How do aircraft loans work?

Plane loans are unlike other vehicle loans and more like home loans. Because planes have a higher average price, applying for a plane loan can be difficult.

The plane loan amount depends on factors like the cost of the plane, the loan term, the APR, and the down payment. Using the aircraft loan calculator above, you can understand your monthly loan payments and the total interest amount on the loan.

How does the aircraft loan calculator work?

The aircraft loan calculator will tell you your monthly payments and the expected interest payment amount. Simply input the size of the loan, the loan terms, and the interest rate associated with your loan.

The same tools apply for a:

  • Turboprop
  • Superlight jet
  • Piston prop
  • Helicopter
  • Light jet
  • Seaplane

How to get a loan for an airplane?

Applying for a plane loan is a simple process that shouldn’t take more than a few days. The application process looks at your credit information which shouldn’t take longer than 36 hours.

Some costs to your plane loan may vary depending on the state you live in. The FAA frequently makes regulatory changes to tax issues, registration requirements, and other factors that can add to the cost of the plane loan. Thus, it’s advisable to work with a plane loan expert if you’re a first-time buyer.

What are aircraft loan requirements?

Compared to other vehicle loans, plane loans have stricter requirements. Like a home loan, plane loan lenders require a minimum credit score and a down payment.

While these factors can vary, plane loan lenders want a buyer with:

  • A minimum 700 credit score
  • A 15% – 20% downpayment on the plane
  • 18 months of liquid payment to ensure payments can be made

In general, your credit score will not be the deciding factor. When applying for a plane loan, lenders will look at your entire financial history. Thus, lenders may look at factors like your debt to income ratio, liquidity, and comparable debt.

How long is a typical aircraft loan term?

In general, plane loan terms are longer compared to other vehicle loans. This is because planes are more expensive than other vehicles. In most instances, plane loans will have a loan term up to 20 years.

It is rare to see a plane loan term exceed 20 years. Further, older planes may have a limit of 10 to 20 years. This is because planes depreciate rapidly and it’s hard to determine the true value of the plane.

What is a good aircraft loan APR?

Compared to other vehicle loans, plane loans have lower APRs. This is because lenders have stricter requirements for plane loans. Since plane loans have a longer loan term and are typically for larger loan amounts, the APRs are lower than other vehicle loans.

The industry standard for aircraft loan APRs start around 3% – 4%. But this is just a starting point. Lenders may increase the APR amount based on your personal finances, the cost of the airplane, and the age of the airplane.

What are used aircraft loan interest rates?

Like auto loans, plane loans have higher interest rates for used airplanes compared to new airplanes. Because the true value of a used airplane is harder to calculate, there is more risk for the lender which causes the interest rate to increase.

Where can I get an aircraft loan?

Like other loans, there are many lenders that offer loan options for aircrafts. In general, credit unions, large banks, plane dealers, and some plane companies offer plane loan services. Since aircrafts loans are like home loans, you will want to work with an experienced lender who understands the industry. 

Most plane loan lenders are only interested in loaning a minimum of $50,000. Although plane loan options for less money do exist, they require a larger down payment and shorter loan terms.

On the other hand, the larger the loan amount, the more options your lender will make available to you. This could mean lower interest rates, a lower down payment, or other favorable options.

Can I negotiate an aircraft loan?

Yes. All loan terms are negotiable, even for plane loans. Having a favorable financial situation like a higher credit score will help you negotiate better loan terms. Additionally, the larger the loan amount, the more likely the lender will be to offer lower interest rates.