we will reply as soon as we can.
How Much Do Planes Cost?
Commercial planes can cost hundreds of millions of dollars. For example, the price of Boeing and Airbus aircraft are often in the hundreds of millions of dollars’ price range.
However, planes often cost less than the catalogue prices. As reported in the Wall Street Journal, this is a complex area, and there is a lot of room for haggling. How much the planes eventually cost is difficult to say because there is a lack of hard numbers.
Why Buying Is Better than Leasing or Chartering
Whether you buy or lease completely depends on your situation, but buying does have some advantages. Primarily, it gives you more control, and you may also build equity. There are also potential tax benefits because you may be able to depreciate your purchase for tax purposes. As long as you will use it enough to justify the costs, buying can be a good option.