NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, shares five quick tips to have a positive airplane buying experience.
On the one hand, the airplane buying experience is thrilling and full of adventure. You’re embarking on an upgrade, or it’s your first-time taking control of your business or personal air travel. On the other hand, the airplane buying experience can be full of adventure and an unintentional thrill ride. You’re embarking upon a transaction process that if left to chance may reveal hidden turbulence. So how to have the best experience? Here are five quick tips:
- Define your mission first. How do you envision using the airplane? Are you going to travel someplace? Are you going to be using to travel someplace with other people? How long are these trips going to be? Where will they be? At what time of year will they be? These will define the type of aircraft that fits your need best. At the very least, this exercise will help you understand what airplanes you don’t want.
- Define your intended aircraft’s support community. Who owns the same aircraft at your local airport? Does that airplane have an associated club or online community? Tap into those human resources to get real world intelligence. Combining what they know from actual flying with your defined mission can help further narrow your choices. For instance, Find out from friends or other owners (e. g. Comanche 400 vs. Cirrus)
- Define the aircraft’s true cost. There is the acquisition price, yes. And you may have clear picture of fuel burn, hangar, database updating, etc. But those aren’t the only cost. What really is the reserve? How easy are parts to obtain? What’s the access like to get a good qualified mechanic who is expert on your make and model? A generalist vs. an expert means down time. What’s your airplane’s down time going to be based on mechanic and parts availability? That analysis may cause you to consider buying a new plane with a warranty on it. Which brings us to #4.
- Define whether a used or a new airplane is your best value. If you own your own business and you can also utilize bonus depreciation to write the purchase off as a business expense, and if your price includes a manufacturer’s warranty for a new plane, that slightly higher cost may mitigate all the issues raised in point #3. This option may also be worthwhile to non-business owners, too.
- Define your financing options. Pre-approval vs. paying cash. What is your opportunity cost vs. financing? How would your return compare between an all cash deal and taking a loan while investing the cash? What’s your comfort level in having cash flow and leverage vs. owning an aircraft outright? Firm knowledge in where you stand on the leverage risk tolerance scale opens or focuses how you’re willing to pay for the airplane.
And last of all, reach out to AOPA Finance. If we don’t know the answers, through the rest of AOPA, we can help point people to other resources and get them those answers.
This article was originally published by AOPA Aviation Finance Company on January 7, 2021.
