Bankers? Loan Officers?

[Golfer]

Hey there guys,

I have a question for the banker/loaner types out there.

I'm hopefully soon to buy my first airplane, and am seeking advice (and shopping i suppose) for a loan.  If you could get in contact with me about some information Email Golfer

I'm looking for a loan roughly $25,000 (the cost of the airplane is slightly less) I'd really appreciate some assistance, or pointed in the right direction.

Thanks.

[StSanta]

I have some Hells Angels acquaintances/supporters that I am sure can borrow you the money.

All you need to do is do a few flights out of the country, below the radar.

Interested?

These d00ds scare the toejam outta me, but I'm sure you're a braver man.

[Golfer]

i really don't know how seriously to take that offer.

[Curval]

Golfer,

Prepare a "net worth" statement.  List all of your assets, liabilities and income.  If you have a business make sure you have a good set of financial statements...prefferably audited, but that is not absolutely necessary.

Then based on this information stop and think "Would I lend me money?"

What is your credit history like?

How old are you?

Is there someone willing to "co-sign" the loan.

Is $25,000 enough?  If you are going to borrow money make sure you aren't totally cash poor after buying the plane.  This will turn an exciting purchase into a financial burden quickly if you don't plan ahead.  You will need insurance, maintenance costs for a year or two, gas money, hanger storage etc, etc.  Borrow more and extend the payback period if the monthly payment is too high.  

As to insurance....check your life insurance out too...there are some issues you need to address there when you buy a plane, such as:  Do you need more coverage, do you need to notify your existing insurers of this purchase, will your rates rise as a result, if you do not tell them and are killed or injured in an accident will your next of kin be  refused payment because of the witholding of the purcahse?

That's all I can think of for now.

GL

[Golfer]

Hey curval thanks!

Net worth :  $0.00


just kidding.

I'm a 19 y/o sophomore at Ohio State University, hopeful transfer to Embry Riddle in the fall.

Credit history is squeaky clean (the whole year i have had a credit card.  i have used it as a 'debit card' rather than a tool to get in debt.  sort of like the gold standard, dont spend it if you dont have it mentality) and havent missed a payment.

The airplane is a Grumman Yankee, well equipped for what it is but i have not had the prebuy inspection performed as of yet.  I am still getting my ducks in a row to make sure i can buy the plane.  

Would it be easier to take a 30,000 loan over say 20...30 years? that would be my sort of monthly payment.  I dont have the burden of paying for school, thankfully  my parents had the foresight to invest for me when i was born and have a dedicated pool of funds strictly for education.  My car is paid for.  and i am changing jobs to one that will pay $11/hr (which isnt bad at all for a pilot still in school).  And in the long run its much cheaper for me to buy and own this little IFR certified buggy than would be rent a slower, less sporty 172.  Send me an email i cant seem to get to yours.  thanks!

[StSanta]

Golfer all sound advice. I recently got a loan, and I basically had to bring all my financial papers.

What the bank is looking for is to find out if you'll be able to pay back the loans both short term and long term. They'll take you combned income, deduct living expenses, other loans etc and see how much is left. Then they'll see how much you're willing to pay back per month and whether you can do it. Affter that, they see if it makes economic sense or whether the amount should be lowered or raised.

For such a loan, I'd advocate taking a long time loan where the interest isn't too variable. Might be more expensive short term but with the economy as it is, it's worth doing.

And my offer was a jest .

[Puke]

Uhm, doesn't the bank only loan money if you have collateral they can take in exchange if you default on the loan?  Like a house?  Maybe your co-signer can put up collateral.

[Sixpence]

Credit history and Credit Ranking, that's all that matters.  If you have a score of 800 or more, you can sign and go. Keeping on top of your credit is VERY important. Without good credit no one will loan you a dime.

[Ozark]

Most lending institutions don’t know much about aviation. Check with some local pilots and find where they got their loans. You can then quickly narrow down your search to banks where loan officers have a basic understanding, they might even be a pilot. If you have under 200 hour, it might be harder to find insurance.

I hope you get it. I tried doing the same thing at your age in the 70’s. I was in the market for an Aeronca 11AC Chief.

[Golfer]

You have been a huge help...i really had no idea where to start.  Square one was mislabeled i think!  

I'm going to sort through all of this, and jumble around the length and amount of the loan to see what the smallest monthly payment is and work from there.  Got lots more homework to do on this one...where'd I put my calculator?  Under my bed propping up that shorter leg?  TV Stand?  Refridgerator Door Stop?(note the time if that is mis-spelled...4AM)  Maybe its in my golf bag when I tallied my golf scores?  boy this is going to be a wild goose chase!

Thanks Again, Curval

[Curval]

Golfer...use this calculator to play with the numbers..the spreadsheets I sent were just values copied in from it.  The spreadsheet won't auto recalculate the figures.

http://www.calculatorweb.com/calculators/amortcalc.shtml

Good luck...let me know how it goes.

[ra]

Golfer,

I've got to think that it would be difficult for a 19 year old to get a $25K loan by himself.  At the very least, the lender would want the plane to be insured for the amount of the loan with them named as the beneficiary.

But loan situation aside, just remember that buying a plane is the easy part.  If you decide you don't want it anymore you can usually sell if for what you paid for it, sometimes more.  But the real costs of ownership are insurance, tie down, and maintenance.  An annual can run $1K on a plane that doesnt have problems.  A busted jug can run $4K.  The cheapest tie downs are usually $40/month.  Call Embry Riddle and find out how much they charge.

A plane can burn $11 an hour just sitting on the ramp.  You are rolling the dice when you say it would be cheaper to own than to rent.  Owning is only cheaper than renting until something goes wrong, then you have to pay huge $ to get it fixed, and in the meantime you still have to rent.

ra

[Golfer]

I'm well aware of the extra costs of owning an aircraft.  I handled billing for a while, until we could find a replacement could be found at my FBO.  Whether it was gearup'd P210 (had one of those...that fellow put $60k on his credit cad...must be nice) or an annual on a Taylorcraft (opposite side of the spectrum to say the least) ive been around the costs.  Just so you dont get the impression i decided yesterday to go buy a plane without gathering information and doing my homework, i have been researching and asking many questions for several months.  pondering what i could afford and have been interested in owning one for over a year, serious now for about 3 months.  Its definately more than an impulse buy.  I've seen airplanes of all different conditions and prices and traveled some distances to see them.  As far as tiedowns go, when i do buy an airplane, i have arranged hangar space for free (tucked away in a corner, next to a Citation V Ultra, or a CJ2) with the manager/friend of a charter company next door.  But thats not the point of this thread.  I started this thread to gather information anyone might wish to give about loans and financing, not an "he's not out of school therefore can't know what he's doing" lecture post.  My research is not limited to an Aces High Forum, I assure you.  And I am not rushing myself into anything.  I simply am trying to fnd what I can get, how soon I can get it, and what else needs to be done.  Getting my ducks in a row seems an appropriate phrase, and thats all I am doing now.

[Thorns]

Well with that said, why don't you just make an appointment with the people who hand out the money?  Go talk to the Banks...The people here, within this thread, only mean well, and aren't the one who is signing the name on the dotted line...you are.  Don't slam them for trying to be helpful.  

Thorns

[ra]

I started this thread to gather information anyone might wish to give about loans and financing, not an "he's not out of school therefore can't know what he's doing" lecture post.

If you knew what you were doing you wouldn't be posting this question here.  My response was to let you know that loan officers want to know what you are going to do with the money, and how you intend to pay them back.  When you tell them you are going to buy a plane, they are going to look at your income and the expenses the plane will run up.  So if you have no collateral, you probably won't get a commercial loan by yourself.  You will need a co-signer who is willing to put up collateral.  Or you can find a rich friend or relative to give you a personal loan.  Commercial lenders are risk averse.   If you were to default on your loan they would have a hard time explaining to their boss why they gave a 19 year old $25K to buy an airplane.  That's the way they think.

ra