Where aircraft financing is concerned, it is crucial for potential borrowers to plan ahead, asking the right questions before applying. Gerrard Cowan explores...
There are a range of factors to coordinate for an aircraft purchase, all of which take time. This is particularly true where aircraft finance is likely to be a factor in the acquisition, and allowing the time to ask all the right questions prior to signing a financing deal is essential.
If the process is rushed or compressed into a shorter timeframe than is standard, there are likely to be complications that will frustrate all parties involved.
Buyers should reach out to financing contacts early in the process to find the right experts for their needs, according to Ramy Sidhom, Head of PNC Aviation Finance. “Building the best team of experts has nothing but upside for the buyer now and during the life of the aircraft.”
The way you plan can either materially enhance the buyer experience or have a severely negative impact, he explains. “The financing simply becomes a lending arrangement if all parties are communicating and furnished with the accurate deal specifications.”
He underscores the importance of studying the aircraft in question, determining the potential operating expenses, maintenance plans, etc. “The total determines how much money or liquidity will be needed to close on the transaction and to operate annually.”
Timing is a factor here, too. “New contracts for most models have delivery wait times of two years or more. Does the wait time make sense, and if so, what will you do in the interim?
“If evaluating a used aircraft, it is helpful to work with the financing team early in the process so that there are no delays in closing while the financer completes their due diligence.” Identifying the usage, registration and type of loan you are looking for upfront will ensure you are working with the right lender with the right type of financing, according to Brian Macbean, Director of Credit and Sales at AOPA Finance.
“All lenders have different requirements. If you change one of those factors mid-process, you risk losing the financing altogether.”
This article was originally published by AvBuyer on February 14, 2024.
