NAFA member, Adam Meredith, President of AOPA Aviation Finance Company shares five of the most common red flags lenders see.
The most common red flags for lenders are:
- Missing or incomplete logs
- Abnormally high airframe hours
- An airplane that is close to or past the recommended time for engine overhaul (TBO)
- A history of damage
- Obsolete or aged turbine aircraft
With missing logbooks, if a borrower is in a strong financial position and what’s missing isn't significant, there may find be little or no impact on the loan. Still, it’s good to plan on the structure of the loan being affected.
We’ll address high airframe hours in an other article, but the short answer is, unless you’re acquiring a turboprop or jet, it will be an issue. At or close to TBO? Plan on extra reserve requirements, a lower LTV analysis or a higher down payment.
This article was originally published by AOPA Aviation Finance Company on July 29, 2021.